First of all my thanks to Sahar for extending an invitation to write this guest post for his blog. I have known and respected Sahar for several years now and what he has accomplished is one of the great success stories in this (or any other) industry. Having real industry experts like Sahar, Frank Schilling and Rick Schwartz offering their insights in new blogs is one of the most welcome developments I have seen so far in 2007. Before I delve into the topic Sahar asked me to talk about, let me tell you why I think these latest additions to the domain blogosphere are so important.
The tremendous growth in this industry and the accompanying increase in media coverage detailing the profit potential in this business has been a bit of a double-edged sword. While it has brought in tens of millions of dollars in new domain-related investments, it has also attracted a lot of get-rich-quick con artists who seek to prey on the naiveté of newcomers hoping to make their own fortune in this space. A lot of the people who would like to separate you from your money pose as “domain experts”? and set up websites offering to sell you their secrets to success.
Virtually every site of that kind that I have seen features an “expert”? that I’ve never heard of. This is still a relatively small industry and I’ve been in it long enough to have had the good fortune to meet (or at least become aware of) just about every real expert in the business. None of those people are operating the snake oil sales sites you see popping up around the web now. With Sahar, Frank, Rick and others now out there sharing their expertise and asking nothing in return, you can keep your wallet in your pocket and still get something worth infinitely more than what the carnival barkers are trying to peddle. Think about it. If those people had really made their millions in domain investing, they wouldn’t need to be out there trying to get $99 out of you!
Now, I’m probably off to a bad start here because I got sidetracked before I even began addressing the subject Sahar asked me to talk about! Since I closely track the domain aftermarket for the weekly sales reports we release every Tuesday night at DNJournal.com, Sahar asked me to comment on where I thought the market was heading, both in the short and long terms.
Let’s take the short term first, looking ahead to the balance of 2007 and perhaps 2008. Of course, the health of the overall economy will have some bearing on how well the domain name market does, but let’s assume there are no huge dislocations in the general global economy (and I know this could be a faulty assumption with gas prices soaring and the bottom falling out of the housing market in many parts of the U.S.). Advertising dollars obviously have a huge impact on the fortunes of domain owners, especially those who monetize through PPC. The flood of advertising dollars to the web is reaching tsunami proportions, with increases topping 30% a year and no end in sight. If you own domains that have type-in traffic it is hard to envision a shortage of advertisers lining up to buy that traffic.
Monetization platforms also keep improving and alternate ways to earn a return from your domains are emerging including leasing, lead generation, cost per acquisition plans, etc. Solid keyword domains even without traffic also look golden because of the millions of new businesses starting up and going online each year. Most of these end users are completely unaware of traffic (and the benefits it provides) - they just want an appropriate descriptive name they can build their business on. Even the mom and pop shops in every neighborhood are going online.
Having a website is becoming as important as having a business card. Actually more important, because having your own website can also replace a big chunk of your advertising budget, a huge plus for people starting a new enterprise from scratch. I was in the music retail business for many years, operating brick and mortar stores as well as a global mail order business. When the web came along I was able to replace our extremely expensive full page ads in national magazines with small inexpensive ads directing people to our website. Our sales shot up while our advertising expenses dropped by 75%.
So with all of the forces currently at play, advertisers abandoning traditional media for the web and businesses scrambling to establish an online presence, the short term forecast for domains looks great. Competitive demand should continue to keep pushing the value of real gems upward and, as I think you can see in our weekly reports, even so-so or substandard domains are commanding surprisingly high prices.
Now, there is an old saying that trees don’t grow to the sky and I certainly learned that a few years back when tech stocks went crazy. Like many people I was piling up stupendous gains and could see nothing in the universe that could upset the tech applecart. We all know what happened. The NASDAQ (like the domain market) took a dive and I watched hundreds of thousands of dollars in paper profits disappear as quickly as they had appeared in my account. Something could always come out of left field and cut the legs out from under the current bull market in domains - but if that gremlin is lurking out there, I still haven’t spotted him.
Now, let’s look further out - Sahar suggested 10-20 years! I can say just about anything I want here because, unless I get out from behind this computer and start getting some exercise, I won’t be around in 20 years for you to call me on it! I see tremendous value in domain names, much of it still unlocked today. The only real long term threat I can think of would be a wholesale change in the DNS addressing system and I just don’t think that is going to happen. Why? Because what we have works pretty darn well. Using words as addresses makes them easy to remember, or if you can’t remember, easy to search for the websites you want to get to.
It is analogous to the street addressing system that has been in place for centuries and is still indispensable today. My daughter goes to the University of Pennsylvania in Philadelphia. Before her freshman year, she was required to read the Autobiography of Benjamin Franklin (who founded UPenn). I picked up the book and read it that summer too. Franklin mentioned the street address of his house in that book (written in the 1700’s). When I took my daughter from Florida to Philadelphia to start school, we were still able to go to the exact address of Benjamin Franklin’s home (which is now a historical site). No one has ever come up with a better system and I think domain names will enjoy a very long life as well, far longer than anyone reading this post is likely to be alive.
So, for what it’s worth, that is my take on the future of domains. Whether you are new to the business or an old pro, I hope your domain investments will blossom just as brightly as Sahar’s have!
Sahar and Ron,
First, Sahar, thanks for having Ron write this informative post.
Second, Ron, great post. And I hope you do get some exercise so you’re still providing your valuable service 20 years from now.
Best,
Kamal
love the new blog format and Ron, your Benjamin Franklin analogy is priceless!
Good stuff
Cheers!
Myzine team
What a great industry to have people like Ron, Sahar, Rick, Frank etc etc!
I don’t think I have enjoyed so much free and valuable education in any other industry that I worked in.
So Ron, this is another reason to be bullish on the domain industry…because of people like you who are in it.
Rob
Ron,
Your contribution to the domain business rises to almost prophetic level. The invaluable insight to both seasoned pros and amateurs is unrivaled. We all look forward to the weekly sermon in the form of DNJ publication on Tuesdays.
Kudos
Thanks for taking the time to come talk to us, Ron!