By Richard Harroch and Andrew Miller
We have recently seen successful acquisitions of real estate on the Internet, in the form of premium dotcom domain names. NFTs.com was acquired for $15 million and HubSpot acquired Connect.com for $10 million. Over the past few years, exact match keywords have become important and valuable digital assets, and signify a transformational change in the way premium domain names are valued.
In the BG (Before Google) era, most people browsed the web by typing a keyword or domain name into their browser. Having a world-class domain name and brand was almost like owning a “television network,” but a global network without walls. Initially, the focus was on generic, single-word domain names that represent a massive global category, like Sweepstakes.com or Home.com.
Recently, a new type of internet real estate has become incredibly valuable and strategically essential for emerging brands and businesses. These are called “exact matches” domain names, unique words that imply a strong brand, such as Extend.com, Gala.com, Universal.com, Iconic.com, First.com, Recuperate.com, and Gravity.com . To illustrate this, here is a link to several acquisitions of exact match domain names by market leaders, and case studies of the most successful founders and executives.
Ways Companies Acquire Exactly Matched Domain Names
At first, venture capital-backed companies often add a word to their domain name, even if their brand is just a powerful dictionary word. For example, the successful warranty company Extend started out as HelloExtend.com. That was before its savvy CEO and founder, Woody Levin, quickly realized that one of the most strategic steps he could take was to acquire the exact domain name for the business, Extend. com, and remove the “Hello”.
Another tactic that some companies use is to opt for a non-.com domain name, such as .io or .xyz, if the .com domain is not available. One problem with this is that customers can still go to the .com domain name instead of the .io or .xyz version, and end up on the wrong site. Another problem is that important emails are sent to the wrong address. Ultimately, a business may need to acquire the .com domain name, but may find themselves in a precarious negotiating position.
Finally, some companies will make spontaneous decisions to acquire an exactly matching domain name asset. Recent examples are Wonder.com and Candy.com, both run by some of the smartest operators and investors of the Internet age.
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The Value of Exact Match Domains
If you’re a one-word brand and product, having your exact match domain asset is the most important investment and decision you can make, and it’s both strategic offensively and defensively. .
Consider the “Super Bowl” analogy. Some companies can spend $8 million or more on a 30-second Super Bowl commercial, which is completed and measured quickly. If it works, there’s a return on investment, and if not, it’s a significant impact on that company’s bottom line.
For a similar cost, if they had purchased their exact match or .com category domain name, they would have an asset on the balance sheet that is a valuable investment, depreciable and resalable, while adding enterprise value and utility. exponential to the business. The same executives and investors who avoid a seven-figure domain acquisition are likely spending P&L money to advertise their forgettable, mismatched domain name all over the internet.
Your domain name, an essential business asset
There’s an old real estate cliché, “Location, location, location,” about the importance of being located on the best real estate. Your brand and the address to access it online is your company’s Internet real estate. This is your address in the world.
An exact match category domain provides a business with authority, credibility, conversion, and clicks – “hear it once, remember it forever” – while being an investment with significant value and returns.
Remember this very important fact: you only have one .com domain name that matches exactly. It is the rarest of assets, and therefore the most valuable. Once it’s gone, it’s most likely lost forever, and not having it could critically impact your business in many ways, including all facets of your marketing, your brand image, your fundraising and a possible future sale.
RELATED: Key steps to get a great domain name
about the authors
Richard D. Harroch is managing director and global head of mergers and acquisitions at VantagePoint Capital Partners, a San Francisco-area venture capital fund. He focuses on internet, digital media and software companies, and he was the founder of several internet companies. His full biography appears here on AllBusiness.com.
Andrew Miller, managing director of Hilco Digital Assets, a Hilco Global company, has been a leading investor and expert in digital assets. Andrew founded major marketing companies CreditCards.com and InsuranceQuotes.com, and is an early investor in Bored Ape Yacht Club NFT, as well as Thrasio. Connect with him on LinkedIn.
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