Before we talk about why a business owner should buy a premium domain name, we need to first define what a premium domain is. A premium domain is a domain that has stand-alone value, without regard to any added-value such as PR, traffic, or revenue. Typically, there are two things that would make a domain premium: dictionary word domains with a high volume of exact match searches (1-2 keywords) or short character domains consisting of letters or numbers (2-4 characters).
The TLD extension also factors into the value of a domain. .COMs are and have always been king, followed by .NETs and .ORGs. .INFOs have been gradually climbing in demand and value over the years. A .COM can increase the value of a domain by 10 times or more over the same domain using a .NET or .ORG TLD.
How Much Does a Typical Premium Domain Go For?
It varies greatly, depending on some factors like where it’s sold, how much promoting has been done, market demand, comparables, appraisal value, etc.. Some sell for thousands, while a handful of them reach and surpass the million dollar mark. Obviously, most small to medium businesses won’t be able to fork out 5 to 7 figures for a domain name, but there are plenty of good domains on the market that may fall within the budget of a few thousand.
What Makes a Premium Domain Name Valuable?
There are several reasons why a premium domain is not only valuable, but also in high demand.
1. Adds Credibility. Having a premium domain name adds instantly credibility. A premium domain shows that the business owner is serious about their business, and willing to invest money into their brand. Also, it is highly unlikely that a scammer or spammer will invest that kind of money to conduct their illegal activities.
2. More Brandable. Nice clean domain names that are short and catchy are more widely recognized. It is also easier for people to remember and revisit.
Examples of some companies using premium generic keyword domains:
- Barnes & Noble owns Book.com, Books.com and BN.com
- Dreyers owns FrozenYogurt.com
- 1-800-Flowers owns Flowers.com
- Bank of America owns Loans.com
- Citigroup owns Finance.com, Mortgage.com and StudentLoan.com
- Office Depot owns OfficeSupplies.com
- Enterprise Rent-a-Car owns RentalCar.com
3. Type-in Traffic. Some premium domain names receive a considerable amount of type-in traffic. This happens when a user types in a keyword or keywords into their web browser and simply adds a .COM to the end of it. With type-in traffic, the user completely bypasses the search engine and goes directly to the website. This is also known as Direct Navigation Traffic, and it is considered one of the best converting types of traffic.
4. Domain Strength. Premium aged domains typically have pre-existing backlinks, PR or traffic. Although these elements are not a prerequisite for premium domains, they do add value.
I wouldn’t recommend that you buy a premium domain name with the expectation of receiving a bunch of type-in traffic. The reality is, type-in traffic is dying down as more people rely on search engines to navigate the web. Besides, type-in traffic really only happens with super-premium domains. If anything, you should consider the other factors that make premium domains great: credibility, branding and domain strength.