Dec. 14, 2006 – The real estate boom isn’t over; it has simply shifted online with market speculators now buying, selling and renting online properties. While the housing market is currently undergoing a correction, real estate on the Web is booming. Some domain speculators are making huge profits by finding domains at bargain prices, making improvements and reselling them. A recent article in Dname.net, citing a study of domains sold on the aftermarket within the last year, showed an average return on investment of more than three hundred percent. Even more amazing than the ROI is the time it took to realize it. The same study showed that the average time between purchase and resale was only two hundred thirty days!*
Of particular interest is the domain name aftermarket which is quickly growing to gigantic proportions. This is the sale of “established” domain names to people or companies who see a value in that name. Another article in The Age recently cited Icann, the non-profit organization that manages the internet’s top-level domain name system, saying they estimate that the domain name market, which has an estimated annual worth of five hundred million dollars, is quickly being overshadowed by the domaining after-market, now believed to value between one and two billion dollars.+
There are two strategies to investing in domain names:
1) Parking- “parked” names are domains that are registered with the registry but are not made active for website or ecommerce service. This is a simple “Buy and Hold” strategy. The name is just reserved and made available for resale.
2) Monetizing- this is adding “virtual equity” to your online real estate by building a functioning Web site around it to generate traffic. These “monetized” sites are (usually) built to derive an income to help offset hosting fees. There are two main ways to monetize a domain name: a) Affiliate Programs- When looking for appropriate affiliate programs to join, you should consider the major affiliate networks such as Commission Junction, LinkShare, ShareASale and FineClicks b) Pay Per Click search engines and bulk traffic aggregators- Some examples of PPC search engines are 7Search.com and Search123.com. Examples of bulk traffic aggregators include Trafficz.com and Parked.com.
Matthew O’Brien, CEO of Searchmarketing, says that this growth in the Domain Name Aftermarket is just in the beginning stages with the names eventually being traded and held in portfolios like stocks: “All current statistics and indicators point to continued growth, making domain names a highly attractive addition to any investment portfolio while demonstrating they are assets that require effective management.” Dale Merritt, CEO of Dotventures, maintains that just “parking” a domain name isn’t enough anymore. According to Mr. Merritt: “Valuation of online real estate exactly parallels the physical kind; it’s all about increasing the value to your property by making improvements to it. The more one improves a domain space and increases traffic to it; the more attractive it will appear to potential buyers on the aftermarket. Fortunately, the costs of making improvements to a domain space are not anything like what it entails to “improve” physical real estate”.
As more and more domain names are registered, the .com space becomes more and more valuable. Again, exactly paralleling physical real estate, it’s just like when Will Rogers advised investors to buy land and keep it because “they aren’t making any more”. True, given that there are millions of .com domains registered, all the low-hanging fruit are overwhelming taken. Every possible two or three letter domain name combination is already taken. However, with the advent of longer names available, now up to sixty-four characters, names can be created utilizing “searched” terms. Then by using strategies and techniques to “monetize” that domain it can possibly be instilled with a great deal of value on the burgeoning aftermarket. The sky is, literally, the limit here.
Searchmarketing, is a privately held company headquartered in Scottsdale, Arizona. They are a marketing technology leader that helps domain investors “get found” through an innovative online and offline marketing process. For more information about Searchmarketing, please call: 866-666-6838 or visit http://www.Searchmarketingllc.com
DotVentures, LLC is a privately held company headquartered in Scottsdale, Arizona. They help individuals successfully invest in domain names. Interested parties can call them at: 888-291-2976. Learn more about DotVentures here: http://www.dotventures.com/?sr=PrDot
* Choosing a Domain with High Resale Value
+ The Age- Louisa Hearn, June 26, 2006
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