The Definitive Guide to the SEO Benefits of Domain Names
This article describes the two SEO characteristics that can benefit domain names (domain authority and referring domains), why these characteristics matter, how the metrics can be measured, and the financial quantification of the metrics.
Student Access (Full Version): https://www.dnacademy.com/course/seo-benefits
Why are so many seemingly terrible domain names selling for such high prices every day in auction?
Let’s take a look at a few sales from the recent past:
|Domain Name||Date Sold |
|Sold Price (US$)||Avg. Price of
Similar Domains* (US$)
*Over the past three years with matching TLD (when possible) and similar SLD.
From the data above, we can see that each of these sale prices is 160% to 1,300% higher than the average price of similar quality domain names that have sold over the past three years.
Why are these domain names selling for such high prices?
Can we attribute the increase in sales price to a new trend in the world? To a recent frothy uptick in auction activity? Or is the industry full of new investors who simply don’t understand how to value domain names?
The answer is none of those. Instead, the answer has to do with the domain name’s SEO characteristics.
Let me explain.
Domain Name Lifecycle
Let’s start with the basics. Domain names give a business or personal website a location on the internet. When someone has an idea for a website, they register a domain name and build the website.
As long as the company or person continues to pay the renewals of the domain name registration and website hosting, the website lives on.
If a domain name registration is not renewed, the domain expires, the website doesn’t resolve and the registrar takes possession of the domain name. The registrar then allows it to be registered by someone else, in most cases through an auction to the highest bidder.
There are myriad reasons why a domain name might not be renewed, including:
- A business stopped operations.
- A company changed names.
- A person shut down their website.
- A payment plan failed to approve a renewal charge.
- The person responsible for the domain name renewal passed away.
Regardless of the reason, however, any links to the (no-longer-resolving) website from another website – known as backlinks – continue to exist after the domain name expires.
I used to think that as soon as a domain name expired and didn’t resolve, backlinks to that domain name would become worthless because search engines would notice and invalidate them somehow in their database. But it turns out that they don’t. The value of backlinks can persist for long periods of time.
How is that possible?
It’s usually a simple matter of priorities. Website owners have a lot of things to do every day. Publish new content online. Promote via their email newsletters and social media. Sell advertising. Worry about traffic. Attend to customer support inquiries. And about a hundred other things. Finding broken links – links to another website that no longer resolves – is usually pretty low on their priority list. (I know it is in my activities for the past 20+ years of publishing.)
As a result, backlinks can endure for months, years or indefinitely.
Is it possible that some broken links do get noticed such that they are removed or replaced in a week, a month or a year? Yes, it’s possible. But – as mentioned above – ferreting out broken links is not generally at the top of a website owner’s to-do list.
SEO and Google
As long as there have been search engines to help users navigate the internet, there has been search engine optimization. The goal of SEO is to improve a website’s organic ranking in search engine results. Getting higher up in the search results means a website can get more traffic, which in turn allows it to sell more advertising, products or services.
When internet search engine Google launched in 1998, it quickly became the most popular search engine in the world. Because of this popularity, SEO specialists were particularly interested in getting to the top of Google’s rankings.
Google’s sole purpose is to present the best webpage at the top of the search results in response to a user’s query. What made Google more effective than other search engines back then was their use of backlink data in assessing a webpage’s value, or authority, and thus how high it should rank in search results. They called this rating PageRank.
Their PageRank concept was simple: if a website is valuable to people, those people will share it with others by creating a link to it from their own website – i.e., backlinks. Google looked at each link like it was a vote, and more votes meant a website was more worthy of being ranked higher.
But then people manipulated links to rank higher in Google. For instance, “links farms” became a popular SEO black hat tactic to trick Google into thinking that many links were coming to a website from a large number of other, unconnected websites.
It became clear to Google that not every “vote” was equal, and some referring websites warranted higher voting power – essentially a weighted vote. Google adjusted its PageRank algorithm to reflect the quality of backlinks, not just the quantity. In this way, a backlink from a website with its own high PageRank (i.e., high authority) would have a stronger effect on your site’s authority (and thus, search results ranking) than a backlink from a low-authority website.
Google’s PageRank values for websites ceased to be published publicly starting in 2013. But what didn’t stop was the importance of inbound links to a website.
