What Is Domaining from a Newbies Perspective?

By William Cuva / July 10, 2017
Business Model Graph

Domaining is a serious multi-million dollar industry. Organizations have been set up solely to buy, sell, park and lease domain names and they make a nice chunk of change doing it.  Be that as it may, domain monetization success is not limited to the businesses with constant cash flow.  You, as an investor, can also make a nice chunk of this change simply by knowing some fundamental techniques.  

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The most successful domainers pay attention to buzzwords, emerging technological innovations and other trends so that they can grab related domains before they become household terms.

The best way to think of this is as domain investing.  There are a lot of similarities with domaining as with real estate investing.  For instance, when you flip a house, and you flip a domain name, there are a lot of similarities.  Same as when you invest in a home and you invest in a domain name, there are a lot of similarities.

Domaining is an all encompassing word that talks about building businesses that are Internet based.  As a domainer, you might work with brokers, product manufacturers, business owners, lawyers, and more.  You may spend time working with code and copywriting as if they were your hammer, nails and two by fours.  

The result is a constructed website that is targeted to serve your end users needs. If all of your construction is right, the site will help people and make sales.

Domaining Definition

So what does domaining mean?  Domaining is defined as the buying, the selling, the development, the monetization of Internet domain names.  Now,  there may be people that have different definitions, but this is the general definition that you will find on the Internet.

Buying a domain name that just means purchasing either by registering it, buying it from another user, or buying it through a listing service like Sedo or Afternic.

Selling a domain means selling an Internet domain name.  Now a domainer or domain investor would like to sell a domain for more money than they paid for just as a real estate investor would like to sell a house more than they paid for the house.

One of the big differences with domain investing and real estate investing is that with real estate investing you are often trying to sell the house for a 20% 30% or a higher return on your investment.  It’s rare that you are going to sell your house and double your money.

Well in domain investing if you only doubled your money, then you aren’t doing too good in growing that domain investment.  Most domain investors will make 10x or more for their initial investment, and that is a huge difference.

With this in mind when you are buying a house and spending $250,000 that is a pretty reasonable amount to expect to spend on the low end in most major markets.  Whereas for a domain name $250,000 would be a lot to spend, but $2000 might be a bit more reasonable

So when growing an investment at a 10x or 20x pace, please remember that these are smaller numbers.

You are not making millions of dollars with every sale, but it is not out of the question to make 10’s or even 100’s of thousands of dollars with every sale if you have good domain names and you know how to grow those investments the right way.

To point out, here is a list of some of the most expensive domain sales to show you the profit domainers have made with the sale of their domain names.  The profit that these domain name owners made was incredible.

Domain Name Sales


Best Place to Sell Domains Names

You have may different options when you are ready to sell your domain names.  There is Sedo, Afternic, and Flippa if you want to go through a listing service.  Do note that this is similar to the sale of a car online.  You will put all of the information in about your domain, and interested buyers that are looking for domains in that category will find you through one of these listing services. 

According to Bill Sweetman, President of Name Ninja to boost your domain name sales, you first need to make sure that your domains resolve to a page that, one way or another, clearly indicates that the domain is for sale and provides a choice of ways for the prospective buyer to contact you or purchase the domain right away, whether that be via email, phone, chat, or whatever

Nevertheless, you can also sell your domains through a forum like DNForum or Namepros.  These are very popular domaining forums where domainers are looking for good deals and learning more about the world of domaining.  One thing to realize is that they are looking for good deals.  If you are going to sell a domain through a forum, you will find that you are giving the domain away for the lowest price.

In fact, Rajiv Sighamony from Hongkiat states to sell a domain name, one should learn to price it.  Many sellers fail to sell names in the marketplace, simply because they overpriced the domain, and thereby lost the chance to sell it.  A lack of knowledge leads to erratic pricing.  

Selling your Domain is almost like sending your car to auction in which case you are not going to get the highest price possible.  You sell it through a listing service or through a private sale and that is where most people get the most bang for their buck when developing or selling a domain name.

An Article by AntiCareer.com states “What the domain registrars want to do is cash in on the domain that someone forgot to renew, so they offer that domain to Namejet to auction it to the general public.  Think of it like a storage unit, someone doesn’t make their payment, and the storage company hires an auctioneer to come and auction the storage unit to the general public. “ 

What about developing your domain name?

eProperty Lease tells us “The problem domain portfolio owners have always faced is that development of domain names into revenue generating websites can be expensive if done by another company or extremely time consuming if worked on yourself.  This is why ePropertyLease.com not only leases and develops our own domain name portfolio, but we provide Domain Development and Domain Monetization Services for others.”

Whenever you are domaining, you are also developing a domain name, and this is where investors also get their hands dirty and the same way that domain flippers get their hands dirty.

If you’ve watched any HGTV flipping shows you will notice that when the flipper goes into the house and picks out all the things that they want to change in the house they will get their hands dirty and do some of the grunt work themselves.

Well, the same goes for domain investing.  Because when you have a domain name, and you want to increase the value of that domain then what you have to do is increase the number of visitors that are coming to the domain and increase the amount of revenue that domain makes.

Those two metrics, visitors, and revenue are the key to getting top dollar for your domain name.  If you think that you have the best domain name in the world, but it only makes two dollars a month and only gets 230 visitors a month that’s not necessarily a successful domain.

