How to Turn a Profit with Domains

Planning for profit

Over the last few years I’ve watched many domain investors throw money at some pretty crazy ideas and invest in nonsensical domains. Some of these investors have already completely burnt their cash and have exited the industry.

I’ve also watched the quite diligent investors that have methodically planned how they are going to get a return on their investment….and they’re making money hand over fist!

Escrow.com

The secret to any business really isn’t a secret at all but it does require a sustained level of tenacity and diligence. Everything in business starts with a plan and the end point of the plan should ultimately be how the business is going to be sustainable and turn a profit.

When I look at investing in domains it’s exactly the same thing. You need a plan. If you don’t have a plan, then you are very likely about to burn through some of your kids’ inheritance.

Let’s get down to the basics. If you have a reasonable sized domain portfolio, I can almost guarantee that 20% of the domains should be monetised for their traffic. This will provide an immediate cashflow that will at the very least help out with renewals or you may find yourself in the enviable situation of turning over an immediate profit.

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Gambling on Domains

Are you gambling on domains?

I must admit that I’ve never really understood the business model underpinning domain sales. I know that in this article I may rain on your parade and for that I’m sorry….but please help me out in getting over some of my possibly faulty logic

Escrow.com

The state of the market for domain names is that it has fallen from a peak growth of 11.7% in 2015 to 1.2% in 2017. The 2015 peak was spurred on by two factors:
•    The Chinese domain boom
•    Greater release of new gTLDs

When you begin to drill down into the data it becomes even more interesting. For instance, .COM grew by 6.4% in 2015 and is growing by 2.8% in 2017. The legacy TLDs (eg. org, net etc) grew by 1.5% in 2015 and slipped backwards by -1.9%. The surprise was the ccTLDs (country codes). In 2015 they were growing by 14% while in 2017 they are beating .COM out with a growth rate of 3.9%. I must admit that I love ccTLDs and have made a lot of money from them over the years.

The sorry tale is the new TLDs. After exploding out of the blocks in 2015 with a growth of 196% they are now contracting by 14.6%. Many have stated that this is not surprising as speculators leave the market but when you consider that over 50% of the domains are parked then you’ve got to ask what’s actually happening. The simple answer is some of the extensions (eg. XYZ) are experiencing massive drops which is influencing the numbers overall…..so no panic here for the truly good extensions.

Ignoring the decline in the new TLDs the overall growth in the market is around 4.8% or approximately 9 million more domains from 2016 to 2017. This is an important number as it represents the demand side of the market and should dynamically influence the sale price of domains.

The other curve is a little frightening…..the supply curve. Since the new TLDs were released, the market has been swamped with a massive level of supply. This is not the early days of the Internet where there was .COM, the CC’s and a few others. We are now in an environment where the supply is so large that it MUST impact the sales price.

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mgilmour
I based this roughly on overall market share. Yes, many domains are sold privately but I think not as many as people would have yo... Read More
11 October 2018
mgilmour
Many thanks for the extensive comment! My understanding was the $150m was the revenue line to GoDaddy not the net revenue. Maybe I... Read More
11 October 2018
mgilmour
Thanks for the correction of .tk.....I forgot to take them into consideration. What is for sure is the domain market is mature and... Read More
11 October 2018
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Domain Sales Needs a Revolution

Out of all of the different domain investment business models I find myself still a little stumped by some of the actions who invest for domain sales. I understand traffic monetisation and development makes sense but sales is one where I scratch my head…..

Escrow.com

I know there are people that make money from domain sales, but it almost seems like a lottery where a domain name is the ticket. The only way to win is to keep on increasing the number of tickets you have in the draw. Inevitably the law of diminishing returns comes into play and a pile of domains are dropped as they were obviously the wrong tickets…..sigh.

Being a numbers guy, I wanted to dig into what was going on in this part of the industry so the first thing I did was make some back of the envelope calculations in Excel. I’ve often commented that Excel is the best computer game on the market….it allows you to model just about anything and then time travel into what would happen in the future. Awesome!

I should say at the outset that I’m looking at the domains that fall into the stock-turn category. So those of you that have the premium top of the line domains should block their eyes at about now….actually, keep them open them for the next couple of paragraphs.

Premium domains….are an interesting concept. You speak to most domain investors and they’ll tell you about their awesome list of domains and like a guy selling you watches down a dark alley they’ll ask you if you want to buy one.

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mgilmour
My apologies.....forgot that figure! Since they are stock item domains they sales prices is between $1600-$2000. BTW - love to hav... Read More
22 August 2018
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10 Ways to Sell More Domains

Selling domains is close to the heart of most domain investors. They hear about the big sales being made and look at their own portfolio and wonder why many of the domains don’t get any offers let alone an offer to get them excited about paying off the mortgage. Here’s a list of ten ways that can help you increase your sales.

Escrow.com

1.  List your domains on all the marketplaces.
I know this seems a little obvious but so many investors forget to keep their domain listings up to date. Think of it like fishing, you can have one line in the water or ten lines. Each line will increase the chance of catching a fish. Whatever you do, list your domains in the two major marketplaces, Sedo and Afternic.

By listing your domains in the marketplaces you’re hoping to catch the eye of people that may be browsing for a domain in the aftermarket. With any luck an offer will be made, and a sale will result.

2.  Build Your Own Sales Page
A person that clicks on the typical “for sale” link will be directed into an existing marketplace for information about your domain. In the process, they may see someone else’s domain and end up putting an offer in on that one. Even though your domain delivered the traffic, you don’t get anything for the sale of the other domain.

The link at the top of a parked page that says “This domain may be for sale” should point to your own landing page. This page should say something about your domain plus links to related domains that are in your portfolio. This will encourage potential buyers to look at your domains rather than someone else’s.

3. Contact dn.biz
Dn.biz run a newsletter that goes out to thousands of buyers. They regularly look for good domains to feature, so you may as well reach out to them and see if any of yours can be listed.

4. Real Whois Information
Make sure you put real information in for your domain whois data. A lot of potential buyers do look up the whois for a domain and if it is privacy protected or has fake details then it will be impossible for them to contact you to make an offer. Think of the whois as just another line in the water.

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mgilmour
One of the most difficult things we can do as investors is to look at reality and then make sound decisions. If there aren't any o... Read More
16 April 2018
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What’s New With Escrow.com?

As domain investors know, for many years Escrow.com has been providing a critical part of the domain industry ecosystem. The trusted independent link between buyers and sellers have enabled many investors to complete secure transactions for their domain sales. So what’s new with Escrow.com?

While I was traveling through Europe at the end of October I received an email from Escrow.com announcing that they have now released a completely updated API for public beta. I knew this major upgrade was clearly going to be the platform upon which other products and services could be built.

For example, the new API potentially means websites, marketplaces, classifieds sites, shopping carts, and mobile apps can have escrow services built directly into them. This opens up a huge range of potential new clients for Escrow.com that is much broader than their traditional business clients.

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