There have been some high-profile recent acquisitions of internet real estate in the form of premium, dotcom domain names, including NFTs.com (non-fungible tokens) for a reported USD 15 million and HubSpot’s acquisition of Connect.com for USD 10 million. This shows only one thing: exact match keywords have become important digital assets. Premium internet domain names are carrying their own value now.
Before Google’s arrival, people used to navigate the internet by typing a keyword or domain name into their browser. As per Richard D. Harroch, Managing Director and Global Head of M&A at VantagePoint Capital Partners, having a world-class domain name and brand was almost like owning a “TV network,” but one on a global scale and without walls. Before the late 1990s (the timeline of Google’s arrival), businesses used to focus on one-word, generic domain names representing a massive global category, such as Sweeptakes.com or Home.com.
“Recently, a new type of internet real estate has become incredibly valuable, and strategically mission-critical to brands and emerging companies. These are called ‘exact match’ domain names, single words that imply a powerful 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 exact match domain name acquisitions by market leaders, and case studies from the most successful founders and executives,” Harroch noted.
Venture-backed businesses will often add a word to their domain name, a simple yet powerful one. For example, the successful warranty company Extend initially began as HelloExtend.com. This was before its CEO and founder, Woody Levin, realised that one of the most strategic moves he could make was to acquire the company’s exact match domain name, Extend.com, and drop the “Hello.”
Companies also use another tactic, when it comes to acquiring exact match internet domain names, by opting for a non-.com domain name, such as .io or. xyz, if the .com domain is not available. However, there is a problem with this approach, as customers will end up going to the .com domain name instead of to the .io or. xyz version, thereby visiting the wrong site. Also, important emails get sent to the wrong address. In the end, a company may need to acquire the .com domain name, but may be in a precarious negotiating position.
Some companies will make out-of-the-gate decisions to acquire an exact match domain name asset. Recent examples of this are Wonder.com and Candy.com, both led by some of the smartest operators and investors of the internet age.
If you are a single-word brand and product, having your exact match domain asset is the single most important investment and decision you can make, something which will be both offensively and defensively strategic.
“Consider the ‘Super Bowl’ analogy. Some businesses can spend USD 8 million or more for one 30-second Super Bowl commercial, which is over and measured quickly. If it works, there is a return on investment, and if not, it is a significant hit to that company’s profit and loss statement. For a similar cost, if they had purchased their exact match or category .com domain name, they would have a balance sheet asset that is an appreciating, amortisable, resalable investment, while adding exponential enterprise value and utility to the business. The same executives and investors who shun a seven-figure domain acquisition are probably spending P&L money to advertise their forgettable, non-matching domain name all over the internet,” Harroch remarked.
There is an old real estate saying, “Location, location, location,” about the importance of being located on the best real estate. A business’ brand and the address to access it online become an entrepreneur’s internet real estate, his/her address to the global audience.
An exact match category domain provides a company with authority, credibility, conversion, and clicks. In conclusion, it can be said that a match .com domain name is a business’ unique asset, which is both scarce and the most valuable. Having secured a domain name will decide your business’ direction in many ways, including facets like marketing, branding, raising funds, and future sales.