An SEO Perspective on how to Determine Domain Name Value

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Domain Name Value

Domain Name ValueWe’ve all been there before. You logon to your favorite domain purchasing service only to find that the domain name you want is already taken. Head, meet wall.

Sometimes these domains are for sale and are simply “parked,” or other times you get contacted from a domain broker who realizes your business name may be similar to something he’s selling.

This always begs the question, how much is a domain name worth and how much should I offer/pay? This industry has always seemed liked the Wild West to me. Maybe we can end this once and for all?

Let’s address the costs and potential value of a domain name from an SEO perspective but also a marketing perspective (which is just really another way of saying SEO anyway).

Here’s What You Should Know about Choosing a Domain from a General Standpoint

Back in 2007, Moz, a SEO software company, published a post on the rules for choosing the right domain name (by Rand Fishkin). These rules still apply and will somewhat set the tone for the rest of this post.

I have condensed them here:

  1. Brainstorm 5 Top Keywords

It can be good practice to have a domain that includes the keywords you’re trying to rank for. So, for example, if you are in the fitness business, something with “fitness, health, exercise, nutrition” could be a good part of the domain.

  1. Make the Domain Unique

You don’t want to get in the situation where you can confuse your domain name with that of another brand. The example Rand uses is Flickr.com and an existing site that, at the time of his post, was not owned by Flickr – Flicker.com. It seems that Flickr heeded his advice and has since purchased Flicker.com which now 301 redirects back to the main site. Look out for situations like these or those that have plural, hyphenated or misspelled versions and, where possible, avoid these domains.

  1. Choose a Dot-com

People still assume that websites end in .com so you should always seek to buy a domain with this TLD. While you can have a site that is .net or .org, you’ll still want to own the .com as well to take control of all the branded properties.

  1. Make it Easy to Type

If you have to break down how to spell the domain when you’re talking to potential customers you’ve probably selected a bad one.

  1. Make it Easy to Remember

This goes along with the above; make your domain easy to remember so that people can easily type it in from memory later on. Think how easy Amazon.com is to remember and spell.

  1. Keep it as Short as Possible

In an effort to push a lot of keywords into domain names, a lot of people have purchased really long domain names. Long domains often break the above two rules.

  1. Create and Fulfill Expectations

If possible, buy a domain that is associated with a word that accurately describes what you do. Amazon.com is an example of domain that doesn’t, WebMD.com is an example of a domain that does.

  1. Avoid Copyright Infringement

Before buying a domain make sure to visit Copyright.gov to ensure you are not violating any copyright laws.

  1. Set Yourself Apart with a Brand

A lot of times companies will buy a domain rich in keywords but that has nothing to do with their actual brand name. It is recommended that your domain also be your brand name, if possible.

  1. Avoid Hyphens and Numbers

Hyphens are amateur-hour in domain names and should be avoided as much as possible. Numbers make it hard for people to know if it is the spelled out number or the numerical one.

  1. Don’t Follow the Latest Trends

A lot of recent trends in domain names have been shifting to things like .co or purposeful misspellings. This is especially true in startup communities. Just because others are doing it doesn’t mean you should too.

  1. Use an Ajax Domain Selection Tool

I’ve heard stories from people where they say they’d use a domain name search tool from a company that sells domains, didn’t buy it, then when they went back the price had either increased or was suddenly sold and was for sale for a ridiculous amount. Remember that you can search for domain names without doing it through a service with sites like Domjax.

The Value of a Domain from a Marketing Perspective

Ok, now that we have identified some points to consider for choosing a domain we can also use this information to determine what the value is of a domain name that is already registered by someone else who wants to sell it to you from a marketing perspective.

Taking points 3, 4, 5, 6 and 9 from above, pure marketing savvy would tell you that the first indicators of a site even being worth your consideration for purchase are:

  • It’s a dot-com
  • It’s easy to spell
  • It’s easy to remember
  • It’s short and sweet
  • It’s your brand name

Adding one more to this list that may or not be obvious is the following:

  • One-word domain names

Note: While all these points need not be met to justify a purchase, the more the better.

General Value of Dot-com’s

As mentioned above, if you get your hands on a good domain name and it’s a dot-com, you can expect to pay more. If you already own the dot-com and just want to get a hold of all the other TLDs to protect your brand (.net, .co, .biz, etc.), then that would be a good way to protect your brand name.

