With the incursion of the Chinese domain buyer ChiP (Chinese Premium) domains have become all the rage and are typically hot items. ChiP domains are domains typically 4 letter domains without vowels or the letter v. The definition of ChiP domains has broadened to include 4 number domains without a 0 or 4. The one thing that both the letter and number variations have in common is they are all .coms.

In my recent trip around the world attending the Dubai Domainers Meeting etc. I began to dig into what was fuelling the interest in ChiPs. I spoke with one prominent domain owner and he indicated that a lot of the money being invested in ChiPs actual come from margin loans underpinned by stocks on the Shanghai stock market.

What Chinese investors are doing is taking RMB (Renminbi – Chinese currency) and buying ChiPs on websites like 4.cn. They are then either flipping the domains to other Chinese investors or planning on selling them for $US at a later date. In many cases, as ChiP domains are quite liquid they have become an effective medium for converting RMB to $US.

It just so happens that there are some well cashed up Chinese investors (ie. not margin loan backed) that are buying the domains in $US because they can resell them for more in the Chinese market or believe that their value will increase over time.

It's also an effective method for hedging themselves against a likely RMB devaluation as the Chinese economy slows down. It’s a long-term play in a very volatile market that if you have the cash you can ride out the ups and the downs. In the event of a Chinese economic collapse these investors have a very transportable assets (ie. domains) they can quicly sell for $US. It's an interesting play and just shows the incredible flexibility of viewing domains as an investment asset class.

For your interest, my company ParkLogic has now established a number of relationships with ChiP domain buyers that are paying reasonable rates for the domains. We’ve been moving a LOT of domains for western investors wishing to quickly cash-out now so they can diversify into other assets. Let me know if you have any ChiP domains you are wanting to sell and I can put you in contact with our team leader.

Where this is all heading is anyone’s guess but there’s one thing for sure that if you ignore the Chinese market you’ll miss out on a huge opportunity. As a person that never regrets having cash in their bank account I would suggest that the door on the ChiP opportunity is quickly closing. Possibly due the Chinese stock market taking a beating there is a declining demand for the domains and this is impacting prices.

I have written in a previous article that I’ve sold all of my own ChiP domains and would recommend other investors carefully consider doing the same.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

So you’ve been looking despondently at your domain portfolio and wondering how to make any money from it. To date, you’ve done a few sales but generally speaking there’s nothing really exciting in the pipeline. So let’s take a look at a few things you can do to get some activity happening.

Let’s imagine you have around 1,000 domains. You’ll probably find that around 5% of them make their registration costs from traffic revenue. By being a little smarter you can probably push this to 20%.

What do I meant by being smarter? Stop trying to work out who is going to pay the most for your traffic by yourself and send the domains to professionals that do that all day long. Not only will you get paid more but trying to do this yourself is a complete waste of your time. Optimising traffic and squeezing the most out of it is a professional skill that takes massive servers and expertise…..unless you have that then give it to someone else to do.

I’ll make a generalisation here but out of the 1,000 domains there are probably 50 that can be priced above $10,000. Set these domains aside a projects in themselves. I’ll come back to them in a future article.

Now let’s take a look at the vast majority of the portfolio. The bottom 50% should be dropped so if you get anything for these domains then it’s a bonus. I know you have lots of reasons to keep them but let’s approach this from an economically rational perspective. These domains haven’t sold and are costing you money, so out the door they go in a fire sale.

Put buy-it-now prices for these domains at around $99 in all of the market places. If an offer comes in, then just accept it and move on. Even at $99 you’re making around 1000% of your investment…..so why complain!

In your portfolio there are around 350 stock item domains that should be priced at around $1,000 each. Seeing that your sales to date have been dismal, your goal should be to move to at least a 2% stock turn per year. This means that you’re looking at selling around seven domains per year or just under one per month.

At these type of numbers your gross revenue line will be around $7,000 and the renewal costs around $3,500 which means you’re make 50% on your money. Since your cost base is fixed, if you can do anything to increase the revenue line then your return on investment increases dramatically. Likewise, if you don’t sell the seven domains then you’ll go backwards.

So what’s the business process here. If you have any enquiries for the $99 domains, then try and upsell them into a $1,000 domain and likewise if you can upsell a $1,000 buyer into a $10,000 domain. This isn’t always going to work and you have to be careful about scaring a potential buyer off but at least there is the beginnings of a strategy.

The next step is to build a web page with all of your domains listed for sale and ideally have them categorised. Any inbound enquiries need to end up at this page (we can put custom links on parked pages at ParkLogic to point to your sales page). The links for the domains on this sales listing page can point back to the marketplaces.

This is where your traffic domains are gold…..each piece of traffic is a potential domain buyer. This works particularly well if you’ve purchased domains in distinct market verticals. A potential buyer will have a large selection of domains to choose from. If you have ALL of your traffic go directly to a marketplace (ie. from the parked page), then the odds of any potential buyer finding your other domains for sale is next to zero.

Traffic domains are incredibly valuable to BOTH the monetisation and the domain sales business models as traffic is potential clicks and sales. If you sell all of your traffic domains, then expect your domain sales to suffer as well.....so hang onto the traffic domains!

In the next article I will be discussing why stock domains are priced at $1,000 and more in particular who buys them.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

So many people let life live them rather than living life. What do I mean by this? The vast majority of people go through the motions each day in order to put food on the table, pay the bills etc. Domain owners are very different individuals as they’ve decided to take a risk and invest in what many see as a highly risky asset.

