Web Domain Spot

... This section of the Guide assumes that you’ve familiarized yourself with domain names (if you’re just starting, you’ll want to read the introduction to domain names), have purchased one or more, and are now trying to resell your domain name… now what?

Before you get down to the hard work necessary to sell your domain name, you’ll need to place some kind of value on it (even if you are not going to publicize the value you’ve placed on a domain name, it’s important to know what the minimum amount you’d accept for it is.)

There are essentially two main ways to sell a domain name: you can find a buyer yourself, or you can use a company/organization to find a buyer on your behalf.

If you choose a domain name broker (site or service that assists you in finding a buyer for your domain name) that does not demand exclusivity, you can even combine both types of sales strategy i.e. list your domain name for sale with the broker, and at the same time solicit buyers independently.

Always remember that the current domain name resale market is much weaker than it was just a couple of years ago, at the height of the Dot-com bubble.

Back then, if you owned a decent domain name, you could generally sit back and wait for the buyers to come to you. Nowadays, you need to be much more proactive in your approach if you want to successfully sell your domain name(s).

At the same time, never discount the possibility of “walk-in” buyers; in other words, potential buyers coming across your domain name during a search, and inquiring about its availability.

To this end, it’s essential that you keep your Whois record (the record of ownership of your domain name) updated at all times, and free from errors. You just never know who might be trying to contact you!

Read on for more information on selling your domain names.

... Of course coming up with a list of domain names and then looking to see who owns them is only one way to find good domain names. There are several other methods that have become standard in the industry. Online auctions, name listing services, and domain brokers are all great ways to find good names at bargain prices.

Dealing with Appraisers

Appraisers and consultants can be very useful when you’re buying or selling domain names. Their expertise in the industry could save you thousands of dollars when considering a domain. But beware – no matter what an appraiser says, your domain is only worth what someone is willing to pay for it. Many domains appraise for hundreds of dollars, but really aren’t worth much at all (perhaps not even the registration fee) simply because there isn’t a market for the name. Novice domainers often go through a phase where they buy several such non-valuable domains only because an appraiser or automated appraising service (which we recommend avoiding) told them that the name was worth a sizable sum.

Choosing the Right Appraiser

It’s important to choose a good appraiser that won’t try to inflate a domain price just to promote other services, such as domain brokerage, escrow, or listing services. The position of an appraiser who doubles as a broker has a very precarious relationship with his/her clients. It is very easy for an appraiser to give a potential buyer a higher price than a domain name is actually worth. While there are a number of variables that consistently help predict the value of a domain name, there are just as many unpredictable factors, and therefore it’s virtually impossible to come up with an accurate price.

Using our previous example, if the owner of the domain name carparts.com has the site listed on SEDO for $10,000 and you want to know if the domain could be worth much more before investing the money, use an appraisal service other than Sedo. Sedo will get a percentage commission for the sale, so the higher the sale price, the more money they stand to make. Check out our resources section for recommended Domain Appraisers.

When Appraisers Get In the Way

While an appraiser can help you bring down a domains price while negotiating (or help you confirm a domain name’s value), they can also hinder your negotiation strategy. If an appraiser has convinced a seller that a domain is worth more than your offer, you will have a much harder time convincing that person that your offer is reasonable.

Sometimes the easiest thing to do in such cases is use a brokerage service, which will be discussed later.

Auctions

When using an online auction (or even an offline one), try to keep in mind that while you can get lucky and find a great bargain, it’s just as easy to over-pay for second-rate domains. Auction goers can get into bidding wars where pride suddenly becomes more important than their search for a bargain. As a matter of fact, an appraisal company recently published results showing that people paid up to seven times more than a domain name’s market value in one of the industry’s most popular auctions.

At the same time, there are plenty of domains that go virtually unnoticed at such auctions and can be purchased for very reasonable prices. If you’re hunting for domains at auctions, make sure you remember you’re there to get a quality domain for a good price. Don’t chase a purchase if it gets driven out of what you consider to be a reasonable price range.

