Domain Name Changes Can be Costly

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I came across an article on Hacker News that discussed a major layoff at a logo and design company called Looka. According to the article, the company laid off 80% of its employees. The layoff followed a corporate rebranding, as the company changed its name from Logojoy to Looka. Interestingly, the Looka.com domain name was acquired via Sedo in September of 2018 for $65,150.

Apparently, the domain name change that went along with the rebrand was the culprit behind a major loss of traffic. Here’s an excerpt from the article found on BetaKit:

“The CEO explained that with the rebrand the company expected and was ready to see a 20 to 30 percent drop in organic traffic due to the domain switch. “That was sort of the standard [of] what to expect, 20 to 30 percent. And expected to recover in three to six months,” Whitfield told BetaKit.

Unfortunately, that recovery never took place. Whitfield claimed that with the domain switch from logojoy.com to looka.com, Looka ended up losing 80 percent of its organic traffic, which had previously accounted for 50 percent of the company’s revenue.”

From what I understand, the company undertook the rebranding effort because it was expanding its offering beyond logos. I can see why the company wanted to go with a more generic brand name in Looka rather than the original brand name, which was more specific to logo making.

When selling domain names, domain investors often tout the benefits of a domain name upgrade, and I think this article highlights one of the perils of a domain name switch. I presume there are plenty of companies that successfully rebranded, but investors should understand that there is a lot that goes into a rebranding decision.

8 COMMENTS

  1. One of the culprits here is Google, and their latent, therefore subjective, search engine algorithms; why should a rebrand do any harm to an entity at all?

    That’s why government should intervene in internet search activities. There should be “forwarding”, when someone or a ranked company changes name, or address, those factors must not be treated as variables in the algorithm. If a company ranks number one, then changes their name, they should continue to rank number one with an asterisk noting the name change.

    • Agree,google is messing up alot of branding .
      When Google decided to get into the travel business,the stocks at expedia and other travel sites took a big hit.
      Expedia stock took a 28% dropped in just a day.

  2. I always thought that “upgrade” is going from a more complicated, longer name to a more generic (or very short), but this is the case of switching one brandable to another brandable.

  3. I realize this is ‘Monday quarterbacking’ but the smarter thing to do was run parallel websites. Keep the money maker running and develop a new website on the new domain with the new services.

    I am sure that strategy was discussed but was voted down by the top decision makers.

  4. Nothing special about “looka”. Look may have given them an advantage, but looka come on now. A company can make any name a success but not the other way around.

  5. Oops would like to rephrase that, “A Company with vast resources can make an irrelevant domain name work, but a great domaIn can make a company with little resources work”. Aaaargh probably could have said that better but you can get the gist of it.

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