Three takeaways people understand – at a high level – from Google’s algorithm are:
- The more links your website receives, the more valuable your website must be.
- If you get a link from a high-authority website, that is worth more than a link from a low-authority website.
- Google’s job is to display search results that include valuable results (webpages) for the user’s query.
For the purpose of this lesson, we are going to define domain authority as the relative value of websites (or domain names, if they aren’t attached to a website). The more valuable a website is, the higher its authority.
SEO Meets Domain Authority
Over time SEO specialists realized that domain names that expire still have their backlink profiles from other websites, and the authority associated with those backlinks could be harvested by the new domain name owner. Such a domain name is said to have SEO benefits because of the head start it gives the new owner in climbing the search engine rankings.
If they use the Wayback Machine, enterprising SEO specialists can see what used to be on each webpage of the domain name’s website prior to its expiring and then create original content on the same webpages in order to keep those backlinks alive. (Black hat SEO specialists will copy with impunity, an illegal practice when someone else owns the copyright for the material.)
With websites built with a similar editorial focus as the prior website, and with existing backlinks leading to webpages with similar content, there is nothing for those providing the backlinks to suspect is out of place. The updated website continues garnering the benefit of all those backlinks to its domain name.
But wait, doesn’t Google crawl the web daily and know the website changed?
Sure. But Google also knows that things are not clear-cut. They know people sometimes forget to pay their hosting invoices due to a blocked credit card, that hosting providers fail due to DDOS attacks, that websites are hacked and taken down by malicious groups, and so on – and Google doesn’t want to penalize the website owner for a temporary glitch that may be out of their control. Additionally, with the latest GDPR changes that protect Whois information, Google can’t always determine when a website changes owners, and definitely can’t make a judgment call about whether the new website content is better or worse than the prior content.
So the backlinks stick around, and their benefit (sometimes called backlink juice or SEO juice) continues to flow.
Tools for Assessing Domain Authority
There are many tools that help SEO professionals determine the domain authority of a given website. The top three tools include Ahrefs, Moz and Majestic. They each have their own definitions for domain authority:
Semantics aside, all three of these applications measure quality and quantity, but values are not comparable across platforms – much like website analytics aren’t the same across platforms because each platform defines variables slightly differently.
You need to pick one application and stick with it in order to see trends and differences in relative terms using the same data and process. For this lesson, we’ll standardize on Ahrefs because they provide a free backlink checker at https://ahrefs.com/backlink-checker.
Quick Definition of Ahrefs Terms
As we mentioned above, Ahrefs’ Domain Rating (DR) is their metric for the strength of the backlink profile. The higher the DR, the more likely Google is to give the weight of pages on this domain name more value and thus a higher-ranking result in organic search results.
DR is calculated on a graduated scale that I’m defining, and may change from time to time:
- 0 to 9 is likely not worth your time
- 10 to 19 might be worth your time
- 20 to 49 is good
- 50 to 69 is strong
- 70 to 89 is awesome
- 90+ is stellar
Google.com, for example, has – as of the date of this article – a DR of 98 (out of 100), while DNAcademy.com has a DR of 69.
Backlinks are the total number of links from other websites to the target domain name. This number includes all links, even if, say, 1,000 are coming from a single website to the target. As such, the number of backlinks is less important than the referring domains count.
Referring domains is the total number of unique domains linking to the target domain name.
For our analysis purposes, we will focus on DR and the referring domains count. The DR is the quick-and-dirty value of the domain name with respect to the quality and quantity of the referring domains. The referring domain count actually shows you the data underlying the calculation of the DR.
And, as previously discussed, it’s not just the quantity of referring domains that matters, it’s the quality of such referring domains that matters too – high-authority referring domains carry more value in Google’s algorithm for ranking websites in their search results. A backlink from Google.com carries more weight than a backlink from MikeCyger.com, as much as it pains me to say.
In addition, the relevancy of a backlink matters. If you are investigating a domain name that was used for car insurance in the past, a backlink from a DR 40 that is focused on domain names is not going to be as valuable as a backlink from a DR 37 that is focused on insurance. That’s why a full analysis – and not just looking at the two numbers of DR and referring domains – is important in the due diligence process.
Typical SEO Results for Domain Names
Most domain names that sell in auction have few backlinks, if any, and no domain authority. They will have a Domain Rating of zero, zero backlinks, and zero referring domains.