Domain Listing Services

Domain Listing Services are a great way to pick up good domain names, but they are also full of worthless domains that you must sort through. Use precaution before jumping into an expensive sale and remember what you’ve learned about what makes a good domain.

Once you’ve learned how to discern a good name from a bad one, searching through a listing site’s directory will pay off. You might find one or two good names someone has had listed for a long time and make a low offer. This is a great way to get decent domains with minimal investment. Now that you know how to buy domains, let’s look at ways to sell domain names.

... When looking for domain names to buy on the secondary market, you may find it productive to undertake the same research process you would follow if you were going to register an available domain name, such as keyword research. However, once a third party becomes involved, other factors must be taken into consideration, including :

• How important is it for you to secure this specific domain name?
• What kind of budget do you have available for purchasing the domain name?
• How quickly do you want to complete the transaction?

Here’s a specific example : in your research, you find a piece of new software that will make it very easy for car parts dealers to take their stores online. That information, coupled with your own experience, has shown you that the likelihood of finding a simple, memorable domain name relating to that industry is zero. However, you decide that you can afford to spend up to $10,000 on securing a suitable domain name because there will be a higher demand for it in the future. So, you draw up a shortlist of names that you’re absolutely certain would have a high resale value by next year (none of which are currently available). This list includes:

carparts.com
car-parts.com
carparts.net
autoparts.com
automobileparts.com

Now it’s time to start honing your list down to the top one or two candidates. To do so, you need to examine the use to which the name is being put. Try and visit each domain name on your shortlist by typing it into the address bar of your browser to see if it currently has a website associated with it. If there is a site associated with the domain name, is the site:

A) Related to the domain name, and associated with a successful business that is using the domain name as its primary URL?

In the example, if you were checking the domain name “carparts.com” and you found a site belonging to a company selling car parts, with “CarParts.com” as its company name or in its main logo, with an up-to-date News section and copyright statement on it, then clearly the domain name is being put to very good use by its current owner. BUYING DIFFICULTY: 10/10.

B) Related to the domain name, and associated with a successful business that is NOT using the domain name as its primary URL?

If you checked out “carparts.com” and found an up-to-date site belonging to a company selling car parts, with “AutoParts.com” as its company name or in its main logo, with an up-to-date News section and copyright statement on it, then while the domain name is clearly being put to good use by its current owner, the owner is not using the domain name as the primary domain name for their site. This may make it a little easier when it comes to negotiating a purchase. BUYING DIFFICULTY: 9/10.

C) Related to the domain name, but containing clearly out of date material?

If you checked for “carparts.com” and you found a site with broken links, missing pictures and a 4-year-old copyright notice, then things are looking more promising. While the domain name owner clearly made good use of the domain name at some point, it is not being used very effectively right now. BUYING DIFFICULTY: 6/10-8/10.

D) Related to the domain name, but essentially linking to one or more affiliate programs?

If you checked for “carparts.com” and you found a single page with a few affiliate program links relating to car parts sites, your attempt to purchase the domain would be very closely tied to how much revenue the domain is currently generating. In other words, the current owner is monetizing the domain name by sending its traffic straight to an affiliate program and receiving a commission from the transactions generated by visitors. Therefore, the value of any sale must reflect this loss of income in addition to the value of the domain itself. However, the current owner is less likely to have any deep or long-term attachment to the name. BUYING DIFFICULTY: 5/10-7/10.

E) Unrelated to the domain name, but linking to a generic affiliate link or parked with PPC ads?

Using “carparts.com” again as the example, if you visited the site to find a generic “Hottest Sites on the Web!“ page filled with affiliate links to gambling, credit card, cell phone, loan and other ads, then any transaction will likely be based on primarily on how much revenue the domain is generating. It’s also clear the current owner isn’t too sure what to do with the domain name, since they’re not targeting it at an appropriate affiliate program. BUYING DIFFICULTY: 4/10-6/10

F) Showing a generic “Registrar” page or a blank “Under Construction” page

If “carparts.com” directed you straight to a page advertising a Registrar’s services or an Under Construction page, then clearly the owner hasn’t “moved in” to the domain name yet. At the same time, they are not currently doing anything with the name to generate revenue, so it may be easier to persuade them to sell it. BUYING DIFFICULTY: 3/10-5/10.

