Domain Strategy & Investment: Which Domains Should You Develop?

| January 31, 2011

We recently reached out to Elliot Silver of www.elliotsblog.com regarding his strategy behind which websites to develop and which ones to add to his portfolio. He had some great advice to share.

By Elliot Silver
Internet Entrepreneur and Domain Industry Veteran

When I purchase a domain name in the aftermarket, it’s because I can imagine it as a fully functioning website. I don’t buy brandable domain names that could be used by someone, but I prefer names that are intuitive and don’t require any explanation (for example a dog walker directory on DogWalker.com. As an individual domain investor, I don’t have the time to build each domain name I buy, as a majority of my business comes from re-selling domain names for revenue.

Developing a domain name can be a time consuming and costly experience, and just about every domain investor I know has contemplated it. Choosing the right domain name(s) to develop is an important process, and I want to share some of the considerations I make before deciding which domain names should be developed and which should be re-sold.

While some might tell you that the most important consideration is your level of interest in a particular topic, I think you really should focus on the monetization options before choosing a domain name to develop. Yes, it’s important to like a particular topic, as that will certainly help you stay interested in your website, but if the monetization options are limited, you may spend a lot of valuable time and effort building something where there won’t be a positive ROI. Sure, you can develop a website without making money, but I personally wouldn’t have the time to dedicate to building a website if I couldn’t monetize it eventually.

Three sources of revenue for my developed domain names include direct advertising sales, Adsense, and affiliate banners/links. I recommend that you look at developed websites that will be your competition and see how those are monetized. Consider whether you will have the ability to monetize in a similar fashion. You will probably want to connect with that website’s advertisers since you already know they are paying for Internet advertising in the field of your interest.

Another consideration that is important is how competitive the field is. High paying verticals may yield more money in the long run, but search engine competition is probably fierce, and it will be an expensive and time consuming task to compete with well funded companies. For instance, if you want to compete in the auto insurance vertical, you should know that Geico, State Farm, All State, and a variety of other high powered websites will all be your competition. Unless you spend a significant amount of money on web development and SEO, you may find it extremely tough to compete. If your site is on page 7 of Google for your competitive keywords, you probably won’t earn much revenue.

Consider your expected time commitment for a particular website. Think about how much time it will take to update the site you choose (content, upgrades, inventory…etc) and determine if you’ll be able to commit that amount of time. By default, some domain name topics may require you to commit more time, and others may be seasonal. For instance, if you are creating a website about new book reviews, you’ll have to continue to update the site in perpetuity, or it will go out of date. Conversely, a website about a breed of dog may not require frequent updates and may be less cumbersome to operate.

Along the same line, you’ll want to determine the size and scope of the website on a particular domain name. In the past, I’ve built large websites with significant amounts of unique content, while I’ve also built sites that contain just a few pages. You’ll want to consider the size and scope of the project before setting out to develop, as some domain names should be more comprehensive than others.

The current traffic levels isn’t a very critical consideration, but knowing that can be helpful in making a decision. If you have a great domain name that receives target type in traffic, or it has traffic from targeted inbound links (perhaps it had been developed previously), this can be helpful to know. Valuable incoming links can help with SEO, and the traffic can be helpful for testing as you develop. IMO, building a website that already receives traffic puts you one step ahead, and it shows that there is “life” in that domain name.

As I touched on in the beginning, a very important consideration is your interest in the topic. The more interested and knowledgeable you are, the better off your site will be in the long run. If you come across as an industry expert, people will cite your website, which will help increase your traffic, reach, and authority. Companies want to advertise on the leading expert websites, and being perceived as an expert will help drive revenue. Additionally, as the website grows, your interest is less likely to wane, and you’ll continue to want to innovate and improve it.

There are many personal and financial considerations to make before devoting time and money to building a website on a particular domain name. It is important to think about all of this before you dedicate your time and effort to a particular project. These are some of the considerations I personally make when considering development.

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Category: Domain Investing, Domain Parking, Domain Tools Updates, Domainers

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Monica is the Senior Marketing Manager at DomainTools.