Domain Names as an Investment – Yay or Nay?

Domain Names as an Investment – Yay or Nay?

Back in mid 1800s, the famous Gold Rush was triggered when some of this valuable metal was dug up in California. During the 1990’s, however, another similar event took place, only this time the gold was made of zeros and ones and took the form of domain names. For the lucky few who were quick to realize just how valuable these real estates of the online landscape were, domain names brought millions of dollars.

The digital era birthed new types of entrepreneurs, visionaries and investors who caught the wave and took advantage of the hype. For example, Rick Schwartz purchased “eBet.com” for only $100, only to sell it 17 years later for $1,350,000. “Fund.com” managed to reach the price of a whopping $9,999,950, while there are rumors about “Insurance.com ” selling for $35,600,000, though there may have been other assets involved in this particular transaction.

Today, the domain name ecosystem is a bit oversaturated, but the demand is still present. Those who play their cards right, do enough research and make a couple of informed decisions, can indeed profit from investing in the right ones.  

The domain vein still circulates strong, one just needs to figure out where to strike.

Here are some actionable tips on how to master the domain name investment game and potentially cash in your both your research and your hunch.

Learn All the Basics of the Process First

Mastering the basics of what you are actually buying when purchasing a domain name is a must. Much like other investment opportunities, you will naturally be trying to buy low and then (hopefully) sell high at one point in the future. However, before you go ahead and splurge on a first catchy name you see, make sure you conduct a thorough research on all the nuanced details that are involved in this procedure.

The domain vein still circulates strong, one just needs to figure out where to strike.

Some of the useful questions you should find answers for include:

    • What is web registration and how does it work?
    • Are there any potential scams and how do I avoid them?
    • Do I opt for top level domains only?
    • Have I taken all the terms of purchase in to consideration?
    • Is the domain name that caught my eye risky? (Make sure you don’t go with a name that has already been trademarked, and don’t opt for ones that are similar to an already trademarked domain. That’s a recipe for one juicy lawsuit.)

It is vital to take all these aspects into account, otherwise you may end up on the wrong side of the bargain. Think of it as buying a used car – you won’t reach out for your wallet without taking a look at what’s under the hood.  

Take Advantage of Upcoming Trends

This one may involve a bit of visionary work.

After you’ve done all the necessary research, it is time to devise a strategy that will yield best results. Since almost all obvious domains (like clothes.com) are already taken, you should be thinking about all the untapped opportunities available out there.

Think about:

    • New products that have a potential to become extremely popular
    • Upcoming video games/systems
    • Potentially trendy foods
    • New technologies
    • New trends in economy (For instance, in 2014, “btc.com” was sold for $1 million, while it was probably bought quite cheaply, for some actual coins and bits).

Look Where Other Domain Name Hunters are not

Untapped markets, geographically speaking, can be quite interesting. Take African countries for instance. Many of those countries are only now entering the digital era, and with their rapid growth and an imminent need for localized websites, these regions pose as a huge domain name gold mine.

Another potent tactic is to, instead of going for millions and aim globally, focus your domain name investments onto local businesses. Think like an SEO expert who is trying to find hot keywords. For example, registering a domain like “TastyPiesLondon.com” can turn out to be quite lucrative and bring you a quick buck.

Go for Quality, not Quantity

Investing in domain names isn’t exactly a numbers game. Purchasing dozens of domain names isn’t the strategy that yields best results. You should instead focus on buying one or two surefire domain names and then see how you can flip them for best profit later. Auction fees and promotion strategies are also something to think about. Right exposure is important, but spending big money on promotion shouldn’t be your main focus.

Go Hunting for Expired Domains

It is a common misconception that you can actually buy a domain. The truth is, domains are never truly owned by those who purchase them. Instead, they are merely rented from ICANN (The Internet Corporation for Assigned Names and Numbers) for a certain period of time. Now, since domain owners are those who must make sure their online real estate is renewed properly and on time, some potentially lucrative names get expired. If you are able to use this window of opportunity to snappily yet elegantly snatch a valuable domain name, you may end up with a beautiful cash cow in your possession.

Purchasing dozens of domain names isn’t the strategy that yields best results. You should instead focus on buying one or two surefire domain names

FUN FACT: A couple of years ago, someone managed to buy “Google.com” for a short period of time, which only goes to show that even the behemoths of the digital era are capable of such blunders.

Versatility Goes a Long Way

Investing in domain names doesn’t have to only involve an act of mere purchase. Your strategy doesn’t have to end here. Coming up with different ways to utilize the domain may turn your approach into an all-round, multi-sided investment capable of skyrocketing your revenue. You can assemble a portfolio of potentially lucrative domains and use it to develop and deploy a potent ad strategy that can generate a nice passive income. Not only will this help you bump up your monthly returns, it will also further increase the overall price of your domain.

Final Thoughts

The online landscape in which virtually anyone can make millions overnight only buy purchasing the right domain names are unfortunately behind us.

The domain market has matured significantly, but that doesn’t mean there is no room for profit. Due to high competition, domain hunters now have to fight heavily for their share of potentially lucrative domain investments, and the right way to do that is to conduct thorough research and come up with a well-thought-out strategy that is both data- and hunch-driven.

Only those who truly understand the marketplace have a real chance of ending up on the gravy train. Others, however, will only be shooting in the dark.

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