Is it Profitable to Invest in Domain Names?
In this article I will be analyzing the fact whether or not investing in domain names is profitable venture for you. I will be including different perspectives of authority sites like moz, godaddy, and businessinsider, and concluding it accordingly.
To start off, I would say that the domain name is the property you buy and register on the internet through ICANN (Internet Corporation for Assigned Names and Numbers), much like Real Estate in the physical world. In lay man terms, it’s the website address that you give in your Internet Browser address bar. The name that you want for your website/domain needs to be unique and should not be taken up by anyone else. Otherwise it can hurt your brand presence both online and offline.
The SEO experts of the internet AKA Moz, suggests against the buying and selling of Domain names for profit. It is pertinent to include here that the Moz Community advice is limited to SEO perspective only and not the aftermarket view. So in a sense, there advice is one of several perspectives on the take.
The Moz community states that a domain name has to be optimized for Search Engines to Index them higher and later they are sold. However, the domain names that are short, premium are sold on auction sites without the need to be optimized by the domain owner. So their view on Labor cost on optimizing the website and getting a decent return off it, can be negated.
The Moz community, however, makes a valid point about the domain names that have a “dirty past”. It means there are Black Hat Techniques used to optimize the domain names which helps them to rank higher in Google. These techniques include buying backlinks for a price, overuse of online directory submission and poor guest blog comments etc. These tactics are fake and temporary; and are meant to elude the buyer into buying the domain name. The rankings fall shortly when google penalizes the site for fake optimization and the new owner is left in shambles.
The other interesting thing mentioned by Moz Community is by posing a question to their audience. They say,” is it a sustainable income?” The majority of the answers were negative. For them investing in domain names is based on luck and gamble. One week you might hit jackpot and sell a domain for $1000 and the next you will be sitting ducks with 5 of them nobody wants. To counter this, I devise having a diverse and vast portfolio in your bucket. For example domain names related to IT, Management, Health sector etc. The benefit of this tactic is that if one domain sells high it can make up for the wait time and cost of other domains purchased.
Godaddy, the company which deals in domain name registration and hosting, is in support of domain names buying and selling. One may think that for their own business growth they have to promote it. However, there are other authority sources which supports there claim like business insider and Investopedia. According to Godaddy, it’s a fruitful idea to invest in domain names. The domains that were bought on mere $10 or less 15 years ago are sold on millions today. It goes on to give us some tips and tricks to do successful in our venture.
The first one is to start with your interests and area of expertise. For example a person who knows more about cats should own more domains related to it. A person who is a programmer should know more domains related to IT field. The key here is to understand your Audience and the sales will follow.
The second tip is to check the availability of the domain. May be you like a domain and it’s not yet taken up by anyone. In this situation you have to directly purchase it from ICANN instead of the middle man. This might save you a lot of time and effort. If however that domain name is purchased by someone you have to contact the owner and negotiate a price in the aftermarket.
A great place to look is http://www.auctions.godaddy.com
Once you have decided on the domain name, it’s time to decide what the fair price is. Use http://www.namebio.com to achieve this objective. Next, select a trusted brand like Godaddy and Afternic to ensure that the Seller gets the money and the Buyer gets the domain.
The investing in domain names have a long learning curve so make sure you ask question in forums like http://www.namepros.com and http://www.dnforum.com ; to keep abreast of industry trends via resources like http://www.domaining.com ; and reach out to the Afternic and GoDaddy Aftermarket support teams.
The Businessinsider published an article by the name of, “Why $10,000 for a domain name is still cheap”. It advocates the trend of investing in the domain names by comparing the expenditure on the domain names to other traditional marketing channels Billboard, Mobile and Radio Advertising. The Article makes a solid case about investing in the domain names.
Practically a domain name can be worth any amount but most sells for around $5,000 to $20,000 – premium domains and short domains however can easily command $100,000 or millions. Billboard Advertising is some of the most expensive advertising around ranging from $35k to $60k. Mobile Advertising is the second expensive on the list with$20K. In this method the truck carries the billboard around the city for promotion. Even radio ads are not cheap costing up to $200 per shot.
This leaves us with Domain names which if purchased for even $10,000 will have $8 year registration fee, making less than $1 a month. Of course there are other expenses such as building a website and SEO but all of these expenses are costs which go directly to building value to something you own – not airtime or billboard space you are leasing!
After above analysis we can conclude that one can buy and sell domain names to make a profit. However, there are certain precautions one must take before plunging into this venture. One should be aware of certain Black Hat Techniques the domain sellers use to temporarily boost its SEO ranking. One should not, “keep all the eggs in same basket”, meaning one should diversify the portfolio to minimize the risk and maximize the profits. The Investor should start with his/her passion, interests and expertise and build portfolio accordingly. In other words, one should know their audience before purchasing domains.
Written By: Waqas Khan
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