I was going to write this response to Sahar on his blog, but I decided to just post it here since it encompasses more than one post. I have a great deal of respect for Sahar and some of the things he has done in the domain industry. Seeing Sahar build some of his domain names into business has helped spark my interest in development, and I believe he has been instrumental in getting domain investors to begin to develop their valuable domain names. However, I disagree and am a bit confused by some of the things he has recently said.
Before I begin, I want to define what I am referencing when I speak of geodomains that are worth a considerable amount of money, and what I blog about (unless previously specified).
1) .com only
2) City with 100,000 population, a large tourism industry, a center of business activity, or a US state
3) Domain name must be the exact spelling of the city
There are plenty of other geodomains, but these are generally what I consider geodomains when I talk about the industry in general.A few weeks ago, Sahar provocatively wrote a blog post entitled “Are Geo Domains Overrated?” He evaluated his thoughts on what to do with geodomains other than PPC, and the answer is either development or resale. The gist of the discussion on development is that it is very difficult (and I agree), and regarding resale, Sahar said, “To me looking for end users is an extremely tough proposition. I would not consider that a viable option.” Ultimately, Sahar’s concludes, “It is my personal opinion that while today Geo domains aren’t an attractive proposition (and we do own a few), in the near future, possibly 2-5 years, they may be.”
To address this topic, I agree that geodomains should be developed to yield their full value. They are expensive to acquire, and if the owner wants to generate revenue, development is the way to go. I do disagree that looking to sell the domain name is difficult, as I have received significant offers on Burbank.com – which I have rejected in favor of development. I know it wouldn’t be difficult to sell this name or Lowell.com, based on the response I’ve received in the Lowell area when speaking about the domain name and website.
A few days ago, Sahar wrote another post about geodomains titled, “The Other Side of Geo.” Sahar cites my blog and Rick Latona’s newsletter as sources of geodomain discussion, in addition to Associated Cities and Castello Cities press. Sahar believes, “majority of the people who promote Geo domains are doing so not because Geo is doing great but because they are invested in Geo.”
I am a bit insulted by this in respect to the reference to my blog. I talk about geodomains because I happen to be developing two of them, not because I need to increase their value or increase recognition. If anything, I would like the value to decrease so I can buy more of them – as I have tried with my $100k offer for a large east coast city .com domain name. I paid what I was comfortable with paying, and I would pay the same price in a heartbeat without so much as a second to contemplate it – as I am sure many others would agree. Also, geodomains are hot and in demand because supply is very limited for decent ones – because most good geo domain owners won’t sell it.
Additionally, Sahar wrote what most people would agree, “In terms of cashflow performance, in comparison to other domain categories, Geo domains are extremely over rated.” Yes, I agree that Lowell.com would only make $2-3/day in Adsense revenue, but I am making more in hotel/job revenue, and the traffic and revenues continues to grow. When I finish with Burbank.com, that will make even more money in hotel revenue, as that is more of a business/tourist center than Lowell, Massachusetts.
Today, Sahar followed all of this up by concluding, “Truth is, after thinking more about it, Geo domains, in term of Domaining, are extremely overrated.” Although I don’t own any parked geodomains to offer a factual assessment, I do agree that geodomains aren’t a great investment vehicle if you plan to only use a PPC model on them. However, saying that they are overrated in terms of domaining is like saying that undeveloped oceanfront property on A1A in Palm Beach, Florida is overrated.
For those who know the area, this is some of the most exclusive property in the country, and there is barely any undeveloped property on A1A in Palm Beach. The property that is undeveloped is generally not for sale or may be for sale at astronomical prices. This property is also some of the most resilient property in all of Palm Beach county, and it hasn’t taken much of a hit when other areas of Palm Beach County has.
So in terms of domaining and simply buying a geodomain name for PPC, yes, they may be overrated, but I think most domain sales would be considered overrated if you just looked at them based on the PPC value (numerics, LLL.com, .mobi….etc). However, I would certainly be willing to pay overrated prices for geodomains. Hopefully when Bido launches, they will be able to offer some great geodomains for sale 🙂
Excellent post. It’s fairly difficult to obtain much PPC info for great city.com Geodomains because almost all are developed.
