Search-Optimized Domain Portfolio Sells for $164 Million

February 2005

Internet marketing firm Marchex Inc. has finalized a deal to pay a whopping $164.2 million for Name Development Ltd., which displays keyword advertising across a portfolio of more than 100,000 domains. The deal, along with the recent sale of a misspelled domain name for $112,000, offers evidence that mistyped URLs and other "accidental traffic" have become big business.

The price tag on the sale of Name Development is more than the $155 million paid by SAVVIS Communications to acquire Cable & Wireless America, and nearly as much as the $176 million Freenet paid for the hosting operations of Germany's Tect AG. SAVVIS gained about 350K hostnames in the C&W deal, while Freenet acquired 2.2 million hostnames from Tect.

Given those valuations, why would Marchex pay $164 million for an obscure company that owns 100,000 domains? The deal was driven by the growth of Internet keyword advertising, which has enhanced the value of domains that can attract traffic without any original content, allowing speculators to turn typos and search-optimized advertising sites into dollars.