G) Pointing to a “Domain for Sale” page

This could be your hardest challenge or an easy transaction. The domain name is owned by somebody who, at the least, understands that desirable domain names can have value. The prospect of closing a sale will depend on the desirability of the domain in question, the current owner’s expectations and experience in the domain name resale market, and your negotiating skills. BUYING DIFFICULTY: 4/10-10/10.

H) No website at the domain

If the domain name is not currently pointed at any website, this at least tells you that its owner is not making any money off of the domain name right now. Maybe there used to be a site at that domain name or maybe the server hosting the site is offline. Whatever the reason, the domain name is currently gathering dust, which should make it a little bit easier to close a sale. BUYING DIFFICULTY: 2/10-8/10.

Now that you know a little about the difficulty in picking up names from website owners, let’s look at how domainers usually try to buy the names for the right prices.

... What happens if the domain name you want is already owned by a third party?

In this case, unless you believe you have a fundamental legal right to the domain name and are prepared to undertake a UDRP dispute or other legal action against the domain name’s current owner, there’s only one thing left for you to do: make an offer to buy the domain name directly from the current owner.

While nothing can guarantee the success of any particular transaction (much will depend on the current use of the domain name, and what the current owner values the name at), the right approach can increase your chance of completing a successful transaction while at the same time reducing the amount you’ll have to pay to secure the domain name.

If you already know which domain name you want to buy, you can move on to the initial approach to the “seller”. If you’re not yet certain which domain name you’re interested in, or if you want to explore the options available to you, then read on.

... The Domain Buying and Selling Guide walks you through the steps of buying and selling domains, teaching you the ins-and-outs of the how and where to buy and sell names, negotiating prices, and what to do once you’ve agreed upon a price.

... The biggest worry to new domain investors is that all of the good names are gone. This is mostly true of the names that draw in millions (or even hundreds of thousands) of dollars. But remember, there are plenty of good domain names left, many that could easily be resold for hundreds of dollars. Also, the word “gone” is operative - the fact that someone has registered a domain does not mean it has disappeared. It just means you’ll have to pay more than a standard registration fee to obtain it. Additionally, the industry continuously comes up with new TLDs, offering new domainers a chance to purchase some of the highly-desired generic domain names with a different extension.

The domain investment industry remains as lively as it did in the beginning (during the initial domain goldrush). It is a constantly evolving industry and there will always be money to make in such a viable online market.

Now that you’ve learned about what you can do to monetize your domain names, let’s look into actually buying and selling domains in the secondary market.

... The revenue that can be generated from dormant domains (domains awaiting a buyer and not pointed at an existing site) is the domain industry equivalent of the dividend that stockholders receive on the stocks in their portfolio.

Revenue of just $0.01 a day per domain adds up to be $3.65 per domain per year. Assuming you own a portfolio of 250 domains and each domain earns $0.01 per day, that small amount of revenue would cut your annual renewal costs by over $900!

In other words, it’s worth setting up some method of income generation to monetize domains with even trivial amounts of traffic – a targeted PPC program might generate revenue from just one daily visitor!

... Like every other industry, the domain industry has its own set of etiquette rules. Ignoring these rules could result in a bad reputation or being banned from certain sites. In some cases, it could even land you in court.

Cybersquatting

The term cybersquatting refers to the practice of buying a trademarked domain name with the intention of reselling it for a high price or damaging the reputation of the trademark owner. That sounds like a nice simple explanation, but the rules concerning cybersquatting are still somewhat open to interpretation.

For example, the company Virtual Works registered the name VW.com. It was challenged by Volkswagen, known as VW for short, in 1999. Volkswagen lost the battle that year, but came back later with an appeal and won the court case and the domain. Conversely, eToys.com tried taking the name etoy.com from a Swiss art company; the courts found in favor of the Swiss art company in this case.

