DomainInvesting.com

When I was on WebmasterRadio.fm, I was asked to make domain industry predictions for 2009.   I hate making predictions, but one of my off the cuff answers was that I thought there would be less development by domain investors by the end of 2009 than there is now.   Although this contradicts what has been going on throughout the past several months, I’d like to explain my thinking.

With PPC revenue down and UDRP complaints against generics/acronyms seemingly at an all time high, domain investors at all levels have been moving towards developing their domain names.   Some people are using mini site services like aeiou.com or SiteGraduate.com, other people are using companies like WhyPark to build a continually updated site, others are hiring great developers to build websites, and others have been working on their own to build out their sites.   Development has been the main theme or at least a big talking point at all the domain conferences since late 2007 and early 2008.

The one big problem/obstacle is that development is hard work.   Sure, a 5 page mini site will get indexed vs a parked page which typically won’t, driving organic search traffic to the site.   However, to really make good money and a solid ROI, I think more than 5 pages are needed to capitalize on the long tail in addition to the lower hanging fruit.   Since most competitive keywords and key phrases have considerable competition from fully developed and deeply rich sites, a great domain name usually needs more than just a mini site to see strong results. My mini-sites that do well started off as mini sites, but I also took time to add content.

This being said, the people who have been spending time and money developing are realizing just how difficult it is to make a good return on investment, and some will throw the towel in and either stop developing and building their sites or slow the pace at which they were going. I think we will see this happen towards the end of 2009. People will still be developing their best domain names, but I don’t think it will happen at the same rate that it has happened the last few months.

Again, I repeat, development is hard work. A great domain name doesn’t need to be developed to make money, but development will usually bring in more money and traffic.   The domain owner needs to determine whether it’s worth the money and time to do this.   Ultimately, I believe people who have been spending money developing “brandable” domain names will realize that they aren’t bringing anything special to the table, so they aren’t generating a positive return on their investment, while owners of great generics slowly realize that development is more effort than they initially thought.

There are great options out there to develop good domain names.   However, it takes time and effort to grow websites into revenue generating websites, and I don’t think all domain investors will have the desire to do this.

What do you think?