The problem is that so many domain investors stop there. They buy the domains and then wait for the magic to happen and believe they'll rake in huge amounts of cash. When this doesn’t happen they crawl back to the nay-sayers and say they should never have invested in a crazy asset like domains.

Before you humble yourself to people who invariably don’t have the gumption to take any risks consider this, buying an asset isn’t the same as working on your business. Buying the asset is the first stage in a journey and that journey will always starts with you. How much you develop yourself will have a direct impact on the success of your business venture.

I'm not trying to brag but I’m constantly attending conferences and speaking with other domainers so that I can learn from their successes and mistakes. It's a real cost to do these things but the payoffs can be astronmical. Reading blogs (thank you for reading this one) and participating in forums is another way you can hone your skills which is less costly.

For example, one of the reasons why I attended the first Domainfest.asia conference in Macau last year was that I wanted to learn more about the Chinese market. Likewise, I attended Domainers Meeting in Dubai. Yes, they were both small conferences but both of them sit at the cross-roads of enormous future markets. I know that learning about these markets now is going to help me in my domaining business in the future. Sure enough, I'm now doing a growing amount of business with the people I've met at these events.

On my recent trip around the world I had the opportunity to speak with a prominent domain investor who told me that domain parking was completely dead and that he was hardly making any revenue from it. I was really surprised by this comment and asked what he’d been doing these last 5 years with his domains.

He told me he’d left them all at one parking company. At which point I said, “How can you expect a different outcome by doing the same thing?” He’s now about to work with ParkLogic. Just for the record, we had a best month ever last month in monetising domain traffic…..so traffic monetisation is far from dead.

Here’s what we can learn from these incidents. Whatever you do, invest in yourself and then make a decision to act. Investing in yourself and then doing nothing is insanity while not investing in yourself and randomly acting is sheer lunacy. You need to do both if you want your business to move forward.

The next thing you should do is develop a plan. If you are buying and selling domains then have a plan on how you’re going to do this. Don’t just buy domains and believe you’ll get a heap of enquiries. That’s a hobby. A business has a plan that you then execute for a defined outcome. Along the journey you need to remain flexible enough to adapt the plan as more information comes in.

In future articles I’m going to unpack how I sell domains and some of the innovations that we are developing at my company, ParkLogic. In the meantime, register for a domain conference and then grab a pen and paper so that you can write down what you believe are your next steps to grow your business.

Have a great weekend!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

Many domainers need to appreciate that we live in a world where the is massive oversupply of domain names and a steady demand. Sadly, the domains in your portfolio are not immune to this state of affairs.

While on my recent trip around the world I met a domain investor that has several thousand domains and hasn’t sold any in the last few years. It was clear that they were getting a little desperate as the renewal fees kept on coming in each year. My advice was to drop the majority of their domains and take a look at the price of the ones they just can’t part with.

Just think about it for a second. What business model was the domain investor I spoke with applying to his domains? Was it the stock-turn or high value model? He was actually unclear and the result was no sales.

Many domain owners should actually be in the stock turn game where they are trying to sell 1-2% of their portfolio each year at an average price per domain of around $1,000. The problem is they have big prices on their domains and no sales result. They aren’t actually realistic about the pricing of their domains as they fall in love with much of the hype promoted by the “big sales”.

It’s like trying to sell a burger as a $200 five course dinner at a high end restaurant. Despite the burger being a awesome, no one in their right mind is going to pay $200 for one. My advice is stop trying to sell your burger domains at ridiculous prices and get realistic.

Let’s do the maths. If you’ve hand registered a domain at $10 and sell it for $1,000 then the return on the investment is 10,000% which sounds pretty good to me. The challenge is to repeat this over and over again NOT get more for each domain and scare away potential buyers.

If you have your domains priced at around $1,000 and you aren’t getting any enquiries, then you’ve really got to reassess whether they are sellable. You may believe in your heart that the domains are really awesome but the market is telling you something different. Stop listening to your emotions and go with the market…..after all, this is business.

I’m really sorry that I may have upset a few domain investors with this article but the sooner you become realistic about your pricing the better the financial shape you’ll be in. Don’t be fooled, although the massive influx of the new gTLDs haven’t really changed the top-end .com domains they have sorted out the wheat from the chaff with a lot of the others.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.

Last night I had a great time going to see the Dodgers play the Padres in baseball. I must admit that I don't really know much about the game but it was a heck of a lot of fun. What really struck me about the game was just how similar it was to domaining.

The bases are like the four primary domain business models; traffic domains, stock item domains, high value domains and domains for development.

Just like domains everything was about the stats. In fact, I found the stats being posted about each player somewhat bewildering for someone that really knows nothing about the game.

The helpful people sitting behind me explained a whole lot about why the Dodgers really should win.....sadly they didn't. For me, their help was like attending a domain conference. You won't believe the number of people that will help out "newbies" in their exploration of the domain world.

The similarities between domaining and baseball don't stop there. The batter seemed to be all by themselves as they faced the onslaught of the next pitch. Most domainers are loners and work from home and each one of us is trying to knock the "domaining ball" out of the park.

I could go on and on why domaining and baseball are similar to each other but many of you that know the game maybe able to provide much greater insight. In the meantime, I'm almost late for my next meeting....cheers!

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.