Here’s the SEO profile for MikeCyger.com, a domain name that has never been developed:
A lightly used domain name, or a domain name that has only email associated with it, probably has only a few backlinks. An example is the domain name HealthAuthority.com:
In both of these cases, the SEO characteristics contribute little or no value to each domain name’s overall value.
Backlinks are considered to be valuable when they come from high-authority websites like Wikipedia.com or Yahoo.com, government groups, and reputable educational institutions.
For example, CakeHealth.com expired and sold at a GoDaddy auction on 9/30/2020 for $6,200. The SEO characteristics are as follows:
We can see that a DR of 40 makes this a very good domain name for acquisition, but even more important are the backlinks from high-authority websites like Entrepreneur, Joel On Software, Forbes, CNBC, Wired, Inc, Cloudflare, Fast Company, Adweek, VentureBeat, The Next Web, NerdWallet, Mint.com, MobilHealthNews and others.
Each of these links is hard earned and has a monetary value associated with it. We’ll get more into that in a moment.
Let’s first talk about the benefits of buying expired domain names with strong backlink profiles.
The Benefits of Backlink Profiles
Traffic is the lifeblood of websites. Without traffic, websites cannot sell advertising, products or services.
Domain names that have a strong backlink profile offer the following three advantages:
- Traffic from people following the links to a webpage on the domain name
- The PageRank benefits that can help the domain name rank higher in Google
- The social proof that comes from promoting “As seen on” high-authority websites
I’ve heard one internet entrepreneur say that he’d never build a website on a new domain name registration because launching on an SEO-enhanced domain name can reduce by years the cycle time of getting that website to rank well.
Having SEO authority is just another domain name characteristic that might prompt an investor or internet entrepreneur to buy a particular expiring domain and hold it until a person or company wants to buy it for their business.
A few popular stores for SEO domain names include:
Building Versus Buying
But can’t you just build links to your domain name instead of buying a more expensive domain name with SEO benefits?
Building versus buying is the classic trade-off of money and time that has been discussed a million times. Actually, 429 million times, according to Google:
Sure, you can buy a fresh hand-registration domain name, write stellar content that people want to share and link to, hire a marketing representative or consulting company to generate leads for you, pitch authors of high-authority websites for a quote and maybe a link, and call in favors to your professional network. It can work and it does work.
Here’s an example of a typical solicitation for a link:
And here’s an example of what you can expect by going the “build” route:
Yes, it is 100% possible you can do it yourself with little cost but your time. The trade-off is that it will take years to accomplish your goals, and – in more cases than not – it may never happen.
Alternatively, you can purchase an SEO domain name that matches your desired website intent and get a head start on your search engine indexing and ranking. It can literally shave years off the ranking process of your website.
In an article entitled “How to Generate ROI from Building Out On An Aged Domain” published by Richard Patey on the Flippa.com blog, ODYS.global founder Alex Drew said: “Aged domains [with backlinks] are one of the greatest business opportunities for the current state of SEO-based online business models. Why go with a brand-new domain and spend 4-5 figures on links, building everything from scratch, when you can kick-start your venture with one that is already juiced up by almost impossible-to-get links?”
As when acquiring any domain name at auction, buyers must make smart decisions about the value of referring domains and how buying a domain name with SEO benefits might expedite the development efforts. Proper due diligence is required, and purchases should not be entered into hastily.
How to Value SEO Domain Names
In DNAcademy, we teach you how to:
- Fully characterize a domain name
- Find comparable sales
- Set valuation ranges for wholesale, retail and maximum retail (to the highest and best use case)
Two of the characteristics of the DNAcademy Valuation Worksheet include domain authority and number of referring domains, so that you – as a domain name investor – can understand if there are any extrinsic characteristics that might increase the value you place on a domain name being evaluated for purchase or sale.
The biggest takeaway that I want you to know is that high-authority backlinks have a monetary value, often in the hundreds of dollars to low thousands of dollars – per link.
I was recently approached by an SEO consultant specializing in backlinks from high-authority websites. Here was their “market rate” pricing for a single link within an article on these websites:
|Website||Domain Authority||Link Price (US$)|
Generally speaking, the greater the domain authority the more valuable a link from that website is to a website owner.
