Invest in Domain Names

Domain Name Investment Tips: How To Invest In Domain Names

Domain name investing is similar in many ways to financial investment, and picking a domain name within a specific top-level domain (TLD) for your domain name is much like picking a stock or commodity. There are no easy paths, nor silver bullets, to finding success buying and selling domains for profit, as other domain investors will affirm. While there is no universal guidance for choosing a profitable domain name or TLD, one can improve the chances of success by having a good knowledge of the market and an understanding of the work involved in developing a domain name.

Learning about domain name investment

Know the Market

Build an understanding of the value of a domain name and how it affects your goals and risk tolerance. Certain assumptions about risk and value can be made when considering the TLD itself. Domains ending in the .com TLD have demonstrated a higher return and better performance in the secondary market, representing a potentially lower risk domain name investment. For example, according to data from Sedo, which describes its domain marketplace as the most active in the industry, domain names ending in .com account for just over half of domain name sales and have an average sales price around 60% higher than the next highest gTLD. This data, combined with the strong impression of reliability and stability associated with .com, demonstrates the value and importance of established TLDs, such as .com, in the market.

Domainer registering a domain name

Understand the Work Involved

Registering a domain name is only one part of domain investing. Developing a viable, valuable domain name takes additional effort, such as understanding how search rankings and traffic can impact your investment. A domain name’s value can come from driving traffic to a corresponding website. If you choose to develop a website, the TLD you choose for your domain can increase, or impede, traffic to your site. In fact, some tools may give preference to established TLDs, like .com. Although TLDs, such as new gTLDs, are being introduced as a new opportunity, getting traffic to a site with less-established TLDs may become challenging. Established TLDs that appear reputable and familiar to Web visitors, such as .com and .net, can lead to higher search rankings and traffic, providing the best opportunity to grow value.

New gTLDs affect domain investing

What About New gTLDs?

How will the introduction of new gTLDs affect domain investing? Some investors are outspoken about the opportunity new gTLDs may bring. When it comes to resale value, the general consensus seems to be that .com is still a reliable choice regardless of one’s inclinations concerning new gTLDs. A good indicator of ROI on a new gTLD is registrant demand and consumer reaction to new gTLDs. People value domain names that their customers trust and will feel safe visiting.

  • A 2014 industry survey found 40% of respondents were unaware of new gTLDs being available. Not surprisingly, preferences are not yet established.
  • The rapid introduction of hundreds of new gTLDs will undoubtedly be confusing for even seasoned users and much more so for the less tech-savvy. In the survey, 75 percent of U.S. marketers said that the new gTLDs would make the Internet more confusing, an increase of 13% from the previous year.

As with investments, there is no “sure thing” in domain name investing, the better informed you are about new and potentially game-changing topics in the domain name investing space, the better prepared you can be to make the investment that supports your goals.