Daily Archives: March 9, 2009

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$5.1m for a Domain Name

The domain name industry is gasping this week at the news that the domain Toys.com was sold at auction for an eye watering $5.1m.

As reported over on Techcrunch, the bidding went back and forwards for hours, but the eventual winner was High Street retailer ToysRus.

Of course many are asking: how can a domain name be worth that much to anyone? Lets look at why ToysRus went for it.

1. Getting the address bar traffic

First off, people navigate the web in different ways. As previously mentioned, many type the website address directly into a search engine. Lots of others do the exact reverse, and type a domain name directly into the address bar. So all those millions who are interested in toys and therefore type toys.com into the address bar will now be taken straight to the ToysRus website. If that equates to 1 million people, who each spend £10 at Toys.com, ToysRus will have recouped almost double their original investment.

2. Getting the Search Engine traffic

Those of you have read our search engine optimisation guide will be familiar with the factors that help your website appear high up in the Search Engine Results Page (SERP) for a particular keyword. One very important way to boost your position in the SERPs for a particular keyword is to have that keyword in your domain name. Now ToysRus can use the toys.com domain name, their opportunities to gain more highly relevant traffic from search engines are improved. A quick look at the Google keyword tool will tell you that there were over 300,000 searches for toys in February alone. Add up all the variations and there are ten times that. If the ToysRus can get just 10% more of this search traffic by using the Toys.com domain, its probably worth the money.

3. ToysRus is a (slightly) confusing name

We’ve all heard of Toys ‘R’ us – they’ve spent enough on television advertising over the years to make sure of that. But if we were all asked to search for their website, how many variations of their name spelling would we get? Here’s just a few that I can think of

Toys r us

toysrus

toys are us

toys ‘r’ us

At the moment these variations and thousands of others are opportunities for ToysRus competitors when it comes to search engine advertising. At the moment ToysRus need to make sure that they are top of the organic and sponsored listings on all the search engines for all the variations of their name. That’s quite a big job – and a big opportunity for competitors to get in and ‘steal’ that search engine traffic by appearing at no. 1 instead. Put it this way, if you wanted to buy a Thomas the Tank Engine model and you went to Google and typed in ‘thomas the tank engine toys are us’ and another website (website X) appeared in the top position for this search term (Toys are us), AND they had a Thomas the Tank Engine cheaper than ToysRus, who would you buy from?

Most people would carry on looking for the real ToysRus website, but a significant minority would by from Website X.

And if their shopping experience was good (the product was cheap, delivery was free and on time, customer service was clear) they might well look to buy from website X second time around. Maybe they buy 5 products a year… for 10 years… and tell 2 friends who do the same… You can see that pretty soon company X is reaping the rewards for getting their website to number 1 for the search term ‘toys are us’. And the money spent with company X is money that isn’t spent at ToysRus. Even though the person originally wanted to buy from ToysRus. The effort and expense of defending the ambiguous ToysRus name is huge.

4. Owning the Real Estate

At the moment in the offline world many turn to ToysRus when buying a toy. But for a variety of reasons (they don’t like the brand, the shops are too big, they’re often out of town) many don’t. If ToysRus can dominate the online toy buying market by effectively blending the ToysRus brand with the generic ‘toys.com’ domain, their dominance of Internet toy shopping may be even greater than their high street success. Only time will tell.

So you can see that $5.1m may be a small price for this particular domain name.

How much do you reckon yours is worth? Remember, you get a free domain with all max packages and above. If you’re inspired by the toys.com story then search for a domain name now!

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