Jun 10, 2024 - by Phil Lodico
How Companies Can Use Generic Domain Names For A Competitive Advantage
This article first appeared on Forbes Business Council on May 9, 2024.
Why are generic terms so valuable? Whether it is in search or domain names, a generic word carries immense opportunity since it often defines categories of information, products and experiences. Consumers using generic terms to seek content often haven’t decided which brand to choose, which presents a huge upside.
A History Of Generic Domains
Category-defining generic .com domains can be just as valuable, if not more valuable when used optimally. Mostly, these got gobbled up over 20 years ago, but many still trade on the aftermarket. Though some are expensive, generic .com domains can produce a substantial return on investment. They can justify high price tags in the form of customer acquisition, new sales and the ability to reach customers in segments where you are not allowed to go direct. Consider Abbvie’s ownership of RA.com, informing potential customers about rheumatoid arthritis and how it mitigates the direct-to-consumer marketing regulations for pharma. Also, generic domains represent tremendous brand recognition and leadership. HubSpot acquired connect.com for $10 million in 2022 and has since utilized the domain to reinforce its core brand message of connecting people. One of the most legendary stories in generic domains history is relatively recent: X.com. Billionaire Elon Musk originally owned X.com, initially the name of an online bank he co-founded. In 2000, X.com merged with competitor Confinity, and in 2001, the combined company became PayPal. Musk eventually left PayPal, but the company retained the domain after his departure. In 2017, Musk repurchased X.com from PayPal, likely expecting to use it for SpaceX or Tesla brands. Then, in 2023, X.com was used for Twitter features as it was rebranded as X. And the rest is history: X is now one of the most talked-about brands in the world, and everyone knows where to find it online. There are virtually no misspellings when the domain only has one letter!
The Benefits Of Using A Generic Domain
For another example of premium generic domains at work, look no further than the competitive flower delivery business. The generic domain flowers.com resolves to 1800flowers.com, while florist.com leads to FTD.com. Clearly, the top merchandisers in the floral delivery industry have realized the value of generic domains, and both are capitalizing on searches for generic keywords to bring traffic to their commercial websites. Generic names hold value like generic keywords do because they drive customer and prospect traffic to websites. Like keywords, generic .coms apply to a wide audience of people who may or may not be aware of the brand yet. Also, generic .coms can psychologically signal marketplace dominance, transmitting a ubiquitous message that the company is a power player in that category. When a company owns a generic domain like flowers.com, the message they send is, “We not only play in this category—we own this category.” Similarly, owning a generic .com is a strong defense. Even though 1800flowers and FTD own flowers.com and florist.com respectively, they don’t market with those specific domains heavily. Instead, both companies redirect those generic domains to their main sites, effectively blocking their competitors from owning those domains and selling flowers using them. By owning the generic domains, these companies leap ahead, leaving competitors lagging behind. Generic domains can also help companies to accentuate their reputations and further their competitive differentiation. Aspirin.com redirects to Bayer’s aspirin site, thereby scooping online traffic from all seeking a pain remedy. Another example is mortgage.com, which leads to the Citi Mortgage Learning Center, funneling general interest in mortgages directly into Citi’s sales pipeline.
How To Strategically Use A Generic Domain
Want in on the generic domain game? Keep in mind these key considerations:
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The chosen generic domain should pass the “radio test." In other words, it should be short and memorable enough that someone can hear it on the radio and remember it. A domain like ring.com is ideal because it is straightforward and clear, and everyone knows how to spell it. Plus, it’s also associated with a doorbell ringing. If the domain is going to take time to explain how to spell it correctly, then it’s not a great generic domain.
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Check for existing use. Most generic domains are already owned by a person or entity, so check if the domain is really being used for a constructive purpose. Visionaries and domain investors sometimes buy generic domains with a plan to sell them off, so they are more open to selling. If the domain already redirects to another site, it may be harder to buy back. However, if the domain is being used as a “parking site” where advertising is being sold, it may be easier to convince someone to let it go. Companies or individuals realizing true value from their generic domains and investing resources in them will be less likely to sell, which could drive the price ever higher. Though most generic domain sales are sealed under nondisclosure agreements and kept private, details for some are publicly available. Information sites like DNJournal compile lists of top domain sales.
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Consider legal issues. One caveat is to consider legal issues surrounding generic domains, such as trademark infringement laws. Treading too closely to legally registered, protected names could result in lawsuits or the loss of the domain name. Some companies enlist help from consultancies or corporate domain registrars that advise organizations about domain name purchases and portfolio management. In addition, aftermarket domain marketplaces can help companies research which domains might be available for sale and help broker the deal. When used to their maximum advantage, generic premium domains can be as good as gold. However, because they can be costly, companies should have a solid plan for what to do with the domains if they are lucky enough to obtain them.
With more than 15 years of domain industry experience, Phil has long been a vocal advocate for brand owner’s rights. He was most recently Managing Partner at Fairwinds Partners, the industry’s leading domain name consultancy. While at Fairwinds Partners he advised multinational corporations on their domain name strategies to increase traffic, grow revenues, and improve online customer experiences. He has been actively involved in ICANN’s Business Constituency, was a member of ICANN’s 2009 Nominating Committee, and has served as Vice President of the Coalition Against Domain Name Abuse (CADNA). A graduate from Hobart College, he holds a bachelor’s degree in Economics and Psychology, receiving honors for his work in Consumer Choice Theory.
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