Pure domaining as a strategy is still alive and well and it is still possible to make money. Here is an overview of such domaining strategies.
Domaining involves buying a domain name and counting on one or both of two things happening:
- sufficient type-in traffic that clicks on ads to make a profit (more money than the registration fee per year);
- increase in value such that you turn a profit selling it.
Strategy 1 relies on users typing in a domain name in their browser when looking for a topic and coming directly to your domain. Obviously people looking for pizza are more likely to type in pizza.com than WonderfulPizza.com
Advantages of type-in strategy
- Minimal maintenance
- Passive income
Disadvantages of type-in strategy
- type-in traffic not guaranteed
- falls short of maximum potential profit
- return visitors unlikely
Possible requirements
- Investment money to buy domains or possibly a portfolio
- Experience, knowledge and luck obtaining good domains
- Cash on hand for renewal fees
Strategy 2 relies on finding buyers who will pay more for the domain than you did. If you hold the domain, you must count in the cost of registration fees for the time you hold the domain.
Advantages of increased value strategy
- Greater potential profit
Disadvantages of increased value strategy
- More effort and time involved
- Value can decrease or name can be worthless
Possible requirements:
- Marketing skills
- Cash for investment and renewal
- Negotiating skills
- Experience, knowledge and luck obtaining good domains
I am sure you can think of more but I think these are the most important.
Registering new domains
You can still register new domains that no one else has thought of and count on the strategies above to make some money. This is not easy and requires both inventiveness and experience, not to mention luck. Many worthless domains are registered in the hope of turning a profit.
Domain tasting
Domain tasting was quite an efficient strategy to filter out those domains that were likely to make a profit. Domains would be bought in bulk and immediately tested for traffic. Those that did not meet the criteria were dropped and registration money was refunded. Domain tasting is less popular now because the full registration fee is no longer returned.
Predictive domaining
You buy a domain name that you believe will become more popular and more valuable over time. This blog covers a lot of techniques used in this strategy.
Obtaining previously registered domains
Looking for dropped domains
Domain owners let their registrations lapse for various reasons. One of the most common is that they have changed their email address but never changed it with their registrar and so they do not know that their domain is expiring.
Domainers will buy up expired domains again looking for either type-in traffic or a potential buyer or both. Just because a domain was previously registered does not automatically mean it will turn a profit for you and there is intense competition for the good domains that expire.
Buying domains
You can buy domains acting as a reseller or to build up a profit-making portfolio. A domain that is turning a profit from type-in traffic is not usually sold individually but as part of a portfolio and this can be very expensive. There are times where these will be for sale individually but spend time verifying the statistics.
Reselling a domain depends on the buyers you have lined up. If you have resellers lined up, expect to turn only a small profit and have to rely on volume. End-users pay more usually but are harder to find.
Buying websites
Probably a more overlooked strategy but you can buy up existing websites that are under-developed and not maintained. You can scrap the website and rely on the type-in traffic or count on selling at a higher price. A good deal of work has to be put in to finding, negotiating and selling such domains.
Portfolios
All these strategies rely on portfolios of domains. Turning a decent profit requires volume and so portfolios can get quite large. Many domainers make most of their money from only a small percentage of domains in their portfolio. You also have to have sufficient cash around (liquidity) to renew the registrations of all your domains.
Pure domaining can be your only strategy or part of a group of strategies. I will talk about development strategies next time.
{ 2 comments… read them below or add one }
I love it! Really looking forward to reading your development strategies post.
Jamie,
thanks, i know this is a somewhat superficial treatment of the subject but sometimes we get lost in the details and forget the big picture.