As long as you remember to use common sense when registering domains, you probably won’t have any trouble related to cybersquatting. Registering kodak.ru and using it to sell cameras is obviously a bad idea, and it could likely land you in court. It has happened before and will likely happen again.

Click Fraud

There are several forms of click fraud. The only one concerning this guide is the kind PPC sites or parked pages would use to make fraudulent money. In this case, a website owner clicks on the various PPC ads on their own site in an attempt to generate more revenue. Sometimes software is used to automatically click through links from different IP addresses. Either tactic will get you banned from most PPC networks or parking services.

You would also gain a bad reputation with other domainers since the high click-through rates would make your site seem more valuable than it really is. If someone were to buy a name from you that vastly under-performs, word could spread and damage your ability to make future sales.

Typo-Squatting

Typo-squatting has not yet been established as a crime the way cybersquatting is. It also is not yet as damaging for your reputation. But, many in the industry do frown upon the practice.

Typo-squatting is when you buy a domain name that is very similar to a popular domain or trademark, hoping for unsuspecting users to mistype a common domain into their browsers. For example, buying frod.com in the hopes of receiving traffic from those who meant to type in ford.com would be typo-squatting.

In most cases, typo-squatted domains are full of PPC ads. The first of the links is often one that leads to the site users had meant to type in.

Obviously, the owners of many large, well-known sites are opposed to this tactic since it preys on their visitors. It remains to be seen if such practices lead to anything definite in the way of legislation (recent court cases have not been unanimous in decision). Regardless, the practice of typo-squatting is becoming increasingly frowned upon in the online community and is not advised or advocated by this guide.

... Domain development is often confused with the ‘stencil’ method of putting the same content on several domains and then selling the domains as ‘businesses’. True domain development consists of building a website with unique content (or functional tools) and receiving a residual income from the site itself as opposed to the domain name.

The reason some domainers develop their domains is because having a well-known domain is like having a good foundation for a business. Since very valuable domains already receive a certain amount of type-in traffic, developing such a domain into something useful can only increase the traffic, which will make the domain name that much more valuable.

How can you make money from a developed site? You could set up an online store and sell things. You could set up a membership site with a forum and sell advertising directly to advertisers. You could set up a news/information site and give readers some kind of bonus incentive for paid memberships (or, again, rely on money from advertisers). And, of course, you could develop a content/information site and earn money from PPC and affiliate ads.

A simple way to figure out how to develop a money making site is to search for successful sites related to your domain name. What are they doing to develop their domain? Would it be easy enough for you to do something similar?

The Difficulty in Developing Sites

Developing a site isn’t easy, even if you know how to design a website. The real difficulty is in finding an idea that hasn’t already been tried, or in making an idea that has been tried work better. Of course, if your domain receives a lot of type-in traffic, the sheer number of users who happen across your site could make even a worn out idea profitable for you. Website owners usually spend more time promoting than developing their sites. Since a domain with lots of type-in traffic doesn’t need as much promotion, it will be that much easier to make money from the domain name.

But even without promotion, a developed site is basically a business and must be treated as such. That can mean anything from updating your store details, filling orders and answering phone calls from customers, or even moderating user created content.

If you find that developing domains becomes profitable, you could easily trade the time you spend ‘domaining’ for time spent developing and running a business. Not that this is a bad thing, but it’s different than domaining, and shouldn’t be confused with domain development. The purpose of developing a domain (from the viewpoint of a domainer) is to increase the revenue made from it while holding the name (spending as little time as possible on it), and to increase the overall value of the domain name. The purpose is generally not to start another business.

... This is where the bulk of the money made in the domain industry occurs and these are he success stories most often seen in the news. The most famous success story is probably the sale of business.com for $7.5 million in 1999 after it was purchased only two years earlier for $150,000.

