For as long as I’ve been serious about investing in domain names, I’ve learned that there are many different business models domain investment companies utilize successfully. There are differing levels of risk and reward for varying business models, and while most people employ similar models to each other, I’ve found that mine is fairly different compared to most other companies who operate in a full time capacity.
Some people seem surprised when they hear I only own a few hundred domain names. Across the five domain registrar accounts I use, my two companies probably own fewer than 400 domain names at any given time, yet I make my living as a domain investor. My domain portfolio is a fraction of the size of most other professional domainers, and I’ll share some insight into how I operate and why having a more trim portfolio is helpful to my business model.
My focus has almost always been to buy domain names to re-sell to targeted businesses. Despite the lessening importance of an exact match domain name, I continue to find companies who are interested in owning their category defining domain name. For my business, I am less concerned about the traffic and revenue a domain name receives and more interested in evaluating whether or not I could see a company buying the domain name from my company for its business. With some domain names, I wait to receive offers, and with others, I am proactive about selling.
A few years ago, during the economic downturn that hurt the US and world economy, I found that the sale of my domain names slowed. As a result, I slowed my acquisition rate, and my business suffered. I decided to focus on having some of my domain names developed into websites, and I launched a number of properties. Despite initial successes with mini sites, most of those petered out or didn’t move the needle. Larger sites of mine, like this blog, have become financially successful. This has helped me significantly, as there are now two different revenue streams for my business.
I’ve found that most other domain investors own many hundreds or thousands of domain names. Some investors rely on monetization via domain parking or other means of monetization. PPC can still drive significant amounts of revenue, and there are plenty of people who do well with it. It’s not my forte, and I would rather focus on selling than monetizing for most of my assets. Other people own thousands of domain names and sell more passively. Others operate networks of inter-related websites and monetize them via different means. There are probably many other business models I am not even touching, like domain registrars, domain brokers, registry businesses, lawyers…etc.
One reason I like my business model is that it allows me to be flexible and make changes quickly. My overhead is fairly low, especially with domain name renewal fees, so I can invest where I see opportunity. Should .com take a hit in the short or long term with the new gTLD domain names, I will be in a position to make an investment. Should .com remain strong, I will continue to invest as I have been doing.
My opinion is that things may be changing, and there might be some good opportunities on the horizon. Should that be the case, my business model will allow me the flexibility to make changes on the fly.
Great post Elliot and as always…thanks for pulling back the curtains on your business and way of thinking.
My questions, if you are willing to answer…Why did you set up two separate businesses? And what are the differences between the two of them?
Thanks again and keep up the great work
I operate Top Notch Domains, LLC and Silver Internet Ventures, LLC.
The primary reason I created SIV was because I didn’t want local businesses to see my business as being focused on the domain name rather than the website when it came to marketing Lowell.com and later Burbank.com.
I suppose I could have done a DBA, but I thought it would be better to create two separate entities.
Interesting and great foresight into what your clients/advertisers may/may think about
Thanks for the reply
When you say “I am less concerned about the traffic and revenue a domain name receives and more interested in evaluating whether or not I could see a company buying the domain name from my company for its business.” does this mean you don’t ‘always’ rely on the Google Keyword Planner stats for part of your decision making on domain purchases?
I hardly use the tool.
When I bought BreastLift.com, I didn’t ask for stats. I know it’s a name some breast surgeon or marketing firm will want to buy, and when they do, they will know that current stats are meaningless.
Thanks for sharing Elliot.
Simply amazing the way you handle your domain business. I admire your domain portfolio when I see them.
Wish you more success and all the happiness.
Thank you very much for your kind words.
There’s a lot of risk involved I suppose, but the amount of time I’ve been doing it helps me mitigate that risk.
Thank you for the insight into your business strategy.
Thanks for sharing!
Great post Elliot. Every successful domain investor has his/her own strategy, or as you wrote: “I’ve learned that there are many different business models domain investment companies utilize successfully.” Many newbies get on the wrong track by believing there is “only one way,” when, in fact, there are almost as many different successful models as there are successful investors!
The great American swimmer Donna de Varona once said, “I always used to watch the other swimmers, but then I learned to ignore them and swim my own races.”
Yes, we must each find our own business model. Thanks for sharing, Elliot.
I think there are quite a few people out there using a similar model, but a lot of them don’t have your quality of names, or the consistency with which you’re able to churn and burn them. I’ve met people who have made a ton off PPC earnings, or only buy high-traffic names, or whatever metric works for them. Personally, I think rankings and stats can change at any time (at Google’s whim), but things like age and a name’s authority/relevance to its particular industry carry more weight in terms of whether an end user will want it or not.
That is, speaking of domains-only, not developed sites. People don’t buy houses based on how many people came to the open house — they buy it because that’s the house they really want, and can picture themselves living in.
I buy in short bursts, if there’s an industry or topic I see potential in, or a particularly good deal. I’m always on the lookout for cracks in the pavement, or things that other people might have overlooked. I like having 250-300 names because it’s a lot more manageable, in terms of keeping track of details, renewals, etc. I’m sure a lot of people who are using a similar model are also regular readers of this blog. 🙂
It would be nice to hear a little more about your acquisition tactics – can you share how and where are you acquiring your inventory Elliot?
Sure… and perhaps I will expand on this when I get some time.
Almost all of my inventory is acquired via private purchase from domain owners or auction (Namejet primarily).
You are spot on with this. I think so many people think that the more they spend the greater the return. Our most successful domains we bought for under $300, meanwhile we have some brandables in the $1k – $5k range that we will have to develop and patiently wait for interest. Excellent post, cheers.
Thanks for the feedback.
Brandables have their place, but I tend to stay away because of the long holding time and uncertainty. Here’s what I wrote about buying brandable domain names: https://www.domaininvesting.com/why-i-dont-like-investing-in-brandable-domain-names/