I will caveat this post by saying that I do occasionally buy domain names based on emerging trends once in a while, although I never buy domains related to brands, people, or other potential trademarks. However, I generally think buying based on trends is a way to lose your investment quickly, especially when you are frequently speculating on trends and/or buying dozens of trend-related domain names.
Based on my experience, it seems that most people who buy domain names based on new trends are looking to make money quickly. You can tell this is the case by viewing lists of newly registered domain names for sale on forums and on Ebay that are related to what’s going on in the US or world (Obama domains, anyone?). When you do a Whois search for various terms related to trends, many have for sale notices or show that the DNS is set to Sedo or other domain sales venue. Most people who buy based on trends do it to make money fast.
While buying a domain name to sell quickly isn’t a bad thing, it’s very hit or miss. There literally could be hundreds of variations of domain names (not even including the various extensions) based on certain trends, and maybe a few of them will have value. While buying 5-10 domain names isn’t a big deal, I know quite a few people who buy dozens or hundreds of related domain names so they don’t miss out on the big one, and that can be expensive – especially if this is done for a few trends.
I think this is a very flawed strategy. If you buy one or two domain names based on every trend of interest (with the sole intent being to sell it), chances are good you won’t get the domain name that has considerable value. If you buy dozens or more, you are better served doing keyword research and spending $300 – $2,000 on a single good domain name. Shoot – NNNN.com names seem to be selling for anywhere from $250 – mid $xx,xxx, so why not try to buy a couple of these (I do not currently own a single numeric domain name).
I’ve had many people email me lists of names – literally hundreds of hand registered names – asking me what I think they are worth. I hate to say it, but most aren’t worth anything short term unless someone in the business wants it – or unless they are receiving traffic and good conversions. It really bothers me when I see someone who is new to the industry investing $5,000 on domain names hoping to get rich quickly, when a smarter investment would have been to buy 1 or 2 strong domain names in the aftermarket to sell or build.
Just like I wouldn’t go out and spend $2,000 on lottery tickets (although I would spend that in a blackjack session), I wouldn’t go out and try to catch a trend by registering dozens of trend domain names. If you do that a few times, you will probably lose your shirt and be out of the domain industry quickly.
Jump on the Bandwagon!!
I’ve been criticized a few times about my coverage of various cctld – and/or lack of coverage. Simply put, I don’t think most are good long term investments when they are released. There are too many people trying to grab these new domain names at the bottom to sell them to the next round of fools who want to sell them to the next round of fools who want to… well, you get the picture.
Sure, quite a bit of money can be made on quickly reselling newly released domain names, but how will you know ahead of time if you get stuck “holding the bag?” I really can’t think of one cctld introduced in the last 5 years where a majority of the domains purchased in the aftermarket have held their value.
I am not averse to risk taking at all. In fact, I’ve been day trading GS ($86.60), LVS ($8.25) and MNTG ($2.69) for the last three days – sold the first two for a nice profit. At least with stock investments, there is a priced market where I can sell these stocks for a set price if the value goes down. I can generally put a stop loss and limit my losses in most cases. If you buy a domain name only because you think the price will increase due to the newest domain “trend,” you are really gambling.
Like I’ve said before, if an extension is accepted and widely used by the public five years after its release, and the values are increasing due to that, then I may buy to develop and hold as an investment. If you are buying just to get on the next bandwagon before it leaves the station, chances are good that you’ve already missed the boat and will get wet.
Domain Theory: Searches to Results Ratio
When people are selling domain names, I frequently see them quoting the Wordtracker daily searches for the domain’s keyword phrase as well as the number of pages there are in Google that have that keyword or keyword phrase. It’s often thought that the higher the number of daily searches and the higher number of Google results, the more valuable that keyword domain name is. This is just theory here, but I think the ratio of daily searches to # of Google results is a better indicator of value for someone that wants to develop the domain name.
The more daily searches a keyword phrase (“painting contractor” for example), the more value a name like PaintingContractor.com is. If people are searching for that term, not only are some of them probably typing PaintingContractor.com into their browser bar, but the greater chance this domain name will be relevant to more people. A generic domain name is valuable because there are people who want to find that generic term. Some will type the term into their browser (with a .com) while many others will search Google for that term, and hopefully your site will come up in the top 5 or 10 results to attract the attention of the searcher.
I would argue that the old way of thinking – the more Google results for the phrase the better – is actually not really that great for the value of the domain name. Sure, the more results there are usually means that more people are interested in that topic – and that more people are writing about it and covering it on their websites. With more interest in the topic, the value should be higher. However, to a developer, the more interest in the topic usually also means the more difficult it will be to rank in Google. The lower a website ranks, the less traffic it will receive, making it more difficult to generate revenue.
That said, I believe the ratio of daily searches to Google results is important to consider. “Painting Contractor” has a WordTracker count of 367, and there are 896,000 Google results for “painting contractor,” which would be strong compared to “Flooring Contractor” which boasts a WordTracker count of 19 and has 309,000 Google results. The more searches with less results in Google means a website will likely have an easier time ranking at the top of the results, meaning more traffic.
I don’t think this will become a commonly quoted ratio due to the actual size of the result (.000405), but I do think people should at least consider this when researching a domain name. It’s great that people are searching for a particular keyword or keyword phrase, but if the SE competition will relegate your developed domain name to the second page of Google or lower, it’s probably worth less than a similar domain name in a less competitive category (assuming PPC values are similar).