How It Works, In a Nutshell -

The basic concept is self-explanatory – either register a name or buy one from another owner, then try to resell it. You might attempt to sell your domain(s) to other domainers, start-up companies who desire the name, affiliate marketers who like the keywords in the domain, or established companies who want the domain for their own site.

You have a number of tools at your disposal when trying to sell domains.

1. You can list the domain for sale with a parking service.
2. You can work with a domain name broker, an individual or company that helps domainers buy and sell domains.
3. You can auction your domain off on a domain brokerage site, in a premium auction, or on a consumer-based auction site, such as eBay.
4. You can create a single “For Sale” page and put it up on your domain.

The thing to remember is that selling domain names is similar to selling any commodity. You can run an aggressive marketing campaign or you can sit back and wait for a buyer to find you. There are advantages and disadvantages to both approaches.

Buying the Right Domain Names

As stated several times throughout this guide, always remember that cybersquatting is illegal. Registering the trademarked name of an existing company and attempting to sell the domain back to that company will only result in trouble.

The easiest way to avoid trouble is to buy and register names that are actual words (or acronyms for common phrases). Remember, a company can’t necessarily put a restriction on a generic English word, like “business”. Common sense will usually help you avoid a trademark infringement lawsuit. When in doubt, you can always search common trademarks at the US Patent and Trademark Office website.

As you look for suitable names to add to your portfolio, keep in mind all of the things that make a domain valuable :

* A single word domain is usually worth more than a two or three word domain.
* A .com is almost always worth more than other TLDs.
* Generic TLDs are usually worth more than ccTLDs (except in the case of .co.uk and .de – these have been increasing in value lately, and are often worth more than .info or even .net names).
* A two word domain name without dashes is worth more than one with dashes between the words.
* A common acronym is often worth more than the spelled out phrase.
* Common words with the addition of suffixes and prefixes are usually not worth much, unless they have a high search value. For example, OnlineSoftware.com would probably be worth more that liquidSoftware.com.
* Substituting numbers for letters (’4’ instead of ‘for’) usually brings the value of the domain name down, not up.

Before getting into the different ways to sell your domains, we’ll share a word of caution. You might have a sudden brainstorm where you think up a good prefix or suffix would fit with just about any subject and realize that it’s rarely used in domain names. Then you might be tempted to buy every possible word combination you can think of with this prefix or suffix.
Don’t waste your money.

Sleep on it and ask a few close friends what they think. If anything, buy a few of the most popular words (like computer, business, and stocks) with the prefix/suffix and see if they sell. Otherwise, you’ll likely end up stuck with hundreds of domain names that sounded good at one time but are virtually worthless in actuality.
Selling Your Domains

As mentioned earlier, a domain seller can be as aggressive with sales as he or she wants. But in the domain industry, there are some drawbacks to aggressively marketing the sale of a single domain.

First of all, when trying to sell a domain to suitable companies, you run the risk of happening on one that might already have the phrase or name trademarked. If they can prove that you tried to sell the domain to them (or even their competitors), you could become implicated in a case of cyber-squatting. So you have to be careful when soliciting individuals about a domain sale.

You also may have to lower your price if you decide to promote your domain name sales. After all, marketing involves finding a need for your product and sometimes that requires creating a need. If the target audience isn’t already actively seeking your domain name, then you don’t have quite as much leverage when negotiating a sale. Remember, you approached them, not the other way around.

But at the same time, aggressively marketing something is the key to making more sales. That could mean posting your sales on forums, if allowed. It might involve sending out press releases. It could even be a simple matter of knowing where to sell your domains (how much coverage a specific broker gets and how aggressively they market their own services).

The bottom line is that launching a marketing campaign will bring you more sales, but waiting for the buyers to come to you will usually result in higher sales prices. Another way to sell more domains is to establish yourself as a domain reseller. This, however, takes time. It also requires investing money in enough quality domain names to establish yourself as a reliable source, which can be an expensive endeavor. If you’re a skilled negotiator, you could make some substantial profits. However, this method requires substantial investment without any immediate returns. It’s better to at least gain some experience in the domain industry before trying this method.

