I rarely talk about the domaining part of my business, but it actually is a fairly large portion of what I do and what any busy online marketer or developer does, so I figured today was a good time to discuss it and see if I could offer anything of value for you from my experiences.

I have to preface this by saying I don’t buy domains purely as investments that I intend to resell later at a higher price.

I know that’s a business model for some who like to speculate on domains like they were stocks. That’s not my thing though, I’m a tinkerer and a builder, I like to create, even in the virtual space, so when I buy domains it’s because I believe they will have value to me on a project, not because I think someone else might want them later on down the road.

I rarely sell domains, in fact I don’t think I’ve sold a single one in the last 2 years. In-fact, I recently just listed a couple I’ve had unused for sale over at NamePros and after 2 days I realize that I have no clue what the domaining market really looks like these days.

These are “CityName”Pizza.com geo-service domains that I purchased last year for a marketing campaign I was launching to promote the CPA offer of a national pizza chain. Unfortunately, the pizza chain shut down their CPA offer really quickly and without warning, so I was stuck with these extra domains that hadn’t been used yet.

They’re great domains if you own a pizza shop in any of the cities. Imagine if you own a small pizza shop in a medium size city like Erie, PA, and you could have EriePizza.com as your domain…list yourself with Google local and you could literally own the online market there. So for domainers who know the ins-and-outs of selling domains like these to end users (like pizza shop owners in the named cities), these should hold some value.

Or if you’re a web developer, you could easily place some content about the cities and pizza on the domain and then monetize the traffic with advertising. Even just using AdSense I figure the domains would pull in a few dollars per month each, and since I’m offering the domains for just about registration fees I thought for sure they would be gobbled up quick. (If they don’t sell, this is likely what I’ll do with them at some point down the road, just because I don’t have the time to chase end user sales)

Yet, 2 days after listing them I haven’t had a single offer or even comment. I’m not sure if domainers are becoming too lazy to take domains like these and go after the end user sales or what. I did look through the listings that were generating offers and sales on the boards at NamePros and what strikes me is that a lot of names which have no true apparent value at all, other than a pointless Google pagerank of 1 or more, seem to get the most traction.

I understand that mentality on forums that are more about webmasters and developers, they often buy pagerank domains just to sell links from and make a quick profit until Google strips the ranking off of the domains for link selling, but I didn’t expect to see so much attention given to pagerank on a domaining forum. It just shows how little attention I pay to the domaining market even though I do a lot of domain buying.

My Domain Portfolio

I’m not sure of the actual number of domains I own right now off-hand, but it’s a lot. By a lot I mean I purchase anywhere from 1 to 4 dozen (and sometimes more) domains almost monthly, and I’ve been doing that for years.

Some I buy for new projects, but most I buy for marketing value with existing projects. And in these instances, it’s usually dropped domains (domains that somebody owned and then let expire without renewing the registration) that I buy, because they sometimes have an extra little value of some established backlinks or traffic associated with them.

A Purchasing Example

Here’s an example of how and why I do this. Let’s say that I have an ecommerce site where I’m selling Baby Strollers (I don’t have such a site, this is a hypothetical example). That’s bad for marketers because we want to get our pages ranked as high as possible. After all, better rankings means more traffic, and typically more revenue.

A lot of marketers (myself included at times) will simply put more efforts into link building, PPC and other whitehat methods to try and improve our product page listings in the search engines. And some will go over the line into the realm of blackhat link building, though I strongly urge everyone to avoid doing that.

So, here’s what I’m facing in my hypothetical situation: It’s hard to get my product sales pages to rank well against established retailers like Amazon and Wal-Mart, but I need more traffic if I want to earn a fair living from my site…

And that’s where dropped domains come in for me. Since my site is about Baby Strollers, I’ll watch the dropped domains listings for anything baby stroller related and that doesn’t violate any trademarks. Sure, it would be great if Baby.com opened up (but don’t hold your breath for such a find), but I’ll take any long-tail domain that comes along if the keyword phrase gets any sort of monthly search traffic and the term has little competition.

Playing Detective

So let’s say I see the domain FastFoldingStroller.com is available. I’ll go on over to Google and check the monthly search volume for “fast folding stroller”, “fast folding strollers”, “folding stroller” and “folding strollers”

If 1 or more of the terms is getting 200 searches per month or more I’m half way to deciding to purchase the domain.

Next, I’ll check Google for the amount of competition for those same terms, as well as check out the top listed sites for each to judge the strength of that competition.

There’s software out there that’s supposed to be able to do all of this for you, but I’m Old-School and like doing the investigative legwork manually. I told you I was a tinkerer.

After looking over the competition, if I believe that I can rank well for the term without too much investment, then I’ve got a winner and head straight to the nearest registrar to grab up the domain.

Then, depending on what I believe the “user intent” of people going to that domain would be, I’ll either put up an informational landing page on it with links directing any possible buying traffic to my ecommerce pages. Or, if it’s a phrase where I feel the user intent is already to make a purchase, as it would likely be with a domain like FastFoldingStroller.com – then I may simply point that domain to one of my ecommerce pages that offers fast folding strollers.

The Gamble And The Payoff

I look at the $10 registration fee this way, and this is especially true with high commercial intent phrases: if the term gets just 300 searches per month and I can put it in the top 3 spots on the search engines with minimal effort for the longtail, then it’s fair to assume I can pull an extra 2 to 3 dozen possible buyers to my ecommerce page each month.

Being uber-conservative, lets say I only grab 10 potential buyers per month though. If I were using PPC marketing, and paying $0.10 per click to get qualified buyers (which usually cost more than $0.10 each if they’re really qualified), then that same 10 visitors would cost me $1 per month, or $12 per year.

So, in reality I just saved $2 per year from my marketing budget by buying this domain.

And like all marketing, the best laid plans don’t always work out. Sometimes something will go wrong in the research of a term, or the traffic won’t have the intent that I believed it would, and so I’ll own a domain that doesn’t lead to any traffic or conversions. It happens, but not often because I’m pretty thorough in my investigative work.

But Is That Whitehat? Is it Cybersquatting?

The truth is everyone seems to have their own definitions for these terms, and some “purists” will even say that just owning more than 1 domain is breaking some unwritten rule or code,  so I can’t answer that in a way that won’t make someone cry foul. But, in my opinion my method is completely “above board” because it connects searchers with what they’re looking for. I’m not taking advantage of incorrect spellings or piggy-backing (leeching) off of brand names, I look for longtail keyword terms that match what I’m offering, so that I can give searchers exactly what they’re looking for.

Like in my example above, someone searching for “fast folding stroller” hasn’t identified a specific brand or even retailer in their search, they simply want to find a fast folding stroller, so if I can connect them with my sales page offering that product it’s a win-win for both of us.

In Conclusion

Anyway, that’s the why and how behind my huge collection of domains that most true domainers would consider low-value. And they’d be right from their perspective where the value is often in the “parked domain” revenue potential.

But if you’ve got some good product(s) to sell, and earn a decent commission from each sale, then using additional domains to attract qualified leads can be a highly lucrative way to spend your marketing dollars.

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Technorati Tags: Domain name speculation, domaining, web dev