Today's Trends in Domain Investing

Article Written By Jay Finnan
Sedo.com Director of Customer Relations

Increasingly, domainers are deciding to corner their own part of the market rather than diversify their investments. It’s a product of aggressive investor speculation fuelled by the growing belief that the industry is poised for even more exponential growth in the near future. Investors big, small and everywhere in between have decided the best strategy for them is to target domains from specific industries, events, locations or based entirely around a specific brand and buy every possible variation in an attempt to control as much web presence as possible. There are risks in using this strategy but the rewards have been so huge for some that more and more are creating their own domain empire.

When it comes to domains, niche specialization has been around for a while but it has never been as popular as it is today. The investment strategy has two major benefits. It saves time for the investor, and when it comes to selling they are in a better position to negotiate.

How can you make the niche investment strategy work for you?

Choosing the right domains to invest in can take a lot of time. Researching new products, technologies, hot trends or likely typos is labour intensive and doesn’t always pay off. Rather than taking the time to constantly re-educate themselves, some domain speculators have taken a different approach. They’ve chosen to focus on something they already know well and aggressively corner that market. Niche markets are alive and vibrant with speculation. All of the one word .coms are gone but if you’re a bio-engineer you can still find good bio-engineering domains available, for scuba divers there are still good scuba related domains available, and the list goes on.

For one heavy domain investor, his investment strategy was closely tied to his business and pastime. If you’re looking for outdoor sporting names, chances are he already has them. This domain owner, who asked to remain anonymous, started investing in 1995. Back then there were a lot of questions about what was going to be valuable and what strategy to take.

“It was really uncertain back then whether investing in domains that represented whole categories or niches paid off. We had long debates over things like singular vs. plural and whether anything but the most generic terms would be valuable.” He was certain about investing in outdoor sports domains though. “Knowing the outdoor sporting industries already gave me a real advantage. There was no doubt; I knew what was going to be valuable there.”

He was certain about not investing half-heartedly either. He knew that if he was going to increase the value of his investment exponentially, he would need to acquire as many domains as he could in his niche.

Another investor, Clark Siegelin, has chosen to specialize in brand names, specifically around .com domains using the well known and generic suffix 360. His bet has paid off with recent sales of cash360.com and firm360.com netting him thousands of dollars each. He continues to receive offers totaling thousands more for domains such as cellularphones360.com, tourism360.com, download360.com among others. For Mr. Siegelin the value of the brand was obvious so he registered every possible 360 related domain he could think of. Half-hearted investment wasn’t an option. Deciding to corner the 360 market was just as obvious as the value of the brand.

“Put it this way. The same buyer of cash360 is going to be interested in money360.com is going to be interested in banking360.com is going to be interested in stocks360.com.”

The level of interest might be different for each, but owning them all definitely puts you in a better position when negotiating for any of them. Cornering that niche has the added benefit of putting you in a much better position when the time comes to sell. If you have all the domains a prospective buyer is interested in they’ll keep coming back with better offers because you have all their good alternatives.

Geographical niches are some of the most popular right now. Investors are increasingly specializing in regional tlds as well as “place names”. Emerging markets, recent liberalization and the development of more and more active websites built around TLDs such as .in and .cn, just to name a few, have convinced more than a few domainers to invest heavily in regions they know are growing.

After “missing the .com era”, Jeffrey Williams decided to invest heavily in .co.in domains near the end of last year. “I was fortunate enough to find out that at the same time .co.in names were also to be released to the general public but this was not widely known.” He wound up getting 90% of the domains he pre-registered and so far his investment of a few thousand dollars has increased nearly 10 fold. He believes, “without a doubt”, that deciding to specialize in a niche earned him much more than diversifying his investments. It had the added bonus of celebrity status among those in the Indian domain name market. “I have gained the reputation as being the .co.in “guy” something that would have been impossible with .com/.net etc as I was too late.”

The key, for all of these investors, was entering a field of speculation where they were already knowledgeable. They all believe that leveraging their knowledge saved them a lot of valuable time on multiple fronts. Time that was put to better use finding available domains and marketing the ones they had already acquired. This niche expertise also left them in a better position to negotiate sales after finding prospective buyers because they knew what someone could make from their domains, what the growth trends would be and everything else that would make the domains valuable down the road.

Whether it’s investing to sell, investing for traffic or both, specializing in and cornering a niche is a growing investment strategy with big potential that is already paying dividends for some.

(NameNewbie.com wishes to thank Jay Finnan and Sedo.com for contributing this article).