I have written many articles about recovering domain names using administrative policies, such as the Uniform Domain Resolution Policy (“UDRP”) (non-exhaustive examples found here and here). Whilst this is a valid option when a domain infringes a brand’s trade mark rights, in many cases a brand will be in its early stages and require acquiring new domain names to power consumers’ online experience. For example, using a domain to resolve to a website for a new brand, or acquiring a domain to supplement an existing domain portfolio for buying and selling on the aftermarket. In these situations, an understanding of how much a domain might be worth and the domain purchase process goes a long way.

1. Domain Valuation

Whilst an in-depth discussion of domain valuation (including search engine optimization potential) is outside of the scope of this short article, there are several useful factors to consider when acquiring your desired domain. Below are four points that I often consider when assessing a domain’s potential worth:

• Domain Prefix – during the 1990’s, many savvy investors registered dictionary terms with the common suffix, “.com”, seeing their long-term value. This clearly paid off for registrants, such as the owner of <voice.com>, who sold the domain for the grand sum of $30,000,000 back in 2019. The same applies to two letter domain names (which are limited in number).
  
  
• Length – long domain names (e.g., <everybodylovestobbsblogsonline.com>) are not desirable because i) customers want memorable domains, and ii) long domain names are easy to typosquat - where domains are registered to take advantage of mistyped brand names e.g., <microsopcom>, instead of <microsoft.com>.
  
  
• TLD – the extension may also have a bearing on a domain’s value. To this day, “.com” is still king, despite the numerous country code top level domains and new generic top level domains like “.shop”.

The above examples are particularly relevant to widely applicable or short domains, such as <wine.com> or <ab.com>. Anyone looking to acquire domains like these should be prepared to pay handsomely to reflect the market value. If you low-ball these domains, it is likely that your offer will be ignored or rejected from the get-go.

2. Domain Transactions

So, you have agreed a domain purchase price, now what? In almost all cases, you will be negotiating with someone that you do not know (and possibly using an alias account), so it is vital that the domain is transferred securely. If a domain is sold on a popular aftermarket (e.g., Afternic), there is often an in-built purchase service, which means you can purchase the domain as if it were an item on, say, eBay. However, where you are acquiring a domain over the phone or via email, it is best practice to agree an escrow process (such as escrow.com). An escrow process is simple and usually follows these five steps:

1. The buyer and seller agree the terms of the domain transfer (e.g., who should be responsible for the transaction fees – often negligible).
2. The buyer will transfer the funds into a holding account unconnected to the buyer or seller.
   
   
3. The seller will then transfer the domain, which often involves unlocking the domain and sending the buyer the unique authorisation code (or a TAG transfer for a “.co.uk” domain name).
   
   
4. Once the domain is transferred to the buyer’s nominated registrar, the buyer will consent to the release of the funds.
   
   
5. The process is completed efficiently and securely.

There may also be other steps to a negotiation that have not been considered e.g. whether a domain transfer agreement is necessary (often used in complex domain transactions).

In conclusion, whilst many brand owners will want to acquire a domain as cheaply and quickly as possible, it’s always worth taking a step back to consider factors such as the domain’s intrinsic value and the mechanisms available for securing transfer of the domain.  The above will put you in good stead when embarking on negotiations. 

We’ve helped many brands acquire aftermarket domain names. If you need any assistance with domain acquisitions, please contact us via info@iamstobbs.com or call our office at +44 (0)1223 435240.