This is a collection of terms defined by DC for the purpose of educating our clients on the terminology used during projects or auctions or discussions.
Our internal valuation structure, layout and language undergoes regular audits by experts inside and outside the company and the domain and appraisal industries. Consultants and analysts are constantly sought to provide feedback used to improve and expand the procedures, terminology, Valuation Grid, integrity, value and comprehensiveness of the system and the results.
A pre-set yet constantly updated set of metrics in the Valuation Grid used to appraise domain names. Each is valued along the Rating Grid: Low, Medium, High, N/A. Base values are determined by their overall consistency in domain valuation systems and formulas – generally accepted variants. Alternate factors are known as ‘Considerations.’
Together, Base Values and Considerations make up the Valuation Grid – used to select and valuate domains for auctions, marketplace listing, promotion, development and beyond.
This base value measures the potential marketability of a developed version of the domain. How brandable is the name? In comparison to existing and potential competition as well as the potential expense? Is there a ‘singular’ and ‘plural’ version of the domain?
“Brand is the emotional value that a buyer attributes to a domain name. Effectively the brand is how users react to the domain name being used and the feelings it generates” ~ Dan Warner
Single-word, non-product/industry/service specific domains – primarily .com and usually singular. Examples would include sky.com and earth.com. Its opposite would be ‘premium generics’ – names likes books.com and music.com.
Domain names have long been separated into categories to simplify identification and market metrics or generally-accepted terms and/or multiples. Main categories include, but are not limited to, mainstream domains, foreign-language, adult, gambling, ccTLD, LLL (3-letter), geo-domains, typos and more. Domains are also broken into broad subject categories like sports, music, travel, business, auto, health, consumer goods, Internet, science, technology, traffic and more.
The singular best domain name in any given industry category. Examples killers would be domains like games.com, music.com, cars.com, baby.com, etc. Afforded their own categorization, they also warrant the highest valuations in the industry. These names are generally classified as ‘World-Class’ in the rating system and referred to as ‘premium generics’ or ‘premium domains’.
If domain applies to specific industry, product, service or otherwise – what is the current competitive state of the industry or segment? What are the barriers to entry? How saturated is the marketplace?
Considerations are variants and variables that may or may not apply to the domain name submitted. If applicable, the measures are rated along the Rating Grid. Considerations include mindshare, expense override, competition, saturation, cycles, dev. potential and more.
An interesting, unique or lucrative web site attached to the domain can raise the overall perceived and real market value. Site assets are taken into consideration but clients are advised to seek valuation from firms experienced in business and web site appraisals for developed properties.
How old is the domain? Can be quite relevant in the case of old or very new domains. Older domains tend to rank better in search engines and have measurable ownership and sales histories. Older domains tend to be worth more money.
Term used to describe individuals who make their primary living via the domain channel. Generally refers to individual domain holders with large or high-quality portfolios. Being a domainer is a badge of honor worn by all our panelists at some point in their storied careers.
Domain Stock Exchange
A platform whereby domain holders can list and monetize ownership of the domain through a traditional platform based on the stock exchange. The platform allows owners, shareholders and investors to buy/sell shares in listed domain names. Current model allows holders to list up to 45% on the public market.
Individual or corporation with the idea, intention and/or budget to develop the name into a relevant and functional web site. End-users historically spend far more than domain investors, with astronomical multiples of revenue being the selling price in some cases. End-user sales, public and private, make ‘valuation’ a multi-level enterprise.
Does the name have end-user value to blue-chip companies? How large is the potential pool of buyers? What are their resources? How competitive are the players in the pool? And at what expense?
End-user value is not included in appraisals due to the volatile and subjective nature of end-user sales – including such variables as buyer motivation, available budget and timing amongst others.
For domain holders, end-user value is a serious and vital consideration in internal valuation yet so also is the potential length of time before such a singular buyer materializes – which indeed might be ‘never’.
To further exasperate, even nullify, end-user valuation is the continued industry/corporate practice of keeping high-level sales information confidential – often times a key consideration in end-user negotiations and property valuation.
Modern marketing directors have thresholds on the amount they will pay for a domain before turning to an alternative, less expensive name and/or putting the money towards marketing and branding. Domains that contain more than one word can be subject to this variable if priced too high, alternately adding some value to single word domains.
The current, inherent value of the extension on a local, regional, national and global scale. Beyond .com, .net and .org, the extension this primary applies to is ccTLDs.
An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions.
Valuation factors are weighed on a domain-by-domain basis. In certain instances, a specific variable may carry more weight than others and thus is factored in as such.
How generic is the domain? Is it an industry-specific, keyword-rich premium generic? A brandable generic? Or both? This factor has increasing weight in the ever-changing marketplace with the generic nature offering advantages in security, branding, mindshare, marketing and more.
Refers to domain names that are region or country or locally specific. An example might be Minneapolis.com. Geo-domain specialists are consulted or hired as appraisers on high-value geo-names.
Valuation of industry the domain directly applies to, if any. How large is the overall marketplace? Gross revenue? What is the customer acquisition cost? Value of a sale? Is the industry local, regional, national or global? Information garnered via industry profile.
Instant Market Share (IMS)
The acquisition of certain high-value domain names can result in instant market share or IMS. If properly developed and placed, a great domain can reduce the barriers to entry.
IMS serves primarily as a competitive and strategic consideration. IMS name acquisition can mean immediate increased share while equal acquisition by a competitor may reduce piece allocation.
What’s the current price, competitive state and saturation level of any saleable keywords related to the name in the PPC (Pay Per Click) market? How much keyword competition for related terms? How large is the current advertiser pool?
Number of characters in the domain is factored, the value measured beyond phrase familiarity. Single word domains are generally rated as ‘high’ by default.
