Valuing exact match keyword domains

A keyword domain is a name that is also the ordinary term for a product, service or activity. Its appeal is immediate comprehension: a visitor knows what the site is about before it loads, and a business using it needs no explanation of what it does.

That appeal has a ceiling, and understanding where the ceiling comes from is more useful than any appraisal of the term itself.

The buyer pool is the price

The buyer for a keyword name is a company operating in the activity the term describes. The number of such companies, and the amount each spends acquiring customers, determines both how many bidders exist and how much the name is worth to any of them.

This is why a term describing a high value professional service in a large market prices far above a term describing a hobby in a small one, even when both are short, clean and in a strong extension. It is also why search volume misleads. Informational phrases generate large volumes and no commercial buyers. Transactional phrases generate less traffic and real ones.

The practical exercise is counting: list the companies that would plausibly use the name, and the count is the starting point. That is the same exercise described in demand signals, and it is worth doing before any price is set.

Language and territory

A keyword domain is only a keyword in the language and territory where the term is used. Terms in widely spoken commercial languages have larger buyer pools than terms in smaller ones, and the same term can be common in one national market and unknown in a neighbouring one.

The extension usually has to match the language. A term in one language sitting in a global extension appeals to buyers who operate internationally in that language; the same term in the national country code appeals to the local market and often sells more readily there, because the local buyer expects the local extension. Dutch, German and French terms in particular trade primarily in their own extensions, as covered in the country code spotlight.

Translation is not a valuation shortcut. A term that is a strong commercial keyword in one market may be a generic word with no trade use in another, and machine translated portfolios accumulate names that no native speaker would use as a business name.

Modifiers and where they help

Few valuable terms are available as single words. Most keyword inventory is a compound, and the compound decides the value.

• Service plus location works when the service is delivered locally and customers search that way. The city or region has to be a real market for the trade in question.
• Product plus a commercial word such as a buying or hiring verb narrows the term towards transaction, which usually improves the buyer pool.
• Plurals and singulars are not interchangeable. One form is the way businesses in that trade describe themselves, and the other is a weaker variant. Which is which differs by sector.
• Adjectives that signal price or quality can help or harm, depending on whether businesses actually use that positioning language in the trade.

Each added word narrows the set of buyers, so a longer compound has to be much more precise to be worth as much as a shorter and vaguer one.

The ceiling

A generic keyword name has a hard limit that brandable names do not. The term describes the whole category, which means it cannot be registered as a trade mark for that category and cannot be defended as a brand. A company building on it can be copied by any competitor using a near identical phrase, and it will never own the term itself.

That limits what an informed buyer will pay. Above a certain point, a company is better served by an invented name it can protect than by a descriptive one it cannot, which is the reasoning that led many well funded companies to abandon exact match names entirely. The comparison with the alternative asset class is set out in brandables.

The second constraint is that the strongest keyword names are already held and already in use. The available inventory consists of second choice terms, and second choice terms compete against a much cheaper option: the buyer inventing something instead.

Pricing a keyword name in practice

Start with the extension, since it caps everything. Establish that the term is used commercially by counting operating businesses rather than reading search figures. Judge the compound by whether it is how customers would ask for the thing. Then look for sales of terms of the same type, in the same extension, from a similar period, following the matching rules in comparable sales.

A keyword name priced above what a business in that trade could recover from using it will sit unsold for as long as the holder keeps renewing it, and no amount of listing effort changes that arithmetic.