Unless you’ve been living under a rock, in a cave, on Mars, then you know that one of the most-talked about trends in Domaining is the shift from Parking to Development. At DOMAINfest last week there was a lot of discussions about development as many Domainers were looking for a better solution than Parking. In a few seminars speakers talked about how many Domainers are seeing their parking revenues decline year after year.
As you know I’m someone who loves analogies so before I go-into the three reasons why some Domainers will miss the boat…I thought I’d share my own analogy. Real Estate is the closest analog to domain names in the physical world and I like to think of a domain name as land. Many Domainers own upscale land in Beverly Hills and Bel Air…with no house on it. Rather than just let the land sit there they’ve allowed people to squat on their land with camping tents and charged them a small fee. Just in case you missed it the people sleeping in tents on the land represent parking.
You see, the land owner is still making money but having squatters on the land sleeping in tents isn’t doing anything to increase the value of the land. Now in 2005, 2006, and 2007 the tent-dwellers paid decent money and the land-owner was happy with what he/she was making. Fast-forward to 2011 and those tent-dwellers are only willing to pay-out 50% of what they did just a few years ago!
So what do you do to create real long-term value on the land? Build a house! With a house you can generate a significant amount of revenue and dramatically increase the value of your land…of course you can’t build a house for free! This leads me to the top three reasons I think that some Domainers will miss the boat when it comes to development.
- Unwilling to pay for development. Some Domainers are more than happy to shell-out $500,000 for a domain but when it comes to development they can’t even spare $5,000. If a domain is worth $500,000 on it’s own imagine what it would be worth if it had 2x the revenue and a steady stream of organic search traffic!
- Looking for a solution for every domain. Some Domainers are looking for a solution for every single domain in their portfolio. This just isn’t feasible or realistic, the Parking model isn’t working and you can’t mass develop thousands of domains and expect them to become brands. It’s important to realize that with development you can make more money with one or two domains then you’re probably making with your whole portfolio parked now!
- Afraid of change. This is an oldie but a goodie. If you’ve been making your money the same way for the last six years and now your revenue has been cut in half you know you need to change, but it can be scary to make the first move. That being said, if you expected the world to stay the same forever then you were selling yourself a dream. The world changes daily, it’s those businesses that adapt to the changes that succeed.
So now take a look at your portfolio and strategy for making money in 2011. Do you see yourself falling-into the same trap you did in 2010, 2009, etc.? If so it might be time to take one domains (not ten, not ten thousand but one!) and turn it into a real online business where YOU not Google controls your revenue.