Via Fortune:
A top name - one for, say, a product like digital cameras or vacation packages - attracts the sort of shoppers advertisers want: People essentially raising their hand and saying here’s exactly what I want to buy. As a result, argues Lawrence Ng, the 29-year-old co-founder and CEO of Oversee, “The return on investment for advertisers can be as good as or better than it is for search.”?
And because such advertising, known as pay-per-click, is so measurable, much of it should remain strong during a downturn. Oak Hill, in fact, did a study that found that direct advertising has held up far better during bad times than less measurable forms of advertising (think big brand building TV ads and magazine spreads). And pay-per-click ads on websites are the Internet equivalent of direct advertising. “All the data to date shows this is really valuable traffic,”? says Robert Morse, a partner at Oak Hill Capital Partners.
Does that mean we should all run out and buy domain names and pack “˜em with ads? Not so fast. Kevin Heisler, the executive editor of Search Engine Watch, has studied the domain world and concludes that when you look at the millions of domain names out there trying to make money from pay-per-click ads, the return on investment from straightforward paid search is better. The top tier domain names are the exception, he says, not the rule. And that explains why some domain names easily fetch six and seven figure sums, even in a down market.
Continue reading here.
My personal take on Domainfest’s auction, which is directly related to the question above, here.
The domain name business is not a recession proof, this is a business that runs with money foundation as well. If the advertisers slow down for their ads due to low demand of products and/or services. In some way, our domain revenue will take the hit too, not comparable damage to the offline market though.
We also need to diversify our business model from developed website, community services, PPC and other online services. In this way, we can minimize risk of recession in domain industry.
IMHO,
Emil @king.net
Emil you have called this completely wrong. In recession order books are empty, that is when you either advertise heavily or go bust. Bang for your buck counts more than ever before, so advertisers will go online. Big Corps will spend heavily. Mum and Paps will just hunker down.
What you will see is a complete collapse in the froathy markets. The Dot Mobis, all those Long-Tail Generics and particularly L_L_L and the like will collapse. Revenues on Top Dot Com generics will soar and so will their retail prices. The money will be concentrated in the hands of those that are already rich. That is always what happens in recession.
Investors will now also be looking for Global spread, in to market where there is no slow down. No, I am not going to spell it out yet again. You guys will just have to work it out for yourselves.