Are Premium Domains Worth It?

With hundreds of new domain extensions flooding the market in the coming months, the huge shift in website browsing over the past few years from PCs to mobile devices, and the growing popularity of social media marketing (Facebook, Twitter, etc.), one might wonder if buying a premium .com domain is worth it anymore. The answer depends on who is asking the question:

1. If you are a domain developer, it is much harder to get ranked well in the search engines than it used to be. In the old days, having a killer domain and a decent site was enough to get lots of search engine traffic. Now, it is a crapshoot. Over the past few years I built sites on some of my best domains (Pastries.com, Weights.com, Physical.com, etc.) and they got almost no traffic at all. I also spent thousands of dollars for unique content on lower quality domains, and almost all of those received no traffic also. But, I have talked with many people who are able to create new sites and that do get good search engine traffic, so I know it is possible. Many times these SEO experts choose domains that aren’t as good sounding because they want specific keywords in them, so I am not sure if they would prefer a premium domain if they could get one. The main point is that having a premium domain no longer guarantees you will get any traffic once you develop a site.

I have had more success with buying top domains in smaller niche markets, but only if I have the absolute best domain for that topic. Some examples of my sites where I rank at or near the top of Google’s search results are NurseryRhymes.com, WaterTowers.com, Metaphors.com. I did nothing different on these sites than I did on many similar sites using not as good domains, and I did no marketing or site promotion for them. The results sound good until you take into account what I paid for each domain:
NurseryRhymes.com – I paid $13,000 for it and it makes around $500/month.
WaterTowers.com – I paid $2000, it makes $5/month.
Metaphors.com – I paid $2500, it makes $50/month.
I am happy with this income, but they are a get rich quick type investment, and more importantly for every domain like those that did well, I bought another domain that made nothing after I developed it, so after taking the losing domains (OfficeHumor.com, DumbVideos.com, LocalArea.com, etc.) into account I did not make any profit at all.

One thing I should clarify is that even though all the sites I build are different (i.e. not a simple template type site), none of them are sites that I advertise or promote. If you are looking to develop a site where you are going to invest money on marketing, then having a great domain may give you a significant advantage. My results are strictly search engine related.

Based on all of this, as a domainer, I have stopped developing my premium domains and focused on selling them instead. It is not that I can’t make money developing them, but I hardly ever seem to be able to make more money than I could get by selling them instead.

2. If you an individual or small business starting a site, buying a premium domain can make you stand out from the competition, and it gives you instant credibility with your customers. It also should help you rank higher in the search engines. Keep in mind that if for some reason your business does not work out, you should probably be able to sell the domain for what you paid for it, so you don’t have much to lose by investing in a domain.

3. If you are a big company, in my opinion, it is a no-brainer to get a premium domain. You may not want to use it for your primary domain (company home page), but there are lots of other ways to use it. Large companies usually spend millions of dollars a year on marketing, so to spend $50,000 or $100,000 to have the best domain in your industry is well worth it. Plenty of research has shown that ads with premium domains get more clicks in Google, and get higher response rates offline also. Plus, unlike advertising, it is an investment.

4. If you are a domain speculator, now may not be a good time to invest in premium .com domains. I don’t expect the domain market to crash, but there is a lot more risk now then ever before due to all the planned new domain extensions. Much like when 866 and 877 toll free numbers first came out, it created a lot of confusion, and for the first time allowed almost any company to get a catchy toll free number when 1-800 previously was the only option. But for many years, people would call the 1-800 version of the phone number instead of the new 866/877 version, just like people many times go to the .com domain by mistake even though the ad they saw was for a .net/.org site. Now many years later do younger people still get confused about the various types of toll free numbers? I don’t know, but even if there is no longer confusion, it took many years for this to happen. So, just like with phone numbers, adding all these new domain extensions creates an element of risk that did not exist before when .com was the undisputed king.