Domaining.EU says “I would suggest you start developing a domain in a certain niche that you are especially interested in or in a niche that you have a good amount of knowledge in.”  

You may have a domain and don’t like the name of the domain, and you don’t think that it sounds catchy or interesting to anyone but the domain makes $1000 a month and those types of statistics specifically based on revenue or visitors is what allows a domain to sell for a very high price.  The key to that is development.

Development is the same thing that you do when you flip a house.  You speculate ok, what if I add these features:

Add an extra bathroom

Add an extra bedroom

Upgrade the kitchen

Add a deck

Put speakers throughout the house

Add a man/woman cave

Add a swimming pool

The same applies to domain investing. Well, if I make a website and add these features:

I'll add a members area

I'll insert a discussions section

I'll add a field in which members can  exchange pictures. 

I'll add a blog

I'll add Google Adsense

All of those features that you add on are things that you are expecting will increase the resale value of the domain.

Developing your domain will fetch you far greater returns.  This method can apply to the domains that might otherwise sell for a regular price minus/plus a few dollars.  The potential of turning a domain name with little value into a hot commodity by giving it some love and attention through traffic and backlinks is a game changer for you as an investor.  Tia Wood from Domainingtoolkit has compiled an impressive master list of 40+ ways to develop your domains. 

Imagine that you have a choice of two domains.  One domain is short, memorable and no traffic, backlinks, in other words, haven't been optimized.

The second domain is a three letter name, not so memorable, but it has received thousands of page views per day, backlinks developed to high authority sites.

You have a choice of these two names which one would you buy?  You would buy the domain that is developed and getting decent traffic.  Yes, you might lose traffic during the transition period, but dealing with those lost numbers is far easier than developing traffic from scratch.

The cool thing is that unlike a house flip when you are flipping or developing a domain you are generating revenue at the same time.  That is, when people are visiting your website and clicking on links or downloading or buying products, they are generating income for you.  The great thing is the more revenue you make, the higher the value you can sell your domain name.

Now, If you register a domain name with the intention to flip it avoid some mistakes that will devalue the name.

Avoid registering names with hyphens

Numerals

Prefix "the" in the name

Although true, these are not rules that specifically prevent you from earning money from these items in your domain names.  But the sale amount they make may not be worth your effort.  It's all about your personal strategy when it comes to flipping domains.

Although true, domainers need to make room for initial losses because you can’t expect to make a multi-thousand dollar sale in your first transaction.  You will learn how to flip your domains after some trial and error and once you go through the trial and error stage you can put your knowledge into earning big from domain flipping.

Be Aware of Branded Domain Names

Another thing to be aware of is not to mistake the idea that “brandable domains” have far greater value than keyword domains.  A brandable name that you think is great another person may believe is a junk name.  Different strokes are for different folks.

Individuals who have registered brandable domain names with the intent that they will sell them for a high dollar may occur if they come across a person looking for that exact name and willing to pay anything to acquire that name.  It's more of a hit or miss factor to sell and make big from brandable names.

Monetizing  your domain name

Along with developing your domain into a website, you should add tools that will monetize your traffic.  You can add Google Adsense so that when a user comes to your site, they can click on a link and get more information about the product or service from the ad.

You can sell Amazon content, such as books, videos, music directly through Amazon and provide visitors to your website with information that they have been searching online.  Nevertheless, you are serving your users as a portal and you are paid when they click on any of those links.

Another way to monetize is by adding ads from an affiliate program.  Affiliate programs may be a good source of income if your domain receives a lot of traffic.

As an example, suppose you have a domain that receives type-in traffic, which means that somebody types in your domain name in their address bar.

Well if that is how you are getting most of your traffic that means that you have a very targeted customer if you know what your customer is looking for you may be able to find advertisers that want to put their ad on your page which is another way that you can monetize a domain name.

Leasing your domain is another revenue stream

 Zak Mustovitch from DNAttorney says that when negotiating a domain name leasing agreement, generally the right time to consult a domain name lawyer is before you agree on the basic terms, not afterwards. 

Renting a domain may be an excellent way to increase your traffic and therefore a potential sale of the domain.  How this works is that an advertiser or the end user leases the domain and all of the traffic from the domain name and then redirects the domain to the advertiser's site, or the end user makes a website out of the domain.

People are already looking for a product or service.  Therefore leasing provides greater sales and traffic than most other advertising programs.  Also, domain leasing is an excellent idea for those trying out new markets or introducing new products.  The end user can test the domain without making a long commitment for either leasee or lessor.

According to Lendvo  - The following are common terms for domain leasing:

Domain leases are usually between 2 years -  10 years in length.  Monthly or quarterly payments are standard. ​

In a nutshell, investing in domains involves buying a domain name, developing the domain name, monetizing the domain name, increasing visitors to your domain, ranking well in Google and hopefully, in the end, selling your domain for an excellent price.

If you are nervous about losing your money with domaining that is the risk that you will have to take to learn the do’s and don’t of this business.  You will have to dish out some of your hard earned cash to see if you will be successful with domaining.

I don’t have all the answers because I am somewhat new to the game,  but I am learning and gaining experience through my mistakes and at the same time, I hope to help others as I learn the full scope of domaining.