General Value of Domain’s that are Easy to Spell

A domain that is easy to spell means that you can say it and people will be able to find it without having to go through the process of going through half the phonetic alphabet each time you try to direct someone to your site. The more basic a word is as a domain, the more value it will likely have. This is especially true for easy-to-spell words that are four to six characters (ex. art.com or Amazon.com).

General Value of Memorable Domain Names

Domain’s that are really easy to remember will merit more value. Amazon.com is the easiest domain to remember that I can think of because it rhymes (this may or may not be influenced by the subconscious brand power this domain affords). If you are seeking to buy a domain that is really memorable expect to pay more for it than a domain that is weird, like Abstentious.com or something (hey, it’s available!).

General Value of Short Domains

If your domain name is short, this makes it more valuable as it is extremely rare to find a domain that is short and that is actually a correctly-spelled word. A short domain doesn’t necessarily mean that it is a one-word domain either, LendingTree.com is a fairly short domain – under 12 characters – and is two words.

General Value of a Domain that is Your Brand Name

If you find yourself in a position where someone owns the .com of your brand name, you’re in a pretty tough spot to negotiate and you likely didn’t do enough preliminary research before choosing your brand name.

That’s the harsh truth but should be understood if you are entering a negotiating position. Still, it doesn’t mean that you’ll end up spending a bunch on a domain name because someone else owns the brand name that you went with.

For example, a client of mine who owns a flight charter company (and who I’ve had this conversation with before regarding the value of domain names), had a brand name of “Great Flight.” Unfortunately, this domain, GreatFlight.com, was not available at that time so he settled for “GreatFlt.com.”

GreatFlt.com didn’t meet a lot of my general marketing criteria for a domain name:

  • It wasn’t easy to spell
  • It wasn’t easy to remember
  • It wasn’t technically his brand name

The client asked that I help him decide what the domain GreatFlight.com was worth as he knew it was important to his branding (even though he’d already bought a bunch of shirts with “GreatFlt.com” on them!). Taking the general marketing considerations in mind but also the SEO value of a domain is important, and you’ll learn more about that below.

The story actually ended pretty well as we found that the owner was willing to negotiate. The site had no SEO value and other than being a fairly generic and easy to spell and remember domain, really had no other inherent value. I think the original owner was asking $1,500 for this particular domain but my client ended up getting off him for like $300 or something that did not break the bank. Winning!

General Value of One-Word Domain Names

Back to the general marketing criteria after a nice little story of someone who didn’t get ripped off.

If you can find a one-word domain name that meets most of the above 12 criteria you can probably expect to pay an arm and a leg for it. It’s not that one-word domain names automatically rank in the search engines or anything like that, it’s just that from a marketing and branding point of view they make a lot of sense. I guess you could say they have a lot of practical value, especially if they are short, easy to spell and easy to remember.

But at the end of the day, it’s the SEO value of a domain name that would make me suggest to a client to get their checkbook out. If you can combine the above general marketing valuation factors with the proceeding SEO values, you’re on to something big.

The Value of a Domain from an SEO Perspective

If you have a terrible domain name that gets 100,000 visits to the associated website each month a lot of the above can be thrown out. At the end of the day Google ranks individual pages, not sites based on their domain name (although this is a correlation factor).

Let’s take another one of my clients and a current domain purchasing opportunity that has recently come his way to help you understand how an SEO would go about valuating a domain from a search engine perspective. My client’s site is FitnessMentors.com and he was recently approached with the potential sale of domain FitnessMentor.com (no plural). Where possible, I’ll look at the purchase of this site in SEO terms based on the advice I gave my client with the examples below.

These are not necessarily listed in order of most importance although they can be loosely interpreted in order of value.

Keywords in Domains and Rankings as Interpreted for Value

According to a recent study conducted by Moz on search engine ranking factors domain-level keyword usage has an influence of about five out of 10 (with 10 being highly influential).  The below graph also outlines some correlations between keyword usage within the domains:

domain-level keyword usage

 

As you can see, the correlation between a search and an exact match domain name is fairly high. If you are going to buy a domain that is an exact match keyword of a keyword that you’d like to rank for (ex. custom widgets/customwidgets.com) then that definitely sets the value at a high place.

Partial matches of a keyword in a domain name (ex. search for blue widgets and your domain is customwidgets.com) then that also is something that works in your favor and increases the value of that domain. Keep in mind that just because a domain has some or all of the keywords you are going after in it doesn’t necessarily mean it will rank, but rather it is likely that whoever owns or owned that domain probably dedicated a lot of their content to ranking for those keywords which would lend itself to algorithmic bias.

