Should a Startup Spend VC Funding on a Domain Name?

Forbes is out today with an article about whether Start Up companies should spend some of their funding on a domain name ?

One of the first interesting parts about the article was this quote, “Domain names are less important than they were in the first Internet wave, because so many people will access your service on mobile and/or via apps, and because type-in traffic is declining.  However, they remain key to your email identity, and fundamental to your marketing and even capital-raising.”

The article does go into the fact that companies with better names have tended to be ahead of their competitors using an inferior name. FourSquare vs Go Walla was one example listed.

From the article:

  1. Fit. The name needs to match the business.
  2. SEO. You want your company to show up first in the search results whenever someone is looking for a product you sell. Keyword rich domain names get a considerable boost in search rankings; an exact match is even better. According to Bill Hartzer, Director of SEO for Standing Dog Interactive, exact match domain names “will astronomically increase the chances that the site will show up on the first page of the search results for a keyword search that contains those keywords or keyword phrase. Currently, this ‘additional ranking benefit’ is only valid for .COM domain names that do NOT contain hyphens. The only other caveat is that the domain name must actually be a live website on the same topic as the keyword. Ideally, the home page should be about the topic of the keyword and it should be ‘optimized’ for that keyword phrase. Just purchasing an Exact Match Domain name is not enough.”
  3. Linguistic Characteristics. Although often overlooked, certain aspects of how a name is formed influence its memorability and appeal. The name’s spelling should be obvious from its pronunciation. Names with homophones will cause needless confusion. Other non-semantic variables are important as well. Using a dataset of over one million domain names, a study at Wharton and INSEAD empirically proved that nine such variables affect site rank by 2.75% or more. A well-named site can thus easily rank 10-20% higher than a poorly named one on a purely non-semantic basis. The best names tend to be short, to use dictionary words, to be devoid of hyphens, and/or to include a numeral.  The sound of the name matters as well. The initial phoneme should be easy to articulate. Simple vowels work best. The presence of phonemes associated with disgust, e.g. the [uh] sound in “muck” and “yuck” and the [ew] sound in “puke,” anywhere in the name can have a dramatic effect in specific contexts. Gaming sites with such sounds rank 44.18% lower, while adult sites with the same sounds rank 7.24% higher.  

This apparently is going to be a two part series with another article discussing building on a premium name.

Read the whole article here.

{ 4 comments… add one }

  • Leonard Britt May 1, 2013, 11:13 am

    A startup needs to move from concept to an operating business which generates revenue and operating cash flow. Resources are likely to be limited so a one-word .COM may be out of reach. However, even when branding may not be viewed as a near-term priority, I see no reason why a carefully evaluated low five-figure expenditure is extravagant. Business travel can blow that amount fairly quickly and what is your ROI on that?

  • HowieCrosby May 2, 2013, 12:55 am

    Thanks Morgan, at least Forbes tidies up with a positive in the quote above, I read the article which is interesting, and I believe the article is good exposure for domain industry.

    However, I presume there is evidence based research on the Forbes quote “Domain names are less important than they were in the first Internet wave, because so many people will access your service on mobile and/or via apps, and because type-in traffic is declining.”?
    Or is this just common tech sense?

    • Morgan May 2, 2013, 12:02 pm

      Thanks for your comment @Howie! Just wanted to let you know it was Raymond who wrote this post, he is the one who deserves the credit for breaking this story 🙂

  • Chris May 3, 2013, 11:26 pm

    Great exposure given by this article. It is important to note that a startup buying a premium domain name is an asset that can be resold in the future in case the startup didn’t take off.


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