... Domain leasing is the practice of allowing another website to use your domain name in exchange for money, similar to if you were leasing a car. There are several ways this can happen :

1. You can list the domain name for lease in a directory like LeaseThis.com
2. You can deal directly with customers, marketing your domain on your own.

How It Works, In a Nutshell -

The domain leasing industry is relatively new. There aren’t too many sites that offer the option and the ones who do haven’t yet built up enough reputation to fill their catalogs with great names. As a matter of fact, a newcomer with a large offering of high quality domain names could easily dominate the current market.

The few sites that do offer leasing (the most significant one being LeaseThis.com) try to match advertisers up with domain name owners. The domain owners set the prices for each of their domains, so it’s easy for them to make sure they get more money from the lease than from parking the domain. What’s more, the domain owner can park a domain until a suitable ‘tenant’ can be found. So no matter what, the domain name will continue to earn money.

One of the greatest things about renting a domain name out to an advertiser is that they will put relevant content on the site, thereby increasing the Search Engine value of the domain. If your tenant ever decides to stop renting with you, they leave the highly-valued traffic that other renters (or buyers) will want. Even if you end up re-parking the domain name, you will still earn substantially more from PPC than you would have otherwise.

Best of all, if a business starts renting a domain and builds a viable enterprise around it, they’ll be much more likely to buy the domain since it has become a part of their structure. This drives the value of the domain up even higher.

Why would a business rent a domain instead of purchasing one?

If a business wants to test a domain’s viability before purchasing it, renting first can provide a first-hand view of visitors and conversion possibilities as opposed to relying on data collected by other parties. A business could avoid spending thousands of dollars by sampling a few different domains and deciding on a purchase after seeing real results.

A business might also have a time-sensitive plan for a domain that would expire long before an actual purchase would pay for itself. Any time a company runs a short-term promo, a rented site with lots of type-in traffic definitely has its advantages.

... Purchasing a domain and then parking it with a parking service is one of the cheaper and easier options when it comes to monetizing your domain name. But, as you study the way a parked domain makes its money, you’ll see that it carries a higher initial cost and significantly higher risk because the value of the domain can sometimes depreciate over time.

How It Works, In a Nutshell -

Just to clarify, the term ‘domain parking’ can be taken in several different ways.

To a website developer, domain parking is when you have several different domain names and you park them all on one website. For example, you have the .info and .net versions of yoursite.com and you park them both on yoursite.com. So when anyone types in yoursite.net, they’re taken to yoursite.com.

The other definition of ‘domain parking’, the one this guide is concerned with, is when you point your domain to a ‘parking service’ via its nameservers. So, when you configure the domain with your Registrar, you give it the nameservers of the corresponding parking service that you’ve signed up with. That parking service then sets up a number of PPC ads on the parked website and you earn a percentage for each ad click-through that your parked domain generates.

As with affiliate website, your means of making money relies on people landing on your site and clicking on the available links. So, if a domain name gets absolutely no traffic, the site will gain nothing from being parked. Some parking companies even ban domain names that receive zero traffic.

Finding a Good Domain Name to Park

As we mentioned before, a domain needs a steady line of traffic in order to make money through a parking service. But a new domain name isn’t going to build any kind of search engine traffic, especially once it’s been parked. The only way to build search engine traffic is by building a website, which is described above in the affiliate website section. So how does a parked domain get traffic? There are actually several ways:

1. The name was once a developed website that search engines still remember and point to. This would likely be short lived though. You’d have lots of traffic when you first buy it and then suddenly it would stop when the search engines realize it’s no longer an active site. This type of domain is generally very expensive, unless you can pick up a dropped domain before someone else gets it.

2. The site has a popular name that people are used to typing into the browser (commonly called a type-in). This can be also short lived. Once people see that their ‘old familiar site’ is gone, they’ll likely stop typing it in, and you’ll get less traffic. As with domains that get search engine traffic, the more of this kind of traffic a site receives, the more the domain name will cost.

