10 Quantifiable Factors of Domain ValuePosted: February 26, 2012
As we often say in this blog, domains are unlike anything else when it comes to evaluating them. Two different people can have evaluations worlds apart, especially since the difference between wholesale and retail value of a domain can be massive.
That said, many domain investors tend to fall back on domains with less potential variance of value. If you’ve ever wondered why generic domains are value, that’s a big reason why. When there are more quantifiable factors involved, there are less subjective factors whereby two different people can see things differently.
In the early days of Google for instance, one person might think the brandable misspelling of the word googol was a really smart choice for a brand, while another might think it just didn’t work well for a search engine. Nowadays, there’s no debate about the name, as it has served Google well.
Simply put, if a potential end-user doesn’t like the brand potential of a domain without many quantifiable factors, there’s little you can say to change their mind and convey its value. Then it all comes down to taste, and different people have different tastes. At best, you could survey consumers in different markets about the name and whether it’s interesting, catchy or would otherwise get a positive response and interest from them.
What are some quantifiable domain factors that affect its value?
1. Exact match searches per month of the domain’s keyword phrase on Google
Probably the most focused-on factor of generic domains, this indicates the incoming traffic potential with a high ranking in Google (a significant percentage of overall search engine traffic for the keyword phrase).
2. Average cost per click of the domain’s keyword phrase on Google
One of two quality metrics regarding search traffic – since Adwords advertisers are looking to make a profit on the clicks they pay for, this serves as a baseline indication of the value of visitors searching the term.
3. Advertiser competition on Google Adwords for the domain’s keyword phrase
The other quality metric regarding search traffic. If there are no advertisers for a term, the traffic to it may be hard to convert or otherwise not very profitable.
While length isn’t as clear-cut of a value indicator as other metrics, there are ideal lengths of domains based on the kind of name it is and the keywords involved. Length is not only character length but also word length. In most cases, looking at length to evaluate a domain is primarily to make sure it’s not “too long”.
Extension may not yield a number like many of these other factors. It’s fairly clear however that a .com domain is worth more than the same domain in .net, the .net is worth more than the .info, etc. Some newer extensions are not so clear-cut, and extensions like .org and .tv introduce other factors such as fit with the extension.
6. Backlinks and Google Page Rank
The domain being an exact match for its keyword phrase certainly helps rank highly for it, but its Page Rank and the backlinks going to it certainly help too. One thing to note – not all Page Rank and backlinks are equal. Page Rank goes up and down rather fluidly based on incoming links to the domain and their quality. Backlinks from higher authority sites, and more notably higher authority pages, make a much larger difference in rankability than lower quality links.
7. Domain age and site age
The age of the domain as well as of the site (if there is one on it) can also make a difference in SEO. Google sees these ages as indications of authority, or lack thereof. It doesn’t always make or break the rankability of the domain, but it’s one of a number of factors Google looks at, and you want every edge you can get to reach the top ranks.
8. SEO competition (measured in many ways)
Not everyone who buys a generic domain for its SEO value cares about competition to capture that search traffic, but some do. SEO competition metrics can consist of things like how many sites have the keywords in the title or the description, how many results there are for the phrase in quotes and ranking factors of the top ranking sites such as backlinks, Page Rank, domain/site age and the keyword being in domain, title and/or description.
9. Possibility of mistypes (not always quantifiable)
Every domain can be mistyped, but ones that are easier to typo or misspell can see a value dip based on that. In the case of “made-up word” kinds of domains, it’s hard to quantify this as you can’t see the difference between correct and incorrect variations in Google Keyword Tool. However, with domains based on real words, you can get an understanding of common typos and misspellings based on those numbers.
10. Existing traffic and revenue
Of course, while many of the other factors speak towards potential value of the domain based on a top ranking for its term, the domain may have existing real value in traffic it gets and revenue made from that traffic. It’s important to understand that traffic varies greatly in quality and some sources of traffic are more stable than others, so it can be a risky quantifiable factor.
There may certainly be many other smaller quantifiable factors that can contribute to a domain’s value, but these are the ones most-often focused on. The names that rely predominantly on these factors for their value are generally easier to evaluate than domains relying on more subjective factors. Even at that, these factors are all subjective in the sense that people place different weights on their importance.