Checking in on the Domain Aftermarket with Sten Lillieström!
“Spending a $10’000–100’000 one-time cost on a domain name, providing you with a channel for your entire brand, can be a smart investment”
The Aftermarket for domain names has kept on thriving throughout the pandemic. We were curious about the overall development and the latest trends, so we asked Sten Lillieström, Domain Aftermarket expert, for a short chat.
Hi Sten! From what we can understand, the Aftermarket for domain names has been thriving this past year, putting a record-breaking year behind us. What would you say is the reason for that?
More and more companies realize that there’s a value in having a domain name that matches their trademark. If the name doesn’t match the trademark, there is a clear tendency for wanting to upgrade the domain name – often to a .com address that matches the company name. Because, of course, .com still is “the icing on the cake”.
Many .com names are already taken, and therefore the pressure on the aftermarket is increasing. More and more companies “need” to purchase an already registered name instead of registering a brand new one.
Having a domain name that matches the brand and trademark, this incentive is connected to a company realizing what value is in the name. How much is it worth having that something which enables you to reach your target group, when the noise reaching the users is constantly increasing? Each month, there is an ever-increasing competition in search results for your ads and sales to actually reach your end clients.
We can see that companies are more willing to invest in a good domain name to reach their audience and that they understand the value thereof. Compare this with the cost of having an app on App Store, which can cost you a percentage of your income throughout the entire usage period. Then, spending a $10’000–100’000 one-time cost on a domain name, providing you with a channel for your entire brand, can be a smart investment.
How has Covid-19 affected the Aftermarket?
There is an air pocket when it comes to domain names and the Aftermarket, which overall rather has received a boost. There was a dip when Covid-19 first struck and affected the world in a manner that maybe nothing else has before. The prevailing idea was that all markets would dip, and so also the domain name market, but that was just for a short moment. After two-three months, it went straight up in an almost perfect line.
That’s simply because of the increase in demand. How we should interpret it, I don’t know. But I guess that when everyone is sitting at home and cannot do what you otherwise would do, maybe people think a little extra about creating a business. Maybe more people have needed a domain name during the pandemic. New business models are being constructed now, and they need domain names, everything is becoming more digitalized. Granted, this was a trend already before, but I think the pandemic accelerated it quite dramatically.
What trends have you seen during the past year?
The trends we can see are that the really short names, which are stable in value, are still very high in demand. But not only short names are of value. Usually, it’s also about often used expressions. Names that tell you something but that can still be protected trademarks.
Are there other factors that you believe will be relevant or affect the Aftermarket in the near future? Will it be saturated or not?
The number of interested parties is increasing, which has the effect that the number of available names decreases and the prices in turn are rising. The market keeps rising, the digitalization isn’t about to slow down, and the will to start new business won’t disappear.
The prices will, naturally, fluctuate. If you look at the largest sales, you will also see the price tags becoming higher and higher, and we will probably also see that the lowest sales values are increasing, too – and they make up the main bulk of the transactions.
If you lump all the “smaller” sales together, you get a decent idea of what the market looks like.
As mentioned, we can see that it is mostly .com domains being sold on the aftermarket. New TLDs don’t affect the aftermarket much.
Do you have any advice for companies who are thinking about buying an already registered domain name, what should they consider before contacting the owner of the name they want?
If the name is taken, you might have to buy it. And sometimes that can end up being a high cost, depending on what identity you’ve chosen and what phase you’re in. A piece of advice for companies who are thinking about buying a name that is important for their business and matches the company name, is to get help from a domain broker.
More often than not, it’s not all that easy, finding the right owner, contacting the seller, negotiating the price and striking a good deal. It’s especially important to get help with the actual domain name transfer process and the money transfer, so it’s all secure and according to the book. To obtain the domain at a fair price you’ll need the right arguments and an understanding of the value and the history of the specific domain. Getting help from an expert will help create a clear picture of what the domain name might be worth and to go about purchasing it at a reasonable price. There’s also a risk of the seller driving the price up if there’s a negotiation without an intermediary.
Another aspect is that it’s easy to mess up an opportunity if you attempt it on your own, simply by using the wrong wording if an owner has slightly too high expectations.
I believe that there is a large insecurity among many who need a specific domain, which in many cases lead to them not taking the plunge at all. And that’s a pity, because the right domain name is important in more ways than just one, and it’s usually very possible to come to an agreement. Those who did take the plunge often testify how valuable it has been for them.
Thank you for this interesting chat Sten!