Length is also a consideration in evaluating the potential for misspellings and errors – diluting traffic to varying degrees.
The domain business, like all industries, is cyclical. Thus, the current cycle in each given industry must be identified and factored for non-generic name appraisals.
Saturation in sales, product, exposure, etc. can affect the overall value of a domain – positively OR negatively. ‘Market trending’ is the primary focal point here.
Commonly used words and phrases used in domains offer a description of a website’s purpose and act as a preview of what a user can expect when they type-in a domain. The easiest measure of mindshare is by comparing search data on domain phrases.
Traffic that is not ‘paid for’ also called ‘type-in’ or ‘direct navigation.’ This may also include brand traffic, inbound and organic links and search engine placement visitors – to a lesser extent.
Pay Per Click (PPC)
Advertising mainstay associated with domain parking and monetization. System allows advertisers to bid on certain keywords and then display an ad when relevant searches are performed. PPC has bred an entire industry of service providers for domains and holders.
Also known as ‘premium domains’, phrase used to describe one to two word product/service/industry specific domain names – usually .com, .net, .org and ccTLDs. Examples include happybirthday.com, games.com and media.org. Single-word premiums are generally plural, the singular version being the ‘brandable generic.’
In a valuation and in a forecast of earning power, the word property is used to describe the rights to the future benefits of something owned or possessed to the exclusion of other persons.
The word property will be used to describe “something owned” without regard to its ownership.
This Consideration is a measure of the ‘MONETIZATION OPTIONS’ available to the domain. A HIGH rating means there are multiple monetization options to owner/buyer/developer.
What are the top three (3) sources of revenue for the domain/site? PPC? PPA? Adsense? Sponsorship? Double-click? Other? Sources and status of revenue streams are considered if submitted by client.
What is the potential impact on optimization and placement efforts? Certain domains shoot right to the top of results on the major indexes, especially one word domains. Further considerations in SEO include the competitive nature of the term, value of sale/customer, etc.
Is the domain name listed on the main (3) search engines? Is it listed on DMOZ? This is a mild, but still accounted for, valuation factor in the case of a ‘developed’ domain name.
A risk assessment of future potential legal issues: UDRP and/or lawsuits relating to legitimate/illegitimate holdings. A ‘high’ rating in this category is a severe negative in regards to current and future valuation, rating and SMV.
The Uniform Standards of Professional Appraisal Practice (USPAP) are the generally accepted standards for professional practice in the United States.
These Standards are based on the original Uniform Standards of Professional Appraisal Practice developed in 1986–87 by the Ad Hoc Committee on Uniform Standards and copyrighted in 1987 by The Appraisal Foundation. The effective date of the original Uniform Standards was April 27, 1987. Prior to the establishment of the ASB in 1989, USPAP had been adopted by major appraisal organizations in North America. USPAP represents the generally accepted and recognized standards of appraisal practice in the United States.
At its organizational meeting on January 30, 1989, the Appraisal Standards Board unanimously approved and adopted the original USPAP as the initial appraisal standards promulgated by the ASB. USPAP may be amended, interpreted, supplemented, or retired by the ASB after exposure to the appraisal profession, users of appraisal services, and the public in accordance with established rules of procedure.
Group of private valuation metrics used by DC that include Base Values and Considerations plus Variables, among others. This grid is used to valuate names for sale or auction or purchase and usually relies on the input of two to five domainers.
Long referred to as “X” in the industry, the multiple is the number of years x annual revenue that a buyer is willing to pay for a name. Requires stat audit for accurate, base figures.
The monetary relationship between properties and those who buy, sell, or use those properties.
Client submitted facts and figures regarding the organic traffic, Alexa ranking, Google PR, monthly revenue, search engine saturation and more associated with the name/site.
Documentation necessary to support a consultant’s analyses, opinions, and conclusions. May include expert testimony, written or oral, statistics and variables, sales, comparables, notes and conclusions.
(noun) the act or process of developing an opinion of value; an opinion of value. (adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services.
One who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.
Other appraisers who have expertise and competency in a similar type of assignment.
A valuation service provided as a consequence of an agreement between an appraiser and a client.
An appraiser’s opinions and conclusions developed specific to an assignment.
That which is taken to be true.
A preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity in an assignment.
An entity pursuing an economic activity.
The interests, benefits, and rights inherent in the ownership of a business enterprise or a part thereof in any form (including, but not necessarily limited to, capital stock, partnership interests, cooperatives, sole proprietorships, options, and warrants).
The party or parties who engage an appraiser (by employment or contract) in a specific assignment.
An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions
Nonphysical assets, including but not limited to franchises, trademarks, patents, copyrights, goodwill, equities, securities, and contracts as distinguished from physical assets such as facilities and equipment.
The use or uses of an appraiser’s reported appraisal, appraisal review, or appraisal consulting assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment
The client and any other party as identified, by name or type, as users of the appraisal, appraisal review, or appraisal consulting report by the appraiser on the basis of communication with the client at the time of the assignment.
An assignment condition that voids the force of a part or parts of USPAP, when compliance with part or parts of USPAP is contrary to law or public policy applicable to the assignment.
A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal.
Mass Appraisal Model
Mathematical expression of how supply and demand factors interact in a market.
Identifiable tangible objects that are considered by the general public as being “personal” – for example, furnishings, artwork, antiques, gems and jewelry, collectibles, machinery and equipment; all tangible property that is not classified as real estate.
The amount asked, offered, or paid for a property.
Personalized evidence indicating authentication of the work performed by the appraiser and the acceptance of the responsibility for content, analyses, and the conclusions in the report.
A signature can be represented by a handwritten mark, a digitized image controlled by a personal identification number, or other media, where the appraiser has sole personal control of affixing the signature.
Services pertaining to aspects of property value.
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