Local Domain Value: What Go Daddy’s Acquisition of Locu Tells Us About Local Domains

The search engine placement of geo domains, and therefore their value, was adversely affected when Google started posting local listings for professionals and local services several years ago.  Basically, Google got into the directory business and ate your lunch while doing so. For example, a listing like SeattleLandscaping.com might have performed very well in the past, a reasonably developed site on such a domain probably would have earned you a page 1 ranking in the SERPS. Let’s say even if it was #1 on page 1 organically for “Seattle Landscaping,” the domain would now appear below the fold because Google Local’s listings take up the first half of the page – and that is where about 70% of the traffic goes.

That’s been very tough for those businesses that invested in this strategy and depended on that “reliable” organic traffic.  This change has in turn created a vacuum of need for services like Locu.com, which Go Daddy acquired this week. Locu adds value to local professionals and services by managing and publishing listings for their websites in one place and they in turn integrate with all the major directories – one stop shopping which is great for small and medium businesses that not only don’t have the time to do all the work themselves but don’t understand how in most cases.

Go Daddy’s acquisition is an indication that they recognize significant value in developing products and services for local business domain owners, who are struggling on the web. Historically, Go Daddy has always been aggressive at adding value-added services to their domain search and registration business, but it appears they are going out shopping to build up their arsenal now instead of building internally.  Precisely because of this new search struggle for geo domains, local businesses are all the more in need of supporting services to get ahead of the competition.   It’s a competitive landscape and only getting tougher.

All these changes, of course, affect the domain name value for those geo domains (and we are not talking about city.com or state.com or country.com domains – we are talking about geo targeted professional service names like FortMeyersLawnServices.com).  For those who have invested heavily in geo-specific portfolios it may be time to re-evaluate. In our experience, recently, there is virtually no reseller market anymore for any geo-specific professional service domains, but yes, they do still have value for local businesses. The most common value range we see these types of domains selling for to those small and medium size businesses is $500 – $2,500.  At that price it may not make sense to go out and pro-actively market the domains as this process is very time and resource intensive and the margin on the sale may not be worthwhile if you could be spending your time doing the same thing for a domain which is worth 5 – 10 times that.  It certainly doesn’t make sense for a broker to take on such an effort.  It would appear then that the only way to sell such names is to hold and wait for inbound inquiries.

To summarize the premise of the Locu acquisition: A struggling local business is willing to invest more to perform better in search engines and garner more targeted local traffic online.  If they’re willing to invest more, an exact match domain can greatly assist their search engine marketing. Yet, there isn’t a huge profit opportunity for the domain investor or enough room for resellers and wholesale markets to make money anymore. As always, we would recommend discussing your portfolio’s particular value with an experienced domain name broker before making any drastic decisions. In general, for domain owners who have a handful of quality exact match geo domains, they may want to hold for an inbound lead, especially if the geo is a large metropolitan area, or another future search engine change. However, some portfolios are very heavily invested in geo targeted professional domains and can’t afford to continue holding indefinitely, and in fact it probably doesn’t make much financial sense to continue. If renewal fees are daunting or you have held the domains without an inbound offer for an extended period, it’s time to rethink your strategy and have a chat with a domain broker to re-evaluate the domains.  Identify which domains to sell immediately if there is a reseller market, which to hold out for end users, and which make sense to just let drop to avoid any further renewal fees.

The consumer’s need for local isn’t going anywhere, and in fact it’s just getting bigger, it’s just getting more competitive online with a host of new services trying to help those businesses promote themselves to their local audience.  Geo-specific domain names still have a place in that mix of offerings, but they are just not as valuable or essential to those businesses as they used to be.  Will that change?

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