Before you invest in a website domain, it is important to understand there are six types of domains, and each type have different values attached. I didn’t think so, but knowing so can make a big difference in your investing success.
Most domain flipping experts teach about the six types of second-level domains, or SLDs. They include:
1. Generic, like Apple.com or Rose.com
2. Exact Match, like CloudComputing.com or TooCoolNotToOwn.com
3. Brandable, like Google.com or Spotify.com
4. Acronym, like Z.com or DATL.com
5. Numeric, like 123.com or 9989.com, and
6. Alphanumeric, like X3.com or 66G.com
I wanted to know if one type of SLD was a better investment than another, so I asked DNAcademy student Alex Chung to lend a hand in data collection and analysis. Our methodology was simple: pulled the top 100 sales out of NameBio.com for each type of second level domain for the years 2015, 2016 and 2017, and double check each domain name in-fact matches each SLD type; generic, exact match, etc.
Once Alex collected and verified the data, we then tried to figure out how to present the data so it made sense. I thought looking at the mean and median would tell us everything we needed to know; but in fact it didn’t. So I had to dig out my old college statistics textbooks to figure out how best to make sense of the data. Turns out, a good old-fashioned box plot (sometimes called a box and whisker plot) was the best way.
And here’s the data. But before we look at all of them, let’s look at one of them: the generic SLD type of domain name, like Apple.com or Rose.com, and let me describe our analysis tool. Box plots always present the data in the same way. The top of the box is the first quartile, which means that 25% of the data lies above this number, and the bottom of the box is the third quartile, which means that 25% of the data lies below this number. Therefore, 50% of all the data is within this box. The mid point of the box is called the median and means that 50% of the data points are above and 50% are below the line.
So rather than look at averages of a data set that can be skewed by extreme values like the $8.5 million sale of FB.com, we can get a better representation of the data set and see exactly where most of the mid-tier domain names are sold. It is this median value, as well as the top and bottom of each box that we want to compare across the different types of second-level domain names because that’s where the middle majority of sales happen.
In other words, the whiskers on top and bottom of the boxes are the extreme 50%, and the data within the box is more typical of results you and I might see if we invested. So how do they look?
Generic domain names like We.com. Fly.com and Freedom.com have a median value of $107,251, and when we compare them to the other five types of domain names, we can see that 50% of those generic domain names (from the median value to the top) are higher than 75% of all the other domain name types except acronyms. This is why generic domain names continue to top the weekly DNJournal sales lists and are strong investment opportunities.
Now, let’s compare Exact Match domain names to Brandable domain names. Looking at the boxes, they appear to be pretty similar. The tops of the boxes are within $2,000 of each other, and the bottoms are within $10,000. But we can also see that the variation in sales prices is smaller for Brandables like StarIndia.com, NextFoods.com and YouCoin.com than it is for Exact Match domain names like UsedCarsForSale.com, YogaPants.com and CollegePrep.com.
And, of course, the top 25% of Exact Match domain names has a long whisker because some keywords have massive search volume, like Porno.com and Home.loans. Acronym domain names are an interesting asset class with a middle 50% that is much higher than all except Generic domain names. This is attributed to the fact that two-letter domain names like hg.com, la.com and px.com have been on fire the past few years. Throw in a crypocurrency related domain name sale like eth.com (the acronym for Ethereum), and you’ve got a big skew. In fact, if we remove the top 14 sales that are all two letters and one three letter, the top of the boxshifts down from $192,000 to $132,000 and becomes a very narrow box, similar to Brandable domain names.
Finally, Numeric domain names like 0123.com and 8181.com and Alphanumeric domain names like w8.com and m33.com round out the asset classes on a downward trend for retail sales figures. And here are my key take-aways: We can’t be experts in every type of domain name asset class, but understanding that there are six types and that there are differences between them, like the variation in retail sales prices, can help us focus and become better investors.
Generic types of domain names are the king of the mountain. Because even new investors can hustle and find good wholesale deals, it provides the best return on investment opportunity. Exact match domain names have fallen out of favor in the past few years, but don’t count them out of contention. They took the top retails sales price between 2015 to 2017, and if you select your industry correctly customers can definitely see the benefits. Brandable types of domain names are easily the best opportunity for creative investors to start their investing career.
While acronyms are skewed by the recent two letter sales frenzy, their established floor and steady market prices provide a safe haven for those with the budget and desire to invest long-term. Fifty-eight of the top 100 acronym domain names in our research sold for six-figures plus, doubling the number of names of all other categories except Generics, which acronyms nearly matched.
In 2015, the Chinese-friendly domain name 8888 8888.com sold for $150,000, putting it 16th on the list and standing out among the names around it. If you don’t understand the desire of Chinese investors to own numeric domain names, like me, then I suggest you leave that type of domain name for other investors. Same goes for alphanumerics, the lowest priced category of the six domain name types, but with a average sale price of over $27,000 there is still real money to be made there. As I said, each of the six types of domain names has a different potential retail value. Just knowing the six types and their retail sales prices can make a big difference in your investing success.