Why Do Top-Tier Generic Domains Sell For More Than Brandable Domains?Posted: January 27, 2012
In a previous article, I proclaim that short brandable domains make stronger brands than generic domains. I’ve had a couple people ask me since then why generic domains sell for more if that’s the case.
Before I answer that, I would like to point out that there are some high brandable domain sales. Facebook for instance put forth $8.5 million to secure FB.com, and it wasn’t even their primary brand domain. Apple.com paid $4.5 million for iCloud.com, a product/service brand they were still developing. That said, it is true that top-tier generic domains make up a vast majority of the top domain sales.
Why do top-tier generic domains outsell top-tier brandable domains?
1. Their value can be measured
How exactly do you determine a “top-tier” brandable domain? An exceptionally good word that’s not generic? A perfect-sounding made-up word? There’s no real easy way, which is why values of them have a much larger low-to-high range than sales of generic domains.
It’s easy however to tell a top-tier generic domain, as it would be both a nice exact match and broad match to extremely lucrative keywords. You would have searches per month, average CPC, advertiser competition, SEO competition and more as surface-level statistics you can look at. You can then take those figures and plug in your own – average lifetime value of your customers, your typical conversion rates and more, coming up with precisely what the domain can be worth to you.
2. They have type-in traffic
Part of the downside with brandable domains is the whole process of branding them through promotions and advertisements in order to bring traffic in. Top-tier generic domains on the other hand get natural type-in traffic from people either curious to see what is on them or believing that they would be the authoritative source for what they’re looking for.
Even if it’s not a high amount of traffic, once you have a good website on the domain, you can grow that traffic out. Companies using even the most pristine quality brandable domains often have to pay millions if not tens of millions to reach a traffic level that top-tier generic domains could grow to with little or no expense.
3. They are authoritative
You can come up with a million insurance brand names, but there’s only one Insurance.com. Even with new extensions, even with so many huge companies using short brandable names instead of generic names, there’s a certain authority and eliteness that comes with a top-tier generic. Even if you’re not an immediate industry leader with it, you’re certainly a viable contender right out of the gate.
With all that said, top-tier generic domains are limiting, which is why you have to go outside the Alexa top 100 before you find a truly generic domain (note that Apple.com is a generic if it were used for selling apples, but not for selling computers, music and more). The largest companies online are involved in many different areas, and a generic domain could have limited their scope and prevented some of their expansion.
That’s why short brandable domains do tend to make better brands than generic domains. Generic domains however are more of a sure way to get off to a strong start, which is why they sell for more.