Editor’s note: This item is republished with permission from Global Edge Marketing Ltd. The original post can be viewed here.

It has been seven days since Colombia’s domain extension (.co) went on sale internationally, and already we have had three calls from cyber-squatters wanting to sell these domain names to international agents.

Do not be taken in!  The domains are rarely worth the registration fee (around $31.19 in U.S. dollars) let alone the thousands of (dollars) these companies are asking for the ones they are sitting on.

Reasons to buy a domain name

There are only two reasons to purchase a domain name:

1. It is a "brandable" domain name or the purchase helps to protect your brand

2. It helps to deliver search-engine traffic

Domain names using .co may not fit into the first category and there are often cheaper alternatives for achieving search engine traffic.

The best domains

The best domain names are short, unique, memorable and ideally use words that position you in the mind of your audience (think PropertyFrontiers.com — emerging market specialist, or PayPal.com — helps you pay for stuff).

To be memorable, your domain needs to pass the radio test. Will it sound credible on a radio advertisement? Only .com and country top-level domains (.co.uk, .com.au, etc.) really meet these criteria in the commercial sector. Dot-net is close but it still says amateur. Using .gov and .org domains works for not-for-profit companies.

Why using .co could lose you money

If you begin using a .co domain two things will happen:

1. You will make everyone ask a clarification question when you mention your website or e-mail address to them. This is at best a waste of time and at worst creates a bad impression.

2. People who are aware of you will type in .com and .co.uk instead of .co so you will lose traffic and lose customers

Worst still, Google’s search algorithms are locally biased. Dot-com and .net names are recognized international domain extensions, but it is not clear how it will deal with the new .co extension. It is possible that using the .co domain will make you very visible in Colombia, but pretty much invisible elsewhere.

Protecting your brand

You may be tempted to protect your brand, and at (roughly $31.19) this may be worth doing, but the financial risks are actually extremely low. Even if your competitors had the inclination, in most cases, they would need to spend so much money on link-building it would not be worth the effort.

Even if they did, your brand should be trademarked and could be protected anyway through the courts.

Search engine benefits

Building microsites that rank for keywords with both volume and intent to purchase, (e.g. Marbella Property) can be extremely profitable and this tactic is more effective when combined with a domain name that matches the keyword you are aiming for (e.g. www.marbellaproperty.net).  

Buying a .co domain name may help with this if all the other extensions have gone, but it is probably not worth paying a premium for.

False assumptions

Domain-name trading is multi-million-dollar business, and domains like www.condo.com have sold for more than $1 million U.S. dollars. However, just because a .com has sold for a large amount of money, don’t assume a .co extension will.

In most cases they may not even be worth the registration fee.

Copyright © 2010 Global Edge Marketing Ltd.

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