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What's in a name?

R.J. Lewis
President and CEO
e-Healthcare Solutions, Inc.
Ewing, New Jersey
(609) 882-8887
www.ehealthcaresolutions.com

By September 2005, there were 85.6 million domain names registered worldwide; A 29% year-over-year increase in domain registrations .

63% have an active web-site, 26% have no live web-site, and 11% are part of a relatively new "parking" trend whereby they contain a revenue generating listing of sponsored search results. The ".com" top-level domain (TLD), is by far the most popular, represents just under half of all registered domains.

A domain name is the "web-address," or location, of a web-site, such as www.yahoo.com. Without the domain naming convention, to visit Yahoo, one would be required to type in http://216.109.117.107 (which also gets you to Yahoo). Since the human brain remembers words more readily than numbers, domain names are useful.

This article provides pharmaceutical marketers with a brief overview of the domain name market.

Anyone can register an unregistered domain through any number of authorized domain registrars for less than $10 a year . A registrant does not actually own the name, but in essence leases the name and maintain the first-right of refusal to renew the lease.

If a web strategy is considered important enough to spend considerable marketing dollars, then the selection of a high quality domain name is imperative, as it is the foundation upon which all other web spending is based.

Like an easily remembered phone number (1-800-mattres "leave the last 's' off for savings") a good domain name is catchy and memorable. Easily recallable clear domain names build competitive advantage and can deliver significant organic (non-paid) traffic.

Off-line retail businesses are willing to pay a significant premium for a good location because the resulting higher foot traffic increases sales. A domain name is the online equivalent of location to store-front real-estate. A product's recall, web-design, marketing dollars, visibility, word of mouth, traffic, and ultimately ROI will all be significantly affected by the choice of domain name.

GlaxoSmithKline had the foresight to register the domain www.diabetes.com (and many other great domains), so every other manufacturer or service provider trying to reach diabetics, must choose a different domain name. Similarly Pfizer registered www.arthritis.com and Medtronic registered www.pacemakers.com. All are capitalizing on a generic term, which will garner tremendous recall and "type-in" traffic from people seeking information on that subject.

Consider a brand that will spend $10MM over the life of the product on it's web efforts. How will those dollars be leveraged when promoting recall of "diabetes.com" verses "you-can-beat-diabetes-and-we-can-help.com"? As with a storefront on Manhattan's 5th avenue verses a store in a rural farm town, all domain names are not created equal, and the ROI of the promotional spend will not be equal.

Because most premium domain names have already been registered, a significant domain aftermarket has emerged where premium names are offered for resale or lease. The domain industry is similar in many respects to the real estate industry, whereby a "property" or domain name is purchased, may appreciate in value, may be resold for a profit, or may be leased or filled with tenants to earn an income while looking for the right buyer. As with real estate, the successful investor finds properties where paying tenants more than cover the cost of ownership, and make the investment cash-flow positive, so it can be repeated.

Determining and measuring the value of a good domain name, is challenging. The ultimate value is determined based on what the market is willing to pay. There are several objective valuation considerations:

  • Length of Name (the fewer characters the better)
  • TLD (.com, verses other)
  • Name Recall
  • Use of dashes"-" (generally not preferred; but this is an active debate in the domain community)
  • "Type-in" or "direct navigation" traffic (people typing the name directly into browsers)
  • Impact on search results
  • Listings in major directories (DMOZ, Yahoo, etc…)
  • Incoming link popularity (perhaps there was a site up for some time, and many inbound links still exist)
  • Keyword Index (frequency of word/words in domain being searched via search engines)

The highest publicly disclosed purchase of a single domain name alone was $7.5 Million dollars, for www.business.com in 1999 during the dot-com boom. Even now, domains are still very actively selling in the after-market. In 2004 for example, www.creditcards.com sold for $2.75 Million.

"CyberSquatting," or purchasing a domain with the intent to resell it at a later date for a profit, has been around as long as domain registrars. Squatters generally had a reputation as unscrupulous trademark infringing parasites, since they would essentially hold companies URLs hostage for a profit. Due to trademark lawsuits and the eruption of paid search in 2003, the business has changed from renegade "squatters" to entrepreneurial "domainers" who register non-trademarked, generic terms, and monetize the "type-in" natural traffic via paid search listings. This positive cash flow business is now attracting investor capital.

Parking service "Aggregators", or hosts who will park an idle domain for free and share in pay-per-click revenues, such as Sedo.com and TrafficZ, emerged to facilitate the earnings process. These "parked" domains contain little or no content, but feature sponsored listings from providers such as Google and Yahoo .

In 1995, from their living room in Philadelphia, Doctors Marie and Bob Benz began buying domain names such as www.athletesfoot.com, www.heartdisease.com and www.highbloodpressure.com. They recently sold their domain portfolio of 101 names to Internet REIT for $3.6 million .

Mr. Yun Ye had a portfolio of domains which was generating $20 million in revenue, $19 million of which was profit, when Marchex paid $164 million, or 8.6 times annual earnings, for the portfolio of domain names in November 2004 . Marchex whose domain portfolio of over 100,000 domains generates some 24 million unique users a month based on type-in traffic, is one of several companies attempting to consolidate the fragmented domain industry.

An estimated 300 domainers control approximately 10% of all dot-com domains. As a result of type-in traffic on parked pages, this group generated approximately $750 million in traffic revenue last year. Google and Yahoo generally don't comment on the effects of "type-in" traffic, but they are highly visible sponsors of many of the domainer's conferences. Marchex estimates that type in traffic accounts for roughly 10% of the global paid search market.

With the creation of both PhRMA and company specific guidelines around DTC, the industry is trending away from 30-second brand-only Madison Avenue advertising campaigns and toward deeper, educationally based, disease communications. Easily remembered, disease specific domain names are powerful tools for communicating with and educating patients. Domains such as diabetes.com (GSK) and cancer.com (Ortho Biotech) are taken. In this new age of educational DTC, marketers are forced to get creative with newer variations such as breastcancersource.com (AstraZeneca), depressionhurts.com (Eli Lilly) and PADfacts.com (Bristol-Myers Squibb).

Pharmaceutical companies will spend millions of dollars on web-site development, maintenance, and promotion of a domain. Unbranded disease domains in particular will likely be used in perpetuity by all future drugs in the disease category. Carefully selecting and buying the right disease domain name is a critical factor to success, as many marketing dollars will go toward leveraging this asset.

See the list of sources used in this article as well as other helpful resources.