On the other hand, parking a powerhouse Geo like a Dallas.com or Nashville.com would be analagous to buying Seabiscuit to offer kiddie rides.
Tell that to The Las Vegas Convention and Visitors Authority and others like them wasting a $188 million annual budget on secondary domains like govegas.com. They are the beginning and endpoint and I’d rather be sitting with David’s portfolio then the critics on the day when they “get it” because they will.
Elliot & David,
Having a one word USA city.com domain is certainly going to get your foot in the door with advertisers and give you a pop in search rankings.
But at the end of the year, after you develop your site, maintain your linking strategy and get traffic coming in, the advertisers are going to pay more for the eyeballs seeing their ads and not for the prestige of being a front page advertiser on your great one word USA city.com domain.
Yes, palmsprings.com or lowell.com will rank #1 in google and be authority sites for the city name. But if am I am local business and you are pitching me to buy ads, I want to your stats on how many people are see my ad on your hotel page or restaurant page. Your bread and butter traffic will come from the long tail and will be greater and more targeted than your direct navigation traffic, not from the direct navigation traffic.
All things being equal, if you have a one word USA city.com or not, you still need to build the traffic. Yes, you will get more direct navigation traffic on lowell.com than lowellma.com but if the guy who owns lowellma.com got off his butt and build a content rich site and maintained a solid linking campaign, lowell.com would have a competitor for its ad sales.
Heheh Richard – you are far overblowing the tech-savvy that local businesses own.
The hard part of sales is getting into the door. After that you can spend whatever you want to get more traffic (and charge more). The CITY.com makes it 100x easier, all there is.
“Prestige” plays absolutely no part in any advertiser wanting to be on our sites. You also mentioned “prestige” as being a factor of our success on Sahar’s site. It is not. I would like to think that it is, but, believe me, we’d be out of business quickly if we tried to use that approach on our clients.
Since 1997, I have sat down with (not emailed or phoned – big difference) over a thousand local business owners. I can tell you EXACTLY what they want. And it’s revenue. That’s right, they simply want to make money. And every time another local web site owner started bragging about all the traffic they received or their great SEO rankings we always blew them right out of the water. I used to call it the “traffic trap.”
Yes, I’ve sat across from hundreds of my web competitors who talked about all the traffic they received. And I walked out with the advertising contract every time. Why? Because there’s one thing they never understood. Not all traffic is equal. Did you know that the more powerful the brand the higher the conversion rate? Actually, it’s common sense. We noticd it first with the PalmSprings.com golf section. Hmmm, let’s see. With equal traffic, would the level of viewer trust for someone wanting to play golf in Palm Springs be higher with PalmSprings.com, JoesTeeTimes.com or XYZGolfCourseGuide.com?
Now don’t get me wrong, our Geodomains do a ton of traffic (and I disagree with you about the value of Direct Navigation Traffic – DNT is gold). In fact, the only sites that do more traffic are the newspaper sites. But, then again, not all traffic is equal. Most newspaper traffic is return traffic reading the news and has a low conversion rate.
Everything I know today is based on my experiences with marketing Geodomains to the public since 1997. And I will be the first to admit that what I know now is something I would have never believed unless I’d owned a PalmSprings.com or Acapulco.com and experienced all of this first hand.
You make some very good points.
Unfortunately palmsprings.com is a very unique geodomain that has all the stars aligned just right for it.
I think Sahar said it as well – all geodomains are not created equal and your example is the *exception*.
It is interesting to consider that the visitor trusts your site more because it is the city.com site. I wonder why many other city.com geodomain domain owners are not catching onto that? You should start giving them seminars on how to duplicate your success. 😉
“Did you know that the more powerful the brand the higher the conversion rate? Actually, it’s common sense. We noticd it first with the PalmSprings.com golf section. Hmmm, let’s see. With equal traffic, would the level of viewer trust for someone wanting to play golf in Palm Springs be higher with PalmSprings.com, JoesTeeTimes.com or XYZGolfCourseGuide.com?”
