IT.COM

opinion Why I Develop Every Domain Name Investment

NameSilo
why-i-develop-domains-eric-lyon.png
About 10 years ago I discovered the secret to domain success. Though, not much of a secret, domain development is a wonderful way to improve upon your investment, yet it is highly underutilized. Once I figured that out, I began developing everything I could get my hands. It’s one of those things that I’m so passionate about, I tend to recommend development to everyone I talk to, even if it wasn't even remotely close to the topic they initiated. It's funny sometimes, the expression on people’s faces when a conversation they started with me makes a 180 degree turn from, "Where can I find an end user for my domain?" to "You should develop it, and here's why!"

Here’s some great reasons why I prefer to develop every domain that I invest in.

Parking vs. Developing

I can certainly understand the draw for many to create a large portfolio of parked domains. Who wouldn’t? It requires little more than your checkbook to amass a stockpile of potential, little energy expended, residual income, and it typically makes back your investment, but why sit on a pile of domains for pennies when you could be making 10x the return on each developed domain? It almost seems fiscally irresponsible once you know what you’re missing out on. I hear it over and over again that people park because they don't know how to code, design, or just don't have the time or money to pay someone else to do it. I get it. I realize that those can be legitimate obstacles for some people. Personally, I think it's a cop-out and a negative mindset. They just have to put their mind to it.

There's always a way to schedule at least 30 minutes a day or budget $10 to $50 a month to put towards developing a domain. I think that sometimes an investor just has so many domains in their portfolio that it's overwhelming to even consider developing them all. I get that too. I understand the feeling of that kind of pressure. Like with anything in life though, one step at a time to get the ball rolling and eventually, in a week, month, year, or decade from now an entire portfolio can be developed. Progress is still progress, no matter how long it takes you.

The main reasons why I stopped parking are:
  • I made more per click (PPC) when I developed vs. a percentage of a click with a parking company.
  • I had more freedom and control over my content and design when developing.
  • I boosted the value of my investment as it grew in traffic, revenue, etc.
  • I was able to save money each year once my domains were able to pay their own renewal fees.
  • I generated profit from my portfolio until the domains and/or websites sold.
  • There was no pressure to sell, and I could hold out for the best offer since there were no more yearly costs per domain.
  • I was able to be found in search engines when I developed, giving me better reach and potential for visitors.
  • I had more control over what type of ads displayed on my pages to avoid any unforeseen UDRP’s.
Quick Flipping vs. Developing

There’s nothing wrong with quick cash. Especially when I started out, I always liked a quick flip where I could turn a $1 coupon .com investment into $10 to $200 within 24 to 48 hours. Frankly, I find that quick flipping is a good way to get your feet wet until one learns more about the industry and how to assess value. Every quick sale you make puts you one step closer to the actual value with cold hard cash that a buyer places at your feet so that next time, you can start putting fixed prices on similar domains.

The quick flip approach can be a particularly satisfying one, especially if you're a fast cash kind of person. However, 9 out of every 10 times, a quick flip leaves lots of money on the table that you could have put in your pocket. Let's not forget how much time it takes out of each day to keep moving each of your domains in a marketplace. We’re talking about a lot of hours per day. Most investors start to realize that while such a business model might be sustainable, they'll burn themselves out and be investing more time than the money they make. How much is your time worth?

In the end, while certainly more time consuming, developing a domain helps you make more productive use of your time. It also allows you to save time in the long run by never having to list the domain for sale. Not to mention, the revenue it generates every year to pay its own renewals and bring profits while it waits for a buyer to inquire about it. Domains will Increase in value each year as more viewers find and refer them to others.

Think about the long term and possibly diversify a little at first. Start out with a few quick flip investments coupled with a few long-term investments, just be careful while developing that you don't infringe on any trademarks.

Long Hold vs. Developing

Just like with quick flipping, it's beneficial to develop and have your investments paying their own renewal fees and bringing in profit each year. It's great if you can afford to renew undeveloped investments every year and not bat an eyelash. However, you'll have more peace of mind if they pay for themselves.

Many investors I've talked to rebut the thought of developing because they feel like their premium one word .com’s value has already hit seven figures, so why bother? But I say, you already own the domain, so why not take a dive into the deep end of the pool and see if it can swim with the big boys? Developing on a parked investment that already has a phenomenal potential will only better your chances at furthering that value and getting more buyers’ attention.

Don’t let this long hold mentality get in your way. If you’re lucky enough to score a premium domain for your portfolio, developing it could make all the difference. Chances are that if you have such a premium domain that everyone already wants and people talk about, developing it even into a five page mini-site could crank out cash like an ATM machine every month.

In Conclusion

There's literally no good reason why an investor shouldn't want to expand on their investments, so that they can profit passively while they wait for the right buyer. They could even have it generate leads for another investment project of theirs. Sometimes one has to sweat a little and dig their heels in before they can find the true potential in an investment. Don’t forget the age old line, “it takes money to make money,” and what better way is there?

Now that you know, there’s no more excuses. It’s time to stop procrastinating and start being productive with your investments. Before you know it, you’ll be telling all your friends to develop, like you’ve been doing it all along. I know I did.
 
90
•••
The views expressed on this page by users and staff are their own, not those of NamePros.
Great post Eric, as usual very detailed but I would like to know one example of any domain you own which end user don't want to buy when they see it as a domain not website but after you have developed it, it has given you good returns.

Please give numbers like domain cost, development cost before sale and how much profit finally after sale. Just to get idea how developing domain really increase the value and it's worth of the effort we pay on development.

Thanks,
Sumeeth
Reminder, this article is 4 years old and many of my strategies have slightly to drastically changed over the years, along with the domain industry, Google algorithms, niche focuses, and monetizing.

