Last November, Amazon acquired a company called Quidsi Inc. in a deal valued at $500 million. Quidsi is the parent company of BeautyBar.com, an online boutique for luxury beauty products; Soap.com, the largest online specialty store for health, personal care, and household products; and Diapers.com, the largest online baby care specialty store. Diapers.com is also the fastest-growing e-commerce website in the world.
According to Internet Retailer, Diapers.com alone generated $292 million in online sales in 2010, up 60 percent from its 2009 sales.
Diapers.com is just one example of the amazing marketing potential of category-defining digital assets, particularly domain names. When properly leveraged, owning a strong category-defining domain name can capture large volumes of online traffic, thereby driving revenue and increasing online brand presence.
The ability to rank well in search engine results is a key factor that makes category-defining domain names valuable digital assets. Multiple factors determine where a website ranks among a search engine's results for a given query, but the weight placed on each factor (i.e., the full details of each search engine's algorithm) is not publicly known. We do know, however, that Google and Bing attribute better rankings to websites with high levels of parity between their domain names and the keyword (i.e., non-brand) terms people use to search for them. One example that illustrates this concept is the keyword term "shopping." Overstock.com, Macy's, Shopzilla, Amazon, QVC, and Target all appear on the first page of Google results when users search the term "shopping." But Shopping.com, owned by eBay, beats out all these retail giants, taking the number one spot. Because category-defining domain names attract natural "search engine love," their owners have to invest less money in optimizing the website itself to achieve high rankings.
From a branding perspective, a category-defining domain allows a marketer to own that category, and position its brand as the definitive online destination for that category. Drugstore.com, for example, is ranked 46 on Internet Retailer's list of top 500 online retailers, making it one of the biggest online health and beauty specialty retailers (second only to Amway Global). One factor in Drugstore.com's success is its category-defining domain name and brand. It ranks at the very top of organic search results for both "drugstore" and "online drugstore," and, according to Compete.com, on average receives about 4 million unique visitors per month.
Category-defining domain names are instantly recognizable and easy to communicate, making them a solid foundation on which to build a new brand. What could be more intuitive for a site that sells movie tickets than MovieTickets.com? Instead of starting from scratch and having to work to earn brand equity around a completely new term, category-defining domains provide a degree of instant equity for the category they represent. Brown Shoe Co. is probably best known for its Famous Footwear brand of shoe retail stores. But in 2001, Brown launched Shoes.com as an e-commerce platform. Last year, Shoes.com brought in $120 million in sales.Of course, this intrinsic equity of category-defining domain names does not automatically guarantee the success of a new brand, but it can give marketers a leg up on the competition.
In addition to Drugstore.com, there are 19 other retailers on Internet Retailer's Top 500 list whose primary domain names are category-defining. For 18 of these 20, the category-defining domain name is also the name of the brand (e.g., Ancestry.com, Wine.com, etc.), and 12 of these 20 had sales of more than $50 million in 2010.
Many companies have also realized that owning category-defining domain names can boost their existing brands by allowing them to capture online traffic that they might not otherwise receive. For example, whenever internet users type the domain Mortgage.com into their browsers, they are directed to CitiMortgage.com, Citi's mortgage page.
PetSmart is another example of a company that uses generic domain names: It owns Pet.com, Pets.com, PetFood.com, Dogs.com, and DogFood.com, all of which point to PetSmart's website. CBS Interactive owns TV.com, Radio.com, VideoGames.com, and others; SalesForce owns Database.com; Barnes & Noble owns Book.com and Books.com; and Sleepy's owns Sleep.com and Mattress.com. These are just a few examples of brands that are using category-defining domain names to capture additional online traffic and boost their business.
To reiterate, category-defining domain names can be great digital assets to marketers and brand owners, whether they use them to augment their existing brands or to launch new brands. The downside (or the upside if you are one of the lucky ones to own one) is that there is a limit to the number of valuable category-defining domains that exist in the current domain name space. In other words, there is only one Makeup.com, and L'Oreal owns it -- meaning Estée Lauder, Sephora, and other cosmetics companies cannot own it. However, beginning in January 2012, marketers and other entities will be able to apply for their own generic top-level domain names (gTLDs), or the extensions that come after the "dot" in web addresses (.com, .net, .jp, and .mx are all examples of top-level domains). If they so desire, marketers will have the chance to apply for category-defining gTLDs, meaning Sephora could apply for .makeup and advertise domain names like Mascara.makeup and LipGloss.makeup.
Whether new gTLD domain names will achieve the same power and value as category-defining .com domain names remains to be seen. But even as the internet and the domain name space continue to evolve, one thing has held constant: When leveraged correctly, category-defining domains are capable of attracting large online audiences and have the potential to provide a great deal of value to brand owners.
Taylor Frank is VP of strategy and development for DigitalDNA.
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