Monday, November 15, 2010

What Makes Toys.com Worth $5.1 Million?

by Steve Khzakia

 

At the beginning of 2009, America’s number one toy retailer, ToysRUs, survived the bidding battle over the domain Toys.com and anted up $5.1 million for it. Some people were flabbergasted, wondering why on earth anyone would pay that kind of money for a domain name. Leaving off the dot-com part, that is more than a million dollars per letter. Does this sale represent some sort of new dot-com mania, or is it a rational business decision and investment? A brief background in domain names will help clear this up.

 

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image from http://www.funpub.net/

 

Your actual Internet address is based on the Internet Protocol (IP) standard, essentially a unique number string divided by dots, or periods, that help maintain the hierarchy. Since it would be difficult and cumbersome to refer to the Toys.com site as, say, http://67.192.43 or some such thing, there are computers called Domain Name Servers that will point browsers to the named domain. Generally speaking, your domain is typically the name of your business (online, brick-and-mortar or both) and this should be the same that you have been building an image for since you founded it. Why change now?

 

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image from http://vi.sualize.us/

What is right?

Choosing the right domain name for your online presence involves both common sense and, at best, uncommon creativity. The name will work toward enhancing your image and as well as your marketing efforts. It can really help bring more traffic to your Web site. This is what makes Toys.com worth the money, or at least arguably so. It is not that so many people will type Toys.com into their browsers, although plenty will, it is that untold numbers of searches will include the words toy, toys and so on. The word is short, typing it is fast and being redirected to Toys.com will likely be the very first option on the search results page. To get it right (or as right as you can in changing environments!), here are some tips about domain names:

 

Simple spelling: If spelling, saying or typing your domain name is tricky, pick another one. You do not even want to know the number of visits you might lose because Zzyzzx.com is a unique but confusing name. Pick something simple.

 

Short and sweet: At the beginning of the Web era, the name-and-number regulators at ICANN (the Internet Corporation for Assigned Names and Numbers) allowed just 23 characters but the limit is now 63. This made more names possible, but also helped some people create confusion. Do not be one of the confusing. Keep it short and sweet.

 

One of a kind: Do not host your Web site with a free or low-cost host that will make it a subdomain. If your name is not unique and clearly identifiable, you lose visitors.

 

Memorable: Your want you domain name to be easily remembered so that Web surfers can type in your name whenever they need to. Many net users will not bother to search for your Web site if the name is difficult and they keep forgetting it.

 

Related to the right category: The name should at least give some clues as to the business you are in, what you are selling or doing, etc. Some names will defy this rule (Yahoo! and Amazon come to mind) but they are usually pioneers and got people to reverse the normal route of association. This is not likely to happen for you, so do not be cryptic.

 

Alphabet: The fact that A still comes ahead of Z can make a big difference if a search returns a lot of results. Names starting with A will be listed at the top, while the Z names will sit at the bottom. This can really make a measurable difference on the amount of traffic you can expect to get from directories.

 

Generic or exclusive?: There continues to be a great deal of debate about domain names being generic or exclusive. While generic domain names should result in more traffic, generally speaking, they certainly do not make for strong, identifiable brand names. The solution? Do not give your business a generic name, but register as many generic names that relate to it and redirect them (via those DNS computers we mentioned earlier) to your main site.

 

Bottom line

 

Domain names can lose you visits and money, be revenue neutral or actually contribute to your profit margin. How well they do so is a function of many different variables, and there is not sure and certain formula for success. However, there are certainly trends to identify and going on 20 years of experience with how domain names work in the real (and virtual) world. Give some thought to it, and you may find that you can sell one of yours down the line. Perhaps not for millions, but there are plenty of domains sold every day for hundreds and thousands of dollars. In fact, there are entrepreneurs who make their fortunes creating, trading, selling and buying these names. Even if you do not do that, applying some of this new knowledge to your own Web presence might help you more than you know! 
 

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Great article from ReviewitOnline! ~ Michele

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