3. People type-in the name of a product in their browser and add a .com, hoping they’ll come to a site that’s useful to them. This kind of traffic will probably never decrease, but such domain names are expensive and there’s usually more money in their resale value. The reason people park such domains is to give them a ‘resting place’ and gain residual income until they’ve found a buyer. Some of the more popular domain names, like computers.com, sell for millions of dollars. These are the headline winners though, and not easy to obtain.

4. People type-in two or more words, add a .com to the end, and hope for the right site. The likelihood of this happening is slim, but it does happen occasionally . Such domains are much less expensive and usually have more value to affiliate website builders. But, they’re also worth money to domain buyers and resellers. If parking the domain builds just enough income to pay for the renewal, it’s worth holding onto while you wait for the right buyer.

5. People try to type-in a popular website’s name in their browser, but make a typo. This is commonly known as ‘typo-squatting’ and will be discussed later. For now, suffice it to say that there are ongoing lawsuits over the practice. Until you have more experience, use caution with this type of domain name.

Of the five types of parked domains listed above, number four is probably the easiest and cheapest option for beginners. While headline-worthy domains (number three above) would obviously yield much more money, such domain names very rarely become available and are hotly contended when they do. Of course, if you have the opportunity to snatch one up if it is dropped or buy one from the current owner for a decent price, then by all means do so. This does happen from time to time, but it usually takes a lot of research, patience, and work.

To find the best domain names for a parked site, you’ll benefit from using several different tools.

One online tool you can use to research keywords is . Like many keyword tools, you simply type in a keyword it suggests various relevant key phrases that are often used in Google searches. It also provides an approximate view of how often those phrases are searched for, how many competing sites exist, and how many existing advertisers there are for that phrase.

A short, common phrase can work well as a domain name and draw type-in traffic while it’s parked. But as with PPC websites, don’t give in to the temptation to click on your own site’s ads. Doing so will only get you banned from your parking service.

... PPC sites work almost the same as affiliate sites, except you earn money every time someone clicks on one of the ads on your website which differs from affiliate marketing, where you are only paid when someone actually makes a purchase.

How It Works, In a Nutshell -

To make money from PPC (Pay Per Click) ads, you start by developing a website, usually with informative articles, visually appealing graphics, or some type of networking system, like a forum. Once the site is complete, sign up for a PPC program, like Google AdSense or Yahoo Publisher Network and place the ads on your website. Most programs will automatically inventory your content, and then display ads with similar themes.

For example, you publish an article on your website about house pests. You then take the code provided to you in your AdSense account and put it somewhere on the same page as your article. The PPC system will see the keywords used throughout the article, and, when your page is loaded, ads from pest control companies, or other pest removal services, will automatically be displayed on your page.

You take the same code that you had used, and put it on a page with an article about finding the right shoes to match a new dress. When that page is displayed, the ads will take browsers to clothing stores.

Every page will display a different set of ads based on its content and every time an internet surfer clicks on one of those ads, you’ll make money. The amount of money that you make per click depends on the popularity of that keyword and how much money those advertisers are paying to get their ads out.

One temptation you must fight is to click on your own ads or to encourage others to click on your ads. Advertisers and PPC networks fight this type of ‘click fraud’ constantly and taking part in it will quickly get you banned from the various programs in which you are participating.

Finding the right PPC Domain Name

Use the same guidelines outlined above for finding a suitable name for affiliate site. Like affiliate websites, the most important thing to consider when creating a ppc website is to select domain names with popular keywords.

... Of the different ways to make money from domain names, the cheapest way is to create an affiliate websites. However, this is also often the hardest and takes the most time. It either requires an extensive knowledge of search engine optimization techniques and/or the money to invest in PPC campaigns which could easily end up outweighing the amount of money made from the affiliate links.

How It Works, In a Nutshell -

With an affiliate website, you’ll first need to register a domain through any Registrar. Next, find a web host for the domain (most Registrars will also host the site for a small fee). Finally, develop an actual site, using a software package, or using an online tool, like DomainIt.com’s site-builder.

