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Domain Name Investing: The Easiest Way to Make Money Online?

Posted: 12 Apr 2010 08:42 AM PDT

This article is guest posted by Kevin Frost.

Everyone seems to be looking for the easiest way to make money online. Sadly, despite the breathless sales pitches of the latest "guru" products, automated systems rarely work, and there is no way to make money while sitting on a tropical beach sipping a pina colada (unless you put in a lot of hard work first!).

With the "pushbutton" online money making scams crossed off the list, I like to focus instead on methods that are "easy" in the sense that they have a high likelihood of success. A good method for making money online should require you to master only one or two new skills. This makes success with blogging difficult for most people as standing out from the bloggerati crowd these days requires not only excellent writing ability, but design talent, salesmanship, and ideally a healthy appetite for community building. That’s a lot for one person to master!

One Skill to Master

Success with domain name investing primarily requires mastering just one skill: valuing domain names. It sounds deceptively simple, but domain name valuation is by no means easy. Unlike with real estate, where you can easily compare properties based upon square footage, location, and amenities, the qualities of domain names tend to be less tangible, and the transaction history less complete. Unlike stock investing, there are not thousands of transactions a second taking place on domain name markets, which would provide a good indicator of market value. No, domain names are still the wild west of the investing world, which means that the risk is high but so are the opportunities for profit.

Take, for example, the domain CamRoulette.com. It was originally registered last December by an inexperienced domain investor who sold it for $1,400 just three months later, as the hype surrounding the website ChatRoulette.com was beginning to peak. But the buyer of CamRoulette.com was also a domain investor, and one who understand that the domain was actually much more valuable – within a month he had resold the domain for a whopping $151,000. That works out to a 10,000% ROI within just 1 month – try to match that profit with a house flip!

Turn your Knowledge into Profit

The unpredictability of domain name sales values are exactly what make domain name investing so profitable– if you can do a better job determining the resale value of a domain than other investors, you’ll know when to buy and when to sell. While many domain investors claim they always "go with their gut" on valuation decisions, there are actually a number of tools that can help you in researching the value of a domain name. Here are three such techniques:

  1. Find valuable search engine keywords:Domains that exactly match a search keyword have a much easier time achieving top rankings in the search engines. Therefore, if a domain name contains a search keyword that 1) gets a high number of searches, and 2) has a high advertiser CPC value, it’s a pretty good bet that someone will be interested in the domain. For example, the keyword “making money online” gets nearly 50,000 searches a month according to Google’s Keyword tool, and advertisers are willing to pay $2.66 on average for a click from each of these visitors. How much would those same advertisers be willing to pay for the domain MakingMoneyOnline.com, which could help them rank well in Google and capture a major portion of those 50,000 searchers – for free?
  2. Find domains that would make good brand names:In contrast to keyword domains, brandable domain names are short, pronounceable, and catchy terms that are usually not real words – think domains like Google.com, Yahoo.com, or Bing.com. Of course you want to avoid domains that are already brand names, since these are protected by trademarks. Instead, you want to register domains that could potentially become good brand names. Try bouncing ideas off your friends to see which terms are the most catchy and memorable. Try doing a Google search on the term to find out if it’s being used as usernames or is catching on as slang among young people (marketers often follow youth). For example, one smart domainer registered BlingBling.com as the phrase started to catch on among the hip hop crowd. He later sold the domain for $60,000.
  3. Consult online tools for help:If in doubt, there are a number of online tools that will help you evaluate the quality of a domain name, and even spit out an estimated value. Estibot.com is one of the better known free domain appraisal services, and although no automated appraisal system is without its flaws, their numbers are uncannily accurate. FreshDrop.net is a (fee required for most features) service that analyzes expiring domain names to identify those that get a lot of searches, incoming links, type-in traffic, and other quality indicators. Finally, the Domain Research Tool is a downloadable application that you can use to research large lists of domains and identify the most valuable.

Get Started Making Money with Domain Names

So that’s it! Once you’ve mastered the fine art of identifying valuable domain names, making money is as easy as buying low and selling high. It’s much easier to get started in domain investing than real estate or stock investing: all you have to do is set up an account at the registrar of your choice (I use GoDaddy.com), and start thinking of domains to register. You’ll also find valuable domain names to buy at expiring domain auction sites like SnapNames.com, NameJet, and TDNAM, and on domain marketplaces like Sedo.com or Afternic. I wish you the best of luck becoming the next domain name millionaire!

What could be better than making a good living working from the internet while having all the free time you could want? Teaching others to do the same thing! That’s the goal of my new website MakingMoneyOnline.com. Click to learn how to start your new online business today!

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Posted By Mr. Joko to Make Money Online at 4/13/2010 07:34:00 PM

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