In order to weather this economic storm, I have been spending most of my time and some of my money on developing and re-developing my websites. I believe it’s become very risky to invest in some lower to mid-priced domain names with the hopes of quickly flipping them, so instead of buying a $3,000 name with the hopes of selling it for $5,000, I am now spending that money on developing my sites (such as Burbank, Lowell, Secaucus and TropicalBirds). Yes it most certainly can still be done obviously, but it is more difficult.
I believe businesses will always need to advertise, and Internet advertising is a trackable way to advertise. Advertisers can determine campaign ROIs and adjust   advertising expenses based on this. My sites will offer affordable advertising opportunities, that will be more economical than Google Adwords campaigns in most cases – or at least that’s the idea. The more advertisers that sign up and create custom landing pages within Burbank.com, the greater the traffic will grow and more value all advertisers will receive.
At this time, especially given the tax burden faced by most domain owners who consider their domain assets inventory, it isn’t wise to spend a ton of money on domain names that may or may not sell quickly. I am fortunate to not have registered a considerable amount of new domain names, so I don’t have to make the renew or drop decision, but I know there are plenty of people out there who are doing that right now. While it might not feel good to have to do this, I believe it will lead to a trimmer and more agile company.
It’s tough out there right now, and every decision you make could have a major impact on your company’s bottom line and/or its ability to survive. For me, developing strong advertising venues via development is hopefully a way that will allow my business to survive and ultimately thrive once the economy is more stable. Perhaps you need to look at your domain assets to see how you can better stay afloat.

With apologies for stealing Mike’s title, I wanted to show another example of the great point he made (and one that many others have also been saying). The main reason why I am developing some of my websites is because I want to generate the most revenue per visitor.   I believe there are 4 levels of doing this – the top 3 of which can only be harnessed by developing a domain name rather than parking.

1. Selling your product or service to visitor
2. Selling another company’s product or service and earning a commission
3. Selling advertising space directly to a company who sells that product or service
4. PPC advertising

While I was reading Mike’s post about what a click is worth, I received the following email from one of my developed websites:

Hotel Name: Doubletree Hotel
Note: There may be a time delay for this reservation to be reflected in the property’s reservation system.
Map/Driving Directions Local Weather
Reservation Details
Check-in date:: Friday, October 10, 2008 Check-in time: 1500
Check-out date: Sunday, October 12, 2008 Check-out time: 1200
Number of rooms: 1
Number of nights: 2
Number of adults: 2
Room description: 2 Double Beds Non Smoking Non Refundable
Rate Information
Room #1
Rate type:
Rate breakdown: 134.10 USD for Friday, October 10, 2008
134.10 USD for Saturday, October 11, 2008
Total rate: 268.20
Taxes and fees: 42.90
Total (1 Room): 311.10
Payment Information: $311.10 USD charged to your credit card to secure this special rate. This amount includes room rate, tax recovery charges and applicable service fees and extra person charges, if any. Hotel rates are based on double occupancy unless otherwise noted. Charges for extra persons and / or children may apply and will be due directly to the hotel at the time of check-out.

It can be very difficult (if not impossible) for a domain investor to build and manage a completely separate company on one of his domain names (see Bobbleheads.com as a great example of a business run by a domain investor). A business owner needs to be passionate about his industry, and running a business takes a tremendous amount of time and effort.
However, there are happy mediums between running a full business and operating a pay per click website. Mike illustrated how a click that would have earned him $1.00 turned into a $300 sale. Likewise, my hotel reservation would have yielded a $1.00 click, but now I made 10-20x that on the sale. While obviously the conversion rate needs to be 10% or higher for this particular sale to make sense, most of my hotel reservations yield greater returns.
Depending on the product or service our sites promote, we really could be giving away the house when we park domain names.

During these tough economic times, I am spending a good deal of money investing in my own business (via development) rather than buying new domain names. Although the TRAFFIC auctions were relatively strong and the domain aftermarket continues to show positive signs, I am still finding it more difficult to sell domain names. There are some good values out there, but I believe the market will get worse before it improves, so I am holding off on making acquisitions for the most part unless I am inclined to develop.
Since most of my sales have been to domain investors, and since people are being more conservative with their finances, my sales numbers are down in the last 3 months year over year. I am not going to complain because it could be much worse, but generally speaking, I think there is less money being spent by domain investors. I do think companies are still actively trying to buy generic domain names related to their businesses, but as the credit crunch impacts credit limits for all sorts of companies, this will be impacted as well.
With these difficult times, I am paying for development expenses rather than investing in other domain names. At the moment, Burbank.com is being completely revamped because I am not satisfied with how it looks.   I put up a quickie site to ensure search engine links weren’t lost, but I am now building a directory and making the site more appealing. I think this will increase the value of the site, and I also think it will encourage businesses to advertise.   This hadn’t been my focus since my priorities were on acquiring good domain names, but it is becoming my focus.
I am also working on my other sites to make improvements on them as well.   I am adding interesting content based on keyword trends, linking to videos that could be of interest to visitors, and I am working on building links to my sites.
Like real estate, there will almost always be people buying domain names. People have tighter budgets these days, and it doesn’t appear that this will improve for a while.   Of course I am willing to make strategic purchases for the right price, but determining what the right price is has become more difficult. For the time being, I am working on strengthening other areas of my business.