In the case of my client FitnessMentors.com and the potential purchase of site FitnessMentor.com, the above benefits of purchasing a domain with exact or partial match keywords doesn’t really apply. He is not actively trying to rank for “Fitness Mentor” (he already ranks #1 for this), the intent of someone searching for “Fitness Mentor” is not consistent with his site’s offerings (he sells educational materials to personal trainers), and furthermore there aren’t a lot of monthly searches (70) for this term according to Google Keyword Planner data anyway:

 

domain name keyword value

We are getting a little ahead of ourselves here with the above keyword search volume data but the point is that other than from a general marketing standpoint, the name does not lend itself to the keywords in domain factor we mentioned above. But, since I mentioned it, let’s look at that as a factor.

Domain Keyword Monthly Search Volume

If the domain you are looking at buying does in fact have keywords –exact match or partial – you are trying to rank for, it makes sense to determine the search volume of these keywords to see how much potential value they have.

Simply go to Google Keyword Planner, sign in (you’ll need a free Gmail account), and do the following:

Under “Find new keywords” select “Search for new keywords using a phrase, website or category”:

keyword planner domain name valuation
You should see the following area where you’ll put in your keywords into the “Your product or service section” (we put in “Fitness Mentor” in this example). Then click “Get ideas”:

domain name keyword search volume

 

Next, select the tab for “Keyword ideas” to see the search volume for the particular keyword:

domain name keyword search volume 2

 

This information will show you the average number of times people have searched for that exact keyword, the competition based on a simple criteria of Low, Medium or High, as well as the suggested bid. If you’re not familiar with Google AdWords, the suggested bid amount may confuse you. These numbers could get pretty high, just check out this search for “defense attorney” and how much higher the suggested bid amount is than it is for “fitness mentor”:

keyword planner search volume

 

The takeaway is that the higher the search volume, the more competition and the higher the suggested bid, the more valuable the domain if it does in fact contain these exact words or most of them.

PageRank as a Domain Valuation Factor

Another thing I look at when determining the value of a preexisting domain is the PageRank. The higher a site’s PageRank, the more likely it is to appear at the top of Google search results. PageRank, a Google construct, works by counting the number and quality of links to a page and is indicated by a 0 through 10, with 10 being the most powerful. Google used to have a tool in Chrome where you could check this but have since disabled it. Just do a quick search for “PageRank plugin” and you’ll find something that helps you determine this number.

Not that you should hold me to this, but you could very easily apply another $1,000 for each numerical PageRank above one. For example, the site “FitnessMentor.com” that is for sale has a PageRank of two and my client’s site, as it is new, has a PageRank of zero. If we decide to buy it and do a 301 redirect of the site to my client’s, we would be confident that we would get a large portion, 90 to 99 percent, of the ranking power of that site, meaning we could likely jump to a PageRank 2 quickly based on the strength of the existing domain.

Before you go all crazy buying up domains and 301 redirecting them you should learn more about that process and involve an SEO and development team who is familiar with the process. Not to get too far off topic, but in many instances you want to do 301 redirects page by page rather than just the entire domain as individual pages/URLs (ex. customwidgets.com/blue) can have value too.

PageRank may be dead, so don’t say I didn’t warn you. Google has said that they wouldn’t be making any updates to the PageRank algorithm so it may not be the most accurate thing around to determine the authority of a domain or page. This leads us into a nice little segue of other tools that are updated regularly that were built to emulate Google’s PageRank.

Domain Authority as a Domain Valuation Factor

 

domain authority

Domain Authority is a lot like PageRank in that it is a calculated metric for how well a domain is likely to rank in the search engines. It was developed by Moz and is based on a scale from 1 to 100 (with 100 being highest), and is in fact, maintained regularly unlike Google’s PageRank.

It is made up of an aggregate of metrics like:

  • MozRank: a link popularity score
  • MozTrust: a link trust score
  • Link profile: a number of varying factors related to types of links on and point to a site

A site with low Domain Authority is in that 1 to 20 range, moderate Domain Authority in the 20 to 40 range, and pretty high Domain Authority in the 40+ range. This is not factual data, just the opinion of an SEO and my experience with websites.

