I have always looked at a domain name as a marketing cost. I do this because essentially a domain is a marketing tool that delivers a customer to your business and makes a visual and mental impact. A domain is just one part of the puzzle of getting customers to spend their money with your business. Like McDonalds.com or ImLovinIt.com, good domains stay in the mind of consumer. So often companies spend millions of dollars on marketing costs only to have potential customers lost because they tried to save $5,000 rather than getting the domain that will have the best impact. If you compare the cost of marketing it’s easy to validate $100,000 on a great domain for merely one ad campaign. It’s less than a cost of a 30 second ad on national TV. Here are some examples of other costs of marketing as compared to a domain.
Billboard Campaign: Let’s start with the cost of the printing itself. It costs roughly $500 for each board. They can now be reused several times but each unique campaign will cost you $500. The cost of the rental of the board will start at $1500 PER MONTH. If you want to go with digital boards where you don’t have to pay for the printing starts at $3500. The sales people will remind you that you can change the message as many times as you want for only 2.5 times the cost of a standard board. And those are starting prices and are for towns of 100,000 or less. Want a billboard in a large city? It’s going to cost you $10,000 and up per month. A memorable domain is the most important part of the billboard. Nobody is going to remember the telephone number. Those are so 1980. You need a great domain name. Spending just 5% on a domain for the campaign still justifies $50K. Total Cost for national campaign for one year: Millions
TV Campaign: If you want a 30 second ad on a network television program expect to pay $100,000 or more. You like Two Broke Girls? That will cost you $270,000 for 30 seconds. One time, thirty seconds, $270K. A national campaign on television is in the millions. Add in another half million to hire your ad agency, your talent, and the production of the commercial. The same goes here. You’ll get roughly 5 seconds to display your domain. You better make it good. Why spend millions on ads and let Google determine who goes to your site? Here’s a list of cost of a tv commercial by show from last year. Makes a domain look cheap doesn’t it?
Radio Campaign: A radio spot in a a local drive time market is roughly $50 to $150 for a 30 second spot. That is PER CITY. If you want a national campaign you either have to advertise in hundreds of cities or you advertise on a syndicated show that is in all the major markets. A radio market like sports has ESPN that reaches most markets but the price of these commercials is basically a sum of the local rates of all the markets minus a small discount. Carry all that out and you’ll see that one national radio ad will be $10,000 or more with most being in the $30,000 rate. I remember back in 2005 a live read from Howard Stern was in the $30,000 range. And again this is for ONE ad. National Campaign Cost: Starts at $500,000
Online Ad Campaign: Want to take over YouTube or Yahoo’s front page for a day? You can for only $400,00. How about a Twitter promoted tag? That will cost you $120,000. Want your own app to promote your wares. That will be $50K (not some quick or template app) or so without any promotion. Want a preRoll on Hulu or Youtube. Hulu is a crazy high $25 CPM and Youtube can range from $10 CPM on up. National Campaign Cost: At least $500,000
As you can see, the cost of marketing for a national company is expensive. There are those that have “trouble” paying someone tens or hundreds of thousands of dollars to a person that didn’t help the company achieve anything other than selling them a domain. But making money isn’t personal. If a better domain can help you make money then it merely becomes part of the cost of a marketing plan, regardless of who owned the domain before. To not budget or plan for a great domain is leaving potential customers in the hands of Google. Every time you take out the middle man that guides customer to your business ,you are saving money. A memorable domain leads directly to your company. Information that must be searched takes them on a journey that can distract or mislead. If you run an Adwords campaign it could also cost.
So the next time you sell your domain, keep in mind the other costs of marketing. Keep in mind you’ve taken the risk of putting your money into an asset that others thought may have no value. Remind them that they are getting an incredible marketing tool for less than all the other ways they are going to promote their company. They are getting a great deal no matter what they paid.
Very good article Shane, and I think the important part is for new domainers to understand you are talking about a good name that will truly help a business. You laid out excellent data points,people need to understand everything has to come together, you can’t own a misspelling or a mixture of letters and numbers that have no marketing advantage and refer back to this article and ask for $100,000.
For those with the right domains they should be using this post as a template to help them sell their domains.
Ray,
Absolutely. We are talking about names that truly will help a company. 99% of all domains I come across have no value to anyone. It is obvious to those that know quality domains but I’ve found from my thousands of emails that most people have no understanding of premium domains.
I wholly agree with you about the undervaluation of great domain names. I am always surprised to see many great names sold for less than the cost of cleaning the office for a month.
Shane, wonderful article. Lack of awareness among marketers about the power of domain names is the biggest problem.
It may take time to change their mindset.
I will use this article in my future negotiations.
Excellent post,it astounds me that companies do not get it, it’s the biggest problem for domainer’s (except rick).Most businesses are still in the dark when it comes to the marketing power of a good domain, they will spend literally hundreds of thousands on Google or facebook(FARMING OUT YOUR BRAND?) but won’t spend on a good product/ service exact match generic domain, it is hard to let a generic go cheap when you know it is worth so much in advertising spend, but even harder to get an offer.
