Oversimplified Adult Domain Evaluation

So you are thinking about buying that perfect domain for your new adult website. You go to your favorite registrar (GoDaddy.com, Enom.com, IPNIC.com) and search some keywords to see what is available only to find that everything you type in is already taken in the .com genre. So you decide to go to one of the aftermarket domain sale sites such as Sedo.com, AfterNIC.com, or SnapNames.com.

But how do you know what to pay for the name you want? Is there a way to tell how much these intangible items are worth?

Actually, there are several ways to judge the value of a domain. Traffic, number of characters, popularity of keywords, number of keywords, memorability, etc., etc., etc. But for the purposes of this "oversimplified" evaluation, we will focus on the method that most people that deal in domains on a regular basis use to valuate domains on a wholesale level. The formula is quite simple, really, using: [revenue x years]. 

I will use two examples of my domains that are currently pointing to a PPC (pay per click) monetization service and real statistics on that name for one month:

Using the above formula, and using an industry standard X-factor for generic domains on the wholesale market (between eight and ten years’ revenue), sex-eastasia.com would be worth approximately $13,369.32. ((Monthly revenue x 12) = Yearly revenue) * 9 years for generic term) = Wholesale Evaluation Price of the name, or (($123.79 * 12) = $1,485.48) * 9 = $13,369.32.

The X-factor can be raised or lowered depending on other criteria as well. For example, potential trademark issues could lower the X-factor to as low as one or two years depending on the severity of the potential issue. Or the X-factor could be raised to as much as 50 in the case of peruanitas.com simply due to the fact it is a great, rare Spanish generic word and would have excellent SEO potential. 

Using the above formula with a 10X factor on peruanitas.com we would arrive at its value being $3,802.80. Now before you get too excited, and I get hundreds of phone calls, I personally would not sell peruanitas.com for that amount. Reason being is that I understand the potential value of the name if developed into a good, monetizing adult website.

This is the important part!

If you find names that are pointing to a PPC monetization service and you are confident that you can develop them into an adult Web platform that can generate more money than PPC, think very strongly about offering them up to 10X on the name as there would be no doubt you could convert the visitors better than a simple PPC landing page and therefore monetize it at a much higher rate. Therefore, you would make back the 10X in as little as a few months and continue to have a steady stream of generic traffic coming to your website with no bills from Google Adsense or other fee-based traffic driving means.

There are of course some caveats to this method.

1. You want to see more than one month’s traffic stats. In fact, the more they can supply the better. (If you can have the PPC companies confirm the stats, that is the best way to go.)
2. You want to see where the traffic is originating from. Type-in is of course the best and will stay the longest. Link Driven has a shelf life and should be factored into the X-factor.
3. Always do your due diligence on any domain purchase. Research is key to not getting scammed.
4. Use an escrow service to transfer the domain if it is over $1,000 and you don't know the buyer. Better safe than sorry! (Escrow.com, IMonetize.com, Moniker.com.)

Best of luck!

Jerry J. Nolte Jr. is managing partner at Domainer’s Magazine.

This article originally appeared in the June 2009 issue of AVN Online. To subscribe, visit AVNMediaNetwork.com/subscribe.