This post will be reevaluated once the weekend haze wears off. I spent the weekend at a friend’s wedding, which is where I thought about this 🙂 More time needs to be spent analyzing this theory, but I think I am onto something.
Crispin Porter & Bogusky "Gets It" for Volkswagen
Usually when I see a newly-created, branded domain name in a commercial using a non-.com extension, I find that the .com was purchased after the commercial went live, frequently by domain speculators hoping to cash in on user errors. Although the lost traffic is arguably light, it’s still enough to warrent purchasing the .com of the domain name for around $7 and forwarding any traffic to the intended website.
I saw a commercial tonight for Volkswagen, and it encouraged viewers to visit the website, RoutanBoom.org. I was curious to see if they purchased the .com as well, since this was obviously a uniquely created domain name specifically for this campaign. The good news for Volkswagen is that their advertising agency, Crispin Porter & Bogusky, seem to “get it” when it comes to domain names, and they purchased the .com and .net on behalf of VW.
Thumbs up to CP+B on this smart domain purchase, and also for the new VW campaign, which is receiving positive reviews.
Types of Domain Names I am Buying
With as much uncertainty as there is in the domain market these days, I am being more selective about domain names that I buy. As PPC is dwindling, there is less money being reinvested into the domain market by domain investors. Since much of the domain sales market has been fueled by domain investors reinvesting their PPC income, that area of the market seems to be stagnant. End users are still buying domain names, but as most people know, it’s a tougher sell.
In that vein, I am being more selective about the names I am buying. When I think about buying a domain name, on top of the standard research I do, I ask myself how the name could be developed into a website. If there is no obvious way that a business could be established on that domain name, there isn’t much of a chance I am buying.
I like geodomain names for this reason. It’s fairly easy to imagine how a city names (in the .com) can be developed into a business. While it’s not easy to generate sustainable revenue to make a living, knowing what the site should feature is a no-brainer. Cities, regions, and countries are like brands with which people are familiar. If you asked a random person on the street in California what Burbank.com would be without prior knowledge, he would probably say, “a site with information about Burbank, California.”
I also like category defining product related domain names like TruckRims.com (which will be auctioned off by Rick Latona at Traffic) or ComputerSpeakers.com (which I once owned). If you know what to expect on a website before you’ve ever seen the site, the name is probably a good name. It’s important, however, that a business can be built around that concept – otherwise, how will you make money?
One problem I am having is that many end user companies also know how strong these product and service related domain names are. I have seen quite a few Whois lookups lately where names are owned by CSN Stores or Net Shops. These companies get it and they own some fantastic product-related domain names that probably won’t ever be on the market.
If you have great .com product related domain names, drop me a note in the comment ection. I had once offered up to $100,000 for a city .com domain name, but that didn’t yield a single viable city .com name unfortunately. I am not looking for anything other than .com right now, nor am I looking for brandable type names. I am looking for names like WindowTreatments.com, Dehumidifiers.com, WashingMachines.com… etc. If you have a fantastic name like this, I am looking – and if I can’t afford it, I know several friends who have much larger budgets for these types of names. The problem is that end users own most of these names. Some are starting to understand the value – which ultimately is a very good thing for domain investors.
Research Domain Names Before You Buy
The way a domain was used in the past could potentially impact a domain owner, so researching any potential domain acquisition is important. Not only could prior usage put a domain owner at risk of losing his domain name due to a UDRP, but there could also be untold legal risk when acquiring a domain name, and also issues with it appearing in search engines. All of these potential problems can cause much financial turmoil as well as take time to remedy and reconcile.
The first and probably the most obvious concern is prior TM infringement with a domain name that may have multiple meanings. If a domain name was previously parked, and the PPC links infringed on another company’s mark(s) where the domain name is also confusingly similar to that company’s marks, the company may have a legitimate complaint. If a new domain owner takes possession of the domain name, it doesn’t negate the issues that existed before. The complainant could cite prior use of the domain name, and the new owner’s claim of non-responsibility probably wouldn’t fly. I think this is especially so in the case of three letter .com domain names, where there may be many companies whose trademarks could be infringed upon.
If a domain name was involved in spam or phishing emails, the new owner may be held accountable. I am not an attorney, so I am not going to say what liability may exist, but from a public relations perspective, it could be detrimental. People may have posted their spam/phishing messages in forums or other websites, all linking back to the domain name. If the domain name gets developed into a website, it might be tough to be legitimized if enough questions were raised – forever linked in Google search results.
In addition to these issues, there are also spam blacklists that exist. If a domain name is put on the list, many mail servers may not accept incoming mail from certain domain names. While that may not be important for mini-sites or for parked domain names, if a business is built on that domain name, email access will be critical. A company may be able to appeal to the blacklists (like Spamhaus), but I don’t know how to handle that.
If a domain name was previously parked or if there were other major problems with it, Google and Yahoo may have banished the name from their listings. Upon changing ownership and/or building a new website on the domain name, it might not even appear in Google or Yahoo because of the domain name’s past history. There is a way to remedy this however, by filing a reconsideration request with Google or asking Yahoo to re-review the website. Neither of these will guarantee that your site will appear, but it’s a good start.
Research is key when buying a domain name. Archive.org offers a great tool to see what the website looked like at various points in time, allowing you to see the history of the site. Domaintools also offers many valuable research tools to see the ownership history, blacklist history, screenshots, and some other useful tools. While you may think you are buying a domain name with a clean history – or one whose history will be cleared when you buy it, but it reality, it’s always buyer be ware.