In the case of my client’s prospective purchase, the site FitnessMentor.com has a Domain Authority of 27, which isn’t amazing, but it is not too bad either. Comparing it to the PageRank of two, this seems about right and you’ll find that they’re tends to be some correlation there as in, if one’s high, the other tends to be high too.

You can determine a domain’s Domain Authority quickly with the Moz Toolbar for Firefox or Chrome.

Backlink Profile as a Domain Valuation Factor

The above PageRank and Domain Authority metrics do take into account the backlink profile. While you could by all accounts take the marketing value, the PageRank and Domain Authority and make an estimate to how much a domain is worth this might not be where you want to stop your search.

The reason I say this is for the exact same issue we are going through upon trying to evaluate the FitnessMentor.com website. Before I dig in you’ll need to know that you’ll need to have some SEO software to do a backlink profile analysis. You can use something like Moz’s Open Site Explorer or Ahrefs to see what kind of links are pointing to the domain you are consider purchasing.

Some of the most important link metrics you’ll want to look at are:

  • Number of Root Domains linking to the domain: in general, more is better.
  • Total number of links: in general, more is better although if the ratio of referring Root Domains to the total number of links is low, it could signal a warning.
  • The anchor text of the links: anchor text is highly correlated with high-rankings and an inspection of this could reveal a lot.
  • The authority of the links: determining if the links that point to the site that you want to buy are from other high-quality, authoritative websites or spammy, low-quality sites.

When I analyzed the PageRank 2, Domain Authority 27 site of FitnessMentor.com for a potential purchase, my first impression was that this would be a good buy for my client if he could get it in that $1,000+/- price range. Then I looked at the backlink profile and scratched my head a bit.

What I found was that the site only had about 20 referring domains linking to it, which is by no means amazing (I build some of my clients more than 20 links a month). Then I looked at the number of total links which was over 22,300. This was a WTF moment. This means that there are a bunch of sites that probably have a link to this site either in their footer or on the sidebar of their site. In other words, they link to this domain on every page of their site which can be a red flag as a lot of sites that do that sort of thing are spammy or it could just mean that they are owned by the same person.

In the case of FitnessMentor.com, it appeared to be the latter; another one of their web properties or partner sites was linking to it in the footer. This is not a deal breaker, it just means that the total amount of links is not representative of the popularity of that domain as the amount of referring links to the domain would be.

When I looked at the anchor text of the links pointing to the site I found that most of them were just names of the developer of the site who commented on a lot of blog sites. These links were all useless from an anchor text perspective and are borderline damaging to the quality of the link profile. I even found one piece of anchor text to the site that was, no joke, “bent over the car free video chat slight bend nude and porn pictures.” This is not good.

Finally, the authority of the sites that linked to this site was low with the exception of one link from eHow that was unfortunately nofollow.

In all, the backlink profile sucked and had some serious red flags as I was not going to let some site that had a decent little PageRank and Domain Authority score ruin my client’s site because it had been penalized for having a shitty backlink profile. I told the client that I wanted to get access to the other guys Webmaster Tools before making a decision and to see if there were any violations of Google Webmaster Guidelines as noted in the Manual Actions section of the site’s Web Master Tools.

At the time of this writing I don’t yet have access to this. I told my client that if I he wants to buy the site there may be a fair amount of link cleanup to do, costing him more in SEO because “homie don’t play that.”

Existing Website Content as a Domain Valuation Factor

This is an important consideration for value that is often overlooked. It is also one of those things that when a domain is purchased, the new owner destroys a lot of the SEO value because they don’t take the time to determine the value of all of the pages (URLs) on the site.

For example, let’s take the FitnessMentor.com website for example. What we are really looking at here is an entire website, not just a domain. This may or may not be the case in your situation but if you are looking at buying a domain and the existing website, you’ll want to pay close attention.

Upon investigation of the site, I found some blogs and pages that I feel are of decent value and could potentially rank in the search engines or could be used as foundations to build better content off of. Not to go crazy here, but the idea would be to grab that content, put it on my client’s existing site, then 301 redirect those old, individual pages to the newly created pages on my client’s site.

Rather than grabbing a domain and saying let’s point A to B, you are going through it and finding the content that may be valuable to your end-users and determining if it is worth saving.

If you find that a domain you want to purchase has a lot of good, useful content that can be used on your existing site, it has more value to you. The owner of the other site doesn’t need to know this, but you will need to have your development team involved to perform the 301 redirects accordingly.