You can see why paying $6,000 or so for a domain name with just four high-authority backlinks can, in some cases, be worth it. Those backlinks are guaranteed links that you can see and value on your own terms, unlike the links you could pay an SEO specialist to get, whose placement in an article or the context in which it will be presented is not certain.
It’s also interesting to note how a SEO domain name marketplace thinks about valuing domain names with backlinks. Here’s their process:
Here is a more complete table of the value of a referring domain backlink from some of the more popular websites that SEO specialists use for their calculations, along with the DR for each domain name:
Before we conclude the valuation section of this lesson, I want to put valuation based on SEO characteristics into perspective.
The way the SEO domain name marketplace values domain names is just one way. Over the course of collecting data for 80 SEO domain names over 40 days in July and August 2020, I documented that the average amount paid for a domain name per referring domain was $10.
Averages can get you in trouble when doing an analysis, though. In the data I collected, the standard deviation of $12 indicates the data is all over the place. But if you can verify that most referring domain links are unique and relevant, then I think using a rough dollar figure like $5 or $10 is fine.
What’s more important is looking at the data. A domain name might have 100 referring domains, but whether the links are relevant and what their DR values are will dramatically influence the value of the domain and what you are willing to pay.
If, for example, the average DR of the 100 referring domains is 15, you might estimate the value for the domain name to be $500 to $1,000 ($5 to $10 per link). However, if a closer look reveals that 90 of the 100 referring domains are DR 7, but 10 are in the range of DR 80-90, paying $5,000 for the domain ($50 per link) might be a fine deal. Knowing that information helps you as an investor value the domain more readily.
Here’s the full data set from the 40 days of SEO domain name collection:
Expiring Domains Come in All Shapes and Sizes
All types of domain names expire. Here are but a few examples.
You can find domains like Traffiliate.com (DR 11), which used to be a specialized ad network that can be used as a marketing blog, an affiliate site for advertising software or a lead generation site for marketing companies.
VAMegaProjects.com (DR 33) used to be a website covering topics on the rail and transportation system in Virginia, USA. Today, it could be used as a Virginia-focused news site, commercial property development in Virginia, or a transportation site specific to Virginia.
EvergreenSeeds.com (DR 35) used to be an ecommerce store offering 350 varieties of Asian vegetable seeds. Today, it could be a gardening blog, an affiliate site for seeds and plant starts, or a lead generation site for landscapers.
If you wait and watch long enough, you can likely find domain names covering something you’re passionate about or interested in. Comic books? Check. Tennis? You bet. Latina news? 100%. Gadgets? Uh huh. Travel? Too easy, yes.
Taking Advantage of Existing Backlinks
This is sort of the “secret sauce” that only SEO specialists understand. And it actually takes some work to do, so I don’t recommend it to the uninitiated.
In general terms, this is how ones goes about making use of a domain name’s existing backlinks:
Again, this is not a procedure that I recommend people implement if they are not well versed in SEO. As with anything requiring specialized skill, consult a professional with past experience and success.
Reaching a Clearer Understanding
This lesson started with a table of domain names that seemingly sold for more than the names alone would suggest they are worth. Let’s now revisit that table of domain names with two new columns added: DR and number of referring domains.
|Domain Name||Date Sold |
|Sold Price (US$)||Avg. Price of |
Similar Domains* (US$)
|DR||No. of Referring Domains|
With this new information you can better understand the reason these domain names sold for much higher than the average price of similar domains – it’s because of their SEO characteristics.
All of these domain names have “good” SEO Domain Ratings with referring domain values ranging between $2,505 and $13,110 (calculated roughly as $5 multiplied by the referring domains count). Assuming you had a business use for the domain name (e.g., they are relevant to your need) and that the referring domains have value (e.g., are not faked links), you can see why these domain names would be attractive to a prospective buyer.
Finally, these two SEO characteristics of domain names – domain authority and number of referring domains – are only two of the 40+ total domain name characteristics and should not be evaluated in a vacuum. Attributing too much value to one or two characteristics can lead you astray. A brand like EvergreenSeeds.com will always be a better business brand than mp3newswire.net.
Special thanks to Sean Markey for his assistance and expertise in helping me understand this topic over the past few months. If you found this lesson interesting, you should read Sean’s Substack newsletter that’s focused on expiring domain names, what their value is, and how they could be used as a business going forward.