Regarding David’s comment above, premium domains get much, much higher CTR also in parking as well over high-quality, second tier or lower domains – even when they are perfectly targeted. The best domains are already branded somewhat when you buy them. They already have credence with the surfers.
When I was at the Kelsey conference last November in Los Angeles, they announced that Marchex had the largest Geodomain portfolio in the world. Dan Pulcrano and I nearly fell out of our chairs until we realized that they meant secondary Geodomains like DallasPlumbers.com, AlbuquerqueDentists.com. I don’t believe that Marchex owns any major US city.com names (and with their money…).
Sahar said PalmSprings.com was an exception, but I took issue with that because there are many, many more out there. Virtually any major US city or popular destination dotcom would qualify as exceptional.
And yes, my brother and I have spoken about the power of the “Geo brand trust factor” at TRAFFIC, DomainFest, Domain Roundtable and will again at the Geo Expo July 10-12. Most new Geo owners understand the concept and apply it quickly. Speaking of, Elliot has a major winner on his hands with Burbank.com.
We have some people who own geo-domains doing well with lead-gen — things like mortgages, debt, and autos etc. Have you thought about adding lead-gen stuff to Salinas and Lowell? There are a number of folks out there that will enable you to white label/host & post forms.
Geez, it is almost as if you could have substituted the word .mobi for geo.
I have been doing geo for a while but not as a major concentration.
But the bottom line is a geo domain is a keyword within itself.
Hard to imagine something like the GreekIsles, Holland, BajaCalifornia, MyrtleBeach all being worthless and hype. No, I do not own any of those. Nor is it likely I will ever be able to.
Can you imagine what Cancun, Aruba, or San Diego would be worth? And not to domainers? Yes, domainers would be fighting over these. But so would the respective tourists bureaus, agencies, states, and municipalities.
One thing that never ceases to amaze me is how domainers can even begin to dictate to the general public what something is worth or its non-worth. And now we have moved into geo.
MadisonAve, WallStreet, RodeoDrive, WilshireBlvd…are you kidding me? We are not even talking states, countries, or continents…
I can assure you, there is no salesmanship or hype needed in many geos. The name says it all.
Now, back to the .mobi bashing.
Sahar??? (REMOVED BY ELLIOT – Sorry no personal attacks), telling David Castello that his business plan sucks? I don’t think so.
Hi Elliot, a small point, why limit a general definition to only .com? ccTLDs already are our international geo-naming system and are a natural fit with geo domains..
***UPDATED BY ELLIOT***
I was limiting it merely to this particular post. I have nothing negative to say about them, and I do like them to an extent.
I woudn’t worry about the naysayers. Great GEO domains have so much value that you almost can’t put a price on it. I cannot even imagine what a name like LasVegas.com would sell for…the sky is the limit.
As you go further down the list, you still have a ton of Geo Domains that are worth six and seven figures. If you want to develop, then go ahead and develop…or make a little (or a lot) with PPC.
If you bought a prime vacant lot in Manhattan, there is nothing wrong with parking a few cars there to pay the taxes until the life-changing deal comes along.
Most people who have success in a certain area immediately paint themselves into a box and then spin everthing in a way that makes their way of thinking look the best.
If and when the dust ever settles on this industry, you can take to the bank the fact that Geo Domains will be the most prized possessions around.
Another area that is often overlooked is common first names. Just like Geo Domains, these are very tough to buy, especially from someone who bought the name in the mid-90’s and has that same name. Some of those names will likely never change hands. There have been some great five-figure buying opportunites on a few of those lately.
There is nothing wrong with putting these names in the vault. Peope spend millions on artwork and it just hangs on the wall. The value goes up every minute of the day. Anything you get from PPC or development is just gravy.