Other Associated Web Properties as a Domain Valuation Factor

Where there’s one there’s usually another. Website owners tend to have more than one property and often have taken their chances at multiple ventures. Before you pull the trigger on the purchase of a domain, make sure to ask the current owner if they have any other associated domains or web properties that are connected to it.

This also includes but is not limited to social media accounts, blogs (ex. blog.customwidget.com) or other digital properties that may have some value. If, for example, you find that the potential domain also a Facebook and Twitter following of 100,000 relevant people, maybe they can agree to give you ownership of those accounts as well.

Domain Age as a Domain Valuation Factor

Another thing that is of very small consideration but worth mentioning is domain age, something that Google has said is not super important but is relevant. You can usually find the age of a domain and how long the owner has owned it by using a service like Whois.net.

Perhaps more important, from an offering point of view, is determining how long someone has owned the domain. If you use the Whois.net service you’ll find a “Creation Date” and that will let you know how long someone has potentially owned a domain (barring the fact that they may also have purchased from someone else).

Still, if you find a domain that has been owned for 10 years and figure that most non-premium domains are about $10 a year to maintain, you can assume, all other factors mentioned above aside, that the owner will want to get his $100 back. This is on you whether you think they deserve it or not.

Domain Name Calculators. Are They Accurate?

Personally, I don’t think software can be quite as subjective as a human when determining the value of a domain name. While some objective analysis is important, a lot of the characteristics of a domain name’s value should be examined relative to your business and its goals.

For starters, a domain name calculator is going to provide very little SEO background into what a site is worth or what it ranks for. Some of the criteria one domain name calculator used to determine the value of a domain included PageRank, the number of pages in Google’s index, its social media visibility, the number of backlinks as well as the estimated traffic.

While these are important metrics, I found that they were completely inaccurate compared to the analysis I performed with my many SEO software tools. In fact, one of these domain calculator sites (whose name I’ll leave out) placed the value of the FitnessMentor.com site at over $7,000!

Keep in mind that this site only has a PageRank of 2, very few pages that are actually non-product specific (which would not be valuable to anyone else), no social visibility (according to their analysis), no backlinks (according to their analysis), and five daily visitors (according to their analysis). I’m not sure where they put all their weight but this site is clearly not worth over $7,000.

Maybe sites like these are why domain name sellers tend to be completely on a different planet when it comes to determining what their sites are actually worth.

Negotiating the Price of a Domain Name

If you do decide that you want to buy a domain name from a private owner or a brokerage, expect the typical “make me an offer” response. For some reason these people always want you to make the first move and for some reason they always seem to be insulted when you procure your bid.

Just make sure you try to understand how they valuate their domain and hope that they don’t say with a domain calculator site. If you know a little about what they are using to justify their cost, you can break that info down and likely prove them wrong (without insulting them).

Now that you have read this post and know how to value a website properly, you can come at them with an army of facts that justify your bid. Just because someone is an ass for buying a domain that has no inherent value doesn’t mean you are too.

However, if you find a domain that checks off a lot of general marketing valuation criteria as well as the SEO valuation criteria you may be prepared for a battle. Whenever possible, make it known that you know a lot about what really makes a domain valuable without letting them know how many of those things their domain has.

For example, if the domain has a high PageRank and Domain Authority but has a poor link profile, don’t tell them about the good things. Let them know that you’ll have to spend hours and $100s cleaning up the bad links they built and that greatly devalues their site. You’d probably be better off picking apart the general marketing valuation items where possible as many domain owners aren’t going to know what they hell you’re talking about when you tell them that the ratio of referring domains to total links makes the site less valuable anyway.

What are your experiences with trying to buy domains? I’m sure there are some good horror stories as well as success stories. Did I miss anything that you’d consider when buying a domain or that needs to be thrown into the mix?

Daniel Lofaso
Daniel Lofaso
Daniel E. Lofaso is the lead SEO and owner of Digital Elevator and is also the founder of startup SwellSpy. Connect with Lofaso on Twitter and LinkedIn

2 Comments

  1. Zac Johnson says:

    Hey Daniel, great article and data points. Domain names are such a fascinating industry to watch! Kills me to think I could have registered so many six figure domains for $79 back in the late 90s 🙂

  2. Hi Zac, thanks for the comment. Domain names really are an amazing industry and I feel there is probably a lot more to come in this arena. Maybe .com’s will be replaced by something else more credible but for now let’s hope the above helps some people save some money and helps them negotiate.

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