Shawn writes:
"I’m an interactive services director for a large ad agency; I’m also a part-time domainer.
From my experience (12 years of online marketing and branding), the biggest reason why you don’t see the usage of generic domains – or even creative domaining – is pushback from the client followed closely by a lack of education/knowledge/understanding from agency personnel.
In addition, the statement, "Big and small ad agencies don’t want their clients to get more selling power from a domain name for 1/10 the cost than the ad agency’s ad campaigns," is based on a misunderstanding of ad agency services. Any advertising agency that will sell their firm’s services on the effect on sales is a firm that won’t be around for long. Agencies sell branding and marketing with the end result designed to increase brand awareness. It is hoped that increased awareness will lead to increased sales, but that is not always a cause-effect relationship.
It also isn’t about the money. Most agencies already have a monetization plan for digital assets, be it a buyers premium or a vendor discount paybacks.
So conspiracy = no."
***FS*** Definitely worth a post of its own, thanks for taking the time to share your perspective Shawn.
Even if the focus was on sales what kind of results can a company expect from buying domains in the current market. If company X goes to snapnames and tries to compete with those paying 30/50/100 years for domains related to their industry what kind of return is that? Even if they can double what the domainer might make is it even worth bothering with? I can understand new co’s/ startups paying a lot for domains they want to brand/build out but in terms of driving sales for established brands where is the return?
***FS*** Great points
I think the answer to that argument is that they would need to be making a lot more than domainer is making from domain. Two times just wouldn’t cut it. But each one of the Fortune 500 companies have a Revenue Stream of at least $1 Billion dollars a year and the largest are two factors of magnitude bigger still. If acquisition of a name is going to allow even the smaller ones to increase revenues by just 1% then the name is going to make around a million dollars a year every year. The domainer may only be making $xx,xxx per annum, but he cannot use it to leverage the kind of investment both in production and advertising that the Fortune 500 company are able to. Clearly he cannot expect to take more than a small slice of the cake, but even the crumbs from these Leviathans are very substantial.
For these big companies it should / would be more about owning the category than getting immediate measurable sales.
The return is that every person who types in loans.com for the next 50 years will be redirected to bank of america. Suddenly there is a connection in their mind between b of a and the multibillion dollar loan business. (whether they should build out loans.com is another question).
at the end of the day these huge companies can probably amortize these names over 15 years and not have any measurable impact on their quarterly earnings…so maybe the question is why DON’T they do it?
Let’s say the guy who runs Coppertone goes out and pays $200,000 for suntanlotion.com – most would say he overpaid. But over 15 years that comes out to $13,000 per year or about $3,250 per quarter. Is that $3,250 going to really hurt Schering-Plough? Obviously there are other issues (cash flow etc.) but still – this is peanuts.
“But over 15 years that comes out to $13,000 per year or about $3,250 per quarter. Is that $3,250 going to really hurt Schering-Plough? Obviously there are other issues (cash flow etc.) but still – this is peanuts.”
The flipside is that the two uniques per day that the name would likely produce isn’t going to benefit them much either, the return is peanuts.
Snoppy, you are missing the point.
We are not talking about domain monetisation, we are talking about rebranding entire ranges of product lines or companies. If a company rebrands their site, then the existing type-in they have should in theory switch to the new branding.
The problem is nobody knows for sure what the consequences would be. It is absolutely certain that this would affect the amount of type-in to the site both in the short and longer-term. Holder’s of generic domains would argue that Traffic will increase longer-term. Against that is the need to invest heavily in the advertising the new brand to offset the short-term damage the change would otherwise bring.
Th effects are likely to vary between companies. I somehow doubt Coca Cola would benefit from branding on softdrink.com but it highly likely either Camera manufacturer or an major online retailer could benefit enourmously from switching to Camera.com.
The problem is nobody can really predict the outcome, and the impact could potentially be damaging. Of course most large corporates will take their lead from the Ad Agencies and we have already established what their attitudes will be and the underlying motivations.
What will crystallize the situation will be solid role models. If the Russian Vodka man takes the US by storm off the back of a Generic domain name, then it is at least going to get talked about in board rooms. My guess is that it will be the desperate that will be the most proactive. Don’t be surprised to see Car.com in the news in coming months.
@Gordon
Excellent question in relation to owning the category and why they don’t do it. My simple theory is lack of knowledge at the client level. Agency staffers are dealing with corporate marketing staffers – who have budgets. Decisions on “everything” are determined by budgets and cause a lot of short-sighted thinking. A single mid-level decision maker can be the one championing an above-and-beyond-budget item or they can kill the idea. A lack of knowledge behind the power of domains names typically prevents the proposal from reaching the level where a “smart” decision could be made.
@Snoopy
Keep in mind that agencies bill out based on time. If my agency were to broker a $5 million domain sale, we really wouldn’t care if we saw a cut of the domain price. However, we’d have plenty of billable hours tied up into the mix and billable hours are gold.