Most were not on marketplaces and done in DM, eMail, Over the phone, In-person, and sometimes in chat (back in older java days).

This one was public I sold back in 2011 for a mere $59.00 back then (Which, at the time nobody would buy it undeveloped): https://www.namepros.com/threads/personalmuse-com-website-unique-and-original.719777/

This one was also public in 2014 for a mere $50.00 (Which, at the time nobody would buy it undeveloped): https://www.namepros.com/threads/onlyzombies-com-traffic-3-yrs-old-5k-pages-pr2-6k-backlinks.828706/

The biggest developed asset sale was for $7,500.00, so far.

I can't even count how many quick flips I've done over the years that started as a $1 Godaddy coupon for a .com + 2 hours on a free template for 3 to 5 pages ($1 + 2 hours labor at $20 per hour = $41.00 total investment) for $50 to $250 each. A lot! But became way too time consuming for the return.

Keep in mind, in 20 years, the domains registered today (Without development) may also have more value. It's a patience game too, if one is not good at outbound or networking.

When it comes to a single website generating revenue of at least 3-figures+ per month, it's consistently been a digital product or service that I owned/operated and not affiliated with. Which also, eventually, died off when a trend faded away or the site(s) were DDoSed, SQL injected, etc... Leading to starting over from scratch again. It seems like once every 2 to 5 years I've had to rotate, drop, and rebuild to latch onto new trends and get away from the majority of the assets I've owned (With the exception of a few that survived the test of time).

I've had sites that got 100k+ visitors in a 3 month span (Affiliate) over the years and only generated $5. I've also had sites that only pulled 15 visitors in a month, but converted 10% to 50% of them, every month at $100 to $500 per month (Service/Product). If we count royalties as being similar to affiliate, those have converted anywhere between $10 to $100 per month with 30 to 200 visitors per website those months. Of course, not all campaigns convert like that, only the ones that are perfectly laid out, perfectly targeted to the viewer, and close to perfectly optimized.

Personally, while mini-sites do still have potential with all the right variables in play, it's very time consuming to do. Keep in mind that every 6 to 12 months, code can be outdated and replaced by new standards, causing a massive update on all developed assets to keep them in compliance.

It can still be done and is done. Take a look at various website sales from multiple venues to get an idea of which niche and type of sites are moving fast and which ones are not getting any play. If you're wanting to flip faster, then the asset needs to be targeted to the biggest demands. Otherwise, just make sure they are monetized so they have a chance to pay their own renewals each year until they do sell.

What works for one may not work for another. It worked for me, but the markets, industry, policies, algorithms, etc. have changed and are not what they used to be back then.

I'm more focused on mega 30k to 50k+ page sites these days (E.g. OfficeDrift.com / ScorpionAgency.com / Etc..), however, I do still have some older developed minisite assets that survived the test of time and still generate leads/revenue (E.g. LocalAutoSalvageYards.com / SanAntonioLogo.com / Etc.. )

I've turned down offers on both the mega sites/brands I mentioned, over the years. Each time I get an inquiry, it's for more than the last time, which is predominantly because of the massive reach in brand awareness the domains/brand/sites have now and continue to expand.

It's funny, but it seems these days, it's the domains you no longer want to sell that people inquire about. Go figure. lol - I suppose it happens that way for everyone after holding for a decade or two or speeding up the process by developing a genuine business model on a domain asset and scaling it until someone notices that reaches out to make a curiosity purchase offer or partnership offer. The OfficeDrift asset has only been developed 2 years now and has had 3 offers to purchase and 19 offers to partner.

I must reiterate though, What works for one may not work for another.
 
5
•••
3
•••
Do you think you can hinder and stereotype a domain with development? eg: sexy dot something being used as adult but potential buyer thinks it is ruined the name or even building a blog. Some buyers actually want it to have never been developed.

The best way to make money is hosting so if your names are doing nothing for you and don’t sell themselves then development is the only way to keep head above water. Nice when one name can pay for another but you can also over do a startup site or not do enough.
 
2
•••
Do you think you can hinder and stereotype a domain with development? eg: sexy dot something being used as adult but potential buyer thinks it is ruined the name or even building a blog. Some buyers actually want it to have never been developed.

The best way to make money is hosting so if your names are doing nothing for you and don’t sell themselves then development is the only way to keep head above water. Nice when one name can pay for another but you can also over do a startup site or not do enough.
From what I've seen over the years, it's generally a reseller/investor or hobbyist/investor that stereotypes a previous development. End users/investors understand that all that traffic and backlink structure could help kick-start a new development with a pre-existing audience. Granted, many of the audience may not like the new development and never return, however, there will be a % that continue to return out of that batch.

When it comes to buying a previously developed asset, the main things an end user should be concerned about, is the traffic sources (Bad neighbor sites can and will devalue the asset), Flagged/banned in search engines (It doesn't help to build a brand on an asset that can't be found in organic search results), and large amounts of negative publicity (The more publications referring to the assets as bad/evil, the harder it is to do damage control for new brand on it).

Everything else, is pretty much moot.

Resellers and hobbyists on the other hand, have a tendency to either over analyze developed assets, not analyze at all, or sometimes pass up on ones that are salvageable, because they didn't like the past development niche, rather than looking at the same things an end user looks at above.

At the end of the day, a genuine end user isn't going to care if an asset is developed or not as long as they can build their brand on it without too many damage control issues out of the gate. It's obviously more beneficial to an end user to build a brand on a previously developed asset that can jump start their campaign with pre-existing traffic/visitors. It's this aspect that is most appealing, as long as the traffic is targeted, coming from a reputable or organic source and not forced, paid, or manipulated.
 
3
•••
Back