Don’t you think that there’s a finite amount of companies that are even at the point that they’d be considering any of the other options either. Add to it that many companies that are buying those media are local and thus want only local customers. The buyer pool of those national campaigns that command big bucks (like superbowl type stuff) and can pay that price is very limited.
So don’t get too pumped up, theres only a handful of companies that could even afford your million dollar domain (that probably really isn’t a million dollar domain. . . .you just got lucky with that buyer coming along). . . Consider yourself a very fortunate soul ( I count my blessings every day) if you get to the point where you have found a buyer that is willing to go deep on domains.
One more thing. There’s millions of options in domain choices for a company to choose.
Not so many choices if you want to reach millions of people to promote your new ‘energy drink” or whatever . . on a global scale.
Ad venues can command those numbers because of reach, eyeballs, and sheer volume. Domains aren’t pulling those sorts of eyeballs, unless we’re talking typos 🙂
These companies spending these big bucks on campaigns of this caliber do need a great domain but they have a lot of choices. . . . Ever notice how movie studios pick the most awful domain names ? They don’t care . They have the eyes sitting in the theater watching the previews and sharing them on youtube, facebook, twitter.
I agree. The point of the article was to say that in the scope of things in marketing. A domain is a minimal cost but still very important.
The problems is even the best and most expensive premium domains have an extremelly limited type-in amount (traffic) and marketers a lot of want eyes balls and they want NOW!
Francois,
Domains are not traffic drivers anymore. At least not in the scale compared to television or an online campaign. Different animal. It’s more about what it represents and memorability
Sellers should arguably not be allowed to set the price, and therefore cannot be accused of selling too cheaply.
It is up to buyers to decide what they’re willing to pay. In a market working properly, the buyer who beats all other bids gets the item. By all means though, you can accuse buyers of under-appreciating the benefit of a good domain, and not bidding high enough.
I was thinking the same thing as I was driving by some billboards along the local freeway. Massive marketing expenses without giving it a second thought, even without any real hard numbers to really prove their effectiveness (just agreed upon models and equations – brilliant!).
Imagine going into the local Clearchannel office, asking them for a quote for displaying your latest campaign and then telling them that they’re completely nuts for asking you to pay them $10,000 for just a month of strapping your oversized banner to a single old wooden frame! Maybe you should argue that the sign isn’t even worth a hundred bucks in wood and nails, and just because they hold a lease for the land, they shouldn’t be allowed to be in display at all, heck, they don’t even have a degree in marketing! they have no business in display! And you tell them that you, the ad/ marketing professional, thought of leasing that land and out up a sign long before Clerchannel did, so you tell them they really must be some kind of display squatters and you threaten them with filing a complaint in order to take the sign from them.
That’s where domains stand compared to displays. But things are changing. Reading about ad and marketing agencies, it becomes clear that things have to change – and that they are changing. Read anything on adage et al and you’ll figure out that the ones to survive and thrive have think of new directions to take.
Generic product category domains as the new 800-numbers. Rick Schwartz has talked about that quite a bit. Owen Frager has been making this point for longer than anyone else I have read or heard about.
Beyond recognizing the immense marketing value of domains, there’s the problem of assembling a useful portfolio. How could any agency provide great domains to their various clients to be used in their marketing campaigns? I don’t think it’s an option. To buy key domains or assemble portfolios to cover all the various industries agencies serve. Too expensive and maybe downright impossible. Even if there’s enough money to spend, they couldn’t buy a lot of the best domains simply because there’s already a business built on them. Much better option: they basically “sub-contract” domain owners and lease the assets, just like they lease the billboards from their owners.
Who are Clearchannel’s end users? Are they trying to sell their billboards to Apple or L’Oreal? No, they’re not even trying to sell their boards to the marketing professionals. They’re leasing them to them and that’s great. Companies don’t want to own billboards. Their agencies don’t want to own billboards. They don’t want to deal with all that. They just want to use them when they need them and lease the space.
And, just like it is the case with billboards, there will be a time when marketing people lease your domains without questioning the prices they demand.
Just as much as they don’t argue with Clearchannel why they should pay them $10000+ a month when anyone can build such a cheap wooden frame and put it up in their backyard, you won’t hear them argue why they should pay you a comparable fee for your domain when they can hand register some other domain for $10 bucks and put it up in their “internet-backyard”.
Display owners made things happen, I’m sure their industry was new and frowned upon at some point in time. Domainers can do that too.
Maybe a few years from now many a marketer will look back to 2013 and wish they would have bought many of the domains that were so freely and cheaply available on the market.
A little correction to my previous: Owen Frager has been making the point about domains as a great marketing tool (not the domain as the new 800 number) longer than anyone else I have read or heard about.
Ted,
Do you mind sending me the decoder ring so I can read all that great information you talk of. It IS great info just scrambled together with 7 other topics and headlines