@David
Exactly right. Many generic names do not and will not make sense to some companies. A Super Brand will carry far more weight, and will strongly out perform, in a generic category than a generic domain will in a category that lacks a Super Brand. Your examples are spot on and I’ll add Viagra.com vs. ErectileDysfunction.com and Apple.com vs. computer.com.
It seems that the point of an ad agency informing their client on a generic domain name’s value for their client’s product/service is being missed. Shawn’s statement as being a ‘part time domainer” and 12 year experienced “interactive service director” for a major ad agency and providing online branding doesn’t support his statements that “Any advertising agency that will sell their firm’s services on the effect on sales is a firm that won’t be around for long. Agencies sell branding and marketing with the end result designed to increase brand awareness. It is hoped that increased awareness will lead to increased sales, but that is not always a cause-effect relationship.”
This viewpoint is based on a lack of understanding the value of vertically BRANDING a generic domain to not only capture the natural typeins, but also to use the domain to increase simple “brand-pairing” of the item/service being sold by the company. (Many other “pluses” for generic domains exist, but will be explained below)
I agree that a large majority of corporate execs “don’t get it” in the mindset of “pairing” the generic description domain of their product/services with the actual branding of that product. Why don’t they “get it”? One reason is that the ad agencies carry a lot of weight in convincing their clients of not only the general “creative idea” of their ad campaigns, but what marketing mediums to use. Print advertisements? TV commercials? Banner ads? Google/Yahoo ad links? Radio? Newspapers? The ad agency DEFINES this for their client and if the ad agency has increased their client’s sales even 2%, the BOD and stockholders are happy. Then the heads of the marketing departments go along with this and accept what’s given them by the ad agency by running their own “tests” of the demographics. A company’s marketing department’s main function is to measure the ad campaigns’ results in metrics. They have certain expectations, and I can tell you that those expectations aren’t huge. As mentioned in comments on this post by others, a small percentage on the positive side weighs in at a lot of profits. But, they have to also measure those results against the cost of the campaign and their ROI. If the ad campaign bombs, the ad agency either loses the client or deals their way into another try for a reduced cost.
Let’s look at the “New Media” scenario. (See Brandweek’s article on Johnson & Johnson and the tone — almost “nurturing” – http://www.brandweek.com/bw/news/pharmaceutical/article_display.jsp?vnu_content_id=1001525482
Notice that the article itself doesn’t mention the power of domains, but just that J&J is off on a new way of advertising. This article basically sells the domainer’s viewpoint without even mentioning domains per se. But the articles includes the comment by J&J’s VP of Corp Affairs: ““I don’t think Madison Avenue should feel threatened. I think Madison Avenue should feel we’re looking for more creative solutions,” Perkins said.
Then the article, in a single sentence paragraph, describes the J&J ad concept: “The commercials conclude by urging viewers to visit baby.com.”
Wow. Talk about J&J’s ad company saying exactly what all domainers should be considering on how to increase the value of their domains.
So what is the domainer’s pitch to companies?
What happens if the company buys the domain names describing their products/services?
1) Not only do they secure the product’s “image” online, which many times is described in their own catalogs generically, but;
2) the domain can be used to shut out competitors, and;
3) can be easily used to brand products to enable consumers or clients to remember and find exactly what they’re looking for by just typing in the domain name of — what they’re exactly looking for.
It’s a no-brainer, and I’m not going to be the person that says that corporate America is run by over-paid executives with no brains. However, for anyone to say that a “major” ad agency WANTS to follow in the footsteps of J&J’s Baby.com and P&G’s Toothpaste.com branding successes, which basically allow these company’s to control their competitors online, is a joke. Most Ad agencies don’t want this because they can’t see their profits increasing outside mainstream “revenue” generation processes of an ad agency. Lowe Worldwide stepped up and sold J&J on new ideas and they succeeded. Maybe they got the job and settled on less profits, but profits just the same.
An ad agency’s goal is to use all other ad and marketing mediums to sell their campaign to brand their client’s COMPANY. This creates chargeable hours and ad placements that agencies receive 15% commissions from. If it’s a product campaign, ad agencies know that a great generic domain can embarrass their attempts to market that product on an equal price footing. If the ad agency doesn’t “knowingly” follow this policy, they purposely close their eyes to the value of that domain for their client.
So with the current advertising “system”, an ad agency can charge their client by the hour, they can get their 15% backend from the advertising mediums, (TV, magazine, newspapers, radio) and they can sustain their creative idea for as long as their client’s marketing department sees even a small positive ROI.
Here is the point where a domain name exerts its most power: The COST of promoting a company’s brand is extremely expensive and the reality is that they have their COMPETITORS DOING THE SAME THING IN ALL THE SAME SPACES. (In an argument for domainers, we all know that a domain name controls its own space… the domain owner doesn’t have that problem of fighting off competitors in their space — if you consider the .com as the space, all other TLDs being wannabees)
Back to the goal of an ad agency — Let’s consider a magazine as an advertising medium investment. Full page color ad. Ad agency XXX is selling next year’s model of a luxury car. Ad design, creation, and placements of the ad page costs the client millions of dollars. They need to run the same ad in “demographically analyzed and researched” magazines to hopefully capture the customer. Also, the ad agency even gives their client the “choice” to run different ads they’ve created (at additional costs, of course) to test the demographics. The ad agencies charge the client for the research to “find the right medium for the best results”. But no matter how hard the client’s ad agency tries, they CAN’T control their client’s competitors from advertising and competing with them in that space. There will be 15 other car advertisements in that magazine issue. So it’s now a battle to compete on the creative content to see what “sticks”. Client is in a gambling game with their ad dollars.
Once the ad campaign dies out, the ads stop, and all that branding money is GONE. Period. Wendy’s Restaurants doesn’t use “Where’s the Beef” anymore, and they don’t even OWN the domain name, (what a surprise!) but they spent tens of millions of dollars in promoting that great tagline. What if they spent $2 million dollars in buying “hamburger.com” and $35 (at the time) for “wheresthebeef.com”? With that small investment, ten years later, they would still be getting all the typeins, using the hamburger.com domain to humiliate Carl’s JR. and to immediately connect the online user to what Wendy’s is all about –HAMBURGERS! All for a $10 a year renewal fee. (By the way, hamburger.com points to a completely non-relevant website, and “wheresthebeef.com” is god knows what.
This is a situation where all of the domainers (99%) who aren’t making $30K a month on PPC traffic have to attempt to educate corporate America on the value of owning their keyword descriptive domains and just how much they’re losing by not owning the RIGHT domains outside their “brand” but inside their product/service descriptions.
A good generic keyword domain lasts forever (in our world). An ad campaign by even the best Madison Ave Agencies lasts months, maybe a year. If they’re lucky, a few years.
As the CEO of APPLE, I would take 1/100th of the amount of money that was spent to promote the APPLE brand through mainstream ad agencies to just owning “computer.com” and “computers.com” and “innovation.com” and “ideas.com” and “easysolutions.com” and then “pairing” those domains with my advertising, because every ad can include the company name, but pushing the generic description of the domain to “connect” that product with the company is more valuable than all the money spent to brand APPLE… and nobody will step up to say buying the above mentioned domains would cost 1/100 the amount of the total cost of branding the name “APPLE.”
But wait! Is Apple smarter than someone who thinks domains in an advertising campaign can’t make a difference? Let’s see — their most famous tagline was “think different”. Type in “thinkdifferent.com” – see where it takes you. Purchasing that domain “tagline” was either smart positioning by Apple’s ad agency or someone at Apple. However, how many people would normally type in “thinkdifferent.com” over “computers.com” and what is the dollar for dollar ratio for branding “think different” to the cost “computers.com” was? The smart money is buying your tagline your ad agency is promoting AND buying the generic keyword of your product. Most likely, the tagline domain of your ad agency’s campaign will be one that hasn’t been purchased and will only cost $7.
Now ask yourself how much value the domain name COMPUTERS.COM has brought CNET for the price they paid years ago for that domain name. I’ll bet it’s performed at a better ROI than their cost of branding “CNET.COM” during the same period of time.
This is our reality. If domainers don’t believe this, then thousands of us are in this business for nothing. Only a small percentage of domainers have high yield traffic domains, the rest of us are hoping for niche interests, building out those domains, or selling the domains to end users — the end users being the companies that sell the products/services the domain name describes. The latter is the most valuable option we domainers, and domain-selling companies, have for our future… the END USER.
Our generic keyword domains are “marketing assets” (my term for defining what a domain is to an end-user).
If there was something better, J&J and P&G would be putting baby.com and toothpaste.com up for sale to their competitors. You can bet you won’t ever see that happen.
All domainers have to embrace the idea that the end user (business community) is going to “get it” and soon. The more we all understand and support this goal, the faster we achieve end user interest in our domains. The end user HAS to understand how to use keyword generic domains to control their online content and pair the domain with their “adword links”, eliminate their competitors from that online market, and capture the prestige of literally “owning” the generic name of the product/services they offer.
On a humorous note, the fact that a corporation’s board of directors can guffaw, laugh and high-five each other because they just purchased a domain name that EXACTLY describes their competitor’s products/services is worth the company’s investment alone!
So for you ad agency types trying to discount my comments here, I have a challenge for you: Show me ONE ad campaign by an ad agency that cost only $3 million dollars and brought their client a positive increase in sales, held on to that sales increase consistently for five years, with no other investment into that “marketing asset” other than a $10 a year renewal fee. You can’t, no ad agency can claim that success. Ever. A good domain can. “Shampoo.com” can do that, but it isn’t, is it?
Ad agencies have their purpose, but they have nothing in their bag of tricks that outguns, outlasts, and outperforms a category-killing generic keyword domain. Simple logic and understanding of this business proves this beyond a reasonable doubt. All domainers should understand this basic power of their domains, and think hard about how we can all work together to educate the end user on these facts.
Stephen Douglas
get a blog stephen