As you develop the site, look for companies selling products related to the domain you registered and sign up for their affiliate programs. You can find several affiliate programs through affiliate networks, which are sites that manage affiliate programs for companies. Two of the larger affiliate networks are ClickBank.com or CommissonJunction.com.

Once you’ve launched your website, you’ll have to start some traffic generating campaigns. Usually, this involves a mixture of search engine optimization (SEO), link building, and PPC advertising. Eventually, the traffic you get will begin to convert into real money. And perhaps, sooner or later, another domainer will show some interest in the site and give you a worthwhile bid on it.

How to Choose the Right Domain Names For Affiliate Marketing -

If you’re registering a new name and have no intention of reselling it, then the extensions won’t make too big of a difference, but of course a .com name is preferable over other extensions. If you expect your traffic to come from a particular geographical area, then you may want to register the corresponding ccTLD.

The biggest factor in choosing the right domain name for an affiliate website is using the right keywords that will give you a slight advantage over other domains. The name ‘TheWriteEditor.com’ won’t help increase the page’s ranking in search engines. However, a name like ‘EditingServices.com’ might. If you want to get more local traffic, a name like ‘EditingServicesAlabama.com’ would work even better. Other TLDs would work as well, but the ccTLDs would tend only to draw country specific search engine traffic as search engines are much less likely to send traffic from the UK to a .us domain.

If you choose to buy the domain from an online auction or sale, you sometimes stand a better chance of getting initial traffic to your site. But, if the site already has a fair amount of traffic, you’re going to end up paying for it in the cost of the domain. Smart domainers know the value of traffic and won’t give up an established domain name for pennies.

As far as how much traffic a domain name already gets, you will often have to rely on the seller’s claims in their listing, which could easily lead you into a scam. One of the first places you should check is Alexa, which will give you an overview of the amount of a traffic a domain receives. Another great resource is Estibot, which gives you information on the popularity of the keywords, potential traffic, and a domain estimate. You can also find out how many sites link to an established domain and how old those links are could be an indicator of how many visitors the site gets. Simply using Google’s advanced search can yield this information.

Do as much research as possible on a domain’s history and the domain owner before laying down any cash or divulging too much information. You’ll find more great resources for researching a domain’s history in our domain tools directory.

Finding Affiliate Programs for Your Site

Some of the best places to find affiliate programs are on affiliate networks, such as ClickBank.com or CommissonJunction.com. These networks offer several benefits:

1. The gather online merchants into one pool so that their programs are easier to find by category.
2. They make it easy to add links to your own site and track your click-throughs and conversions.
3. They consolidate the payments from several companies and make your affiliate business much easier to run.

Another way to find great advertisers with big payouts to their affiliates is by searching the internet and asking for the advice of more experienced affiliate marketers in forums and other social networking sites. You can also check out affiliate directories such as the one at AssociatePrograms.com for potential programs to promote.
Developing Your Site

Website development is not a simple process. While there are many resources on the Internet for beginning web developers, you won’t find any sure-fire instructions for developing a great site from scratch. Unless you plan on hiring a professional, expect to spend some time and effort developing your website.

Using HTML editing software, such as Dreamweaver, can help you get started. Additionally, many web hosts offer online web-building tools, which will likely be easier for beginners than a more advanced software package like Dreamweaver.

Another option is to use a Content Management System (CMS) like Word Press. It’s a little more difficult to set up than a basic HTML page, but it’s much easier to add and change content with a CMS than it is with an HTML editor.

Promoting Your Site

There’s an entire industry set up around website promotion. It involves optimizing your website to make it more ‘likable’ to search engines, obtaining inbound links to the site from other websites, and paid advertisements (PPC ads) on other sites and search engines.

The fastest way to get traffic, though it can be expensive, is from PPC campaigns, but you have to be careful about the keywords you use to draw traffic and the amount of money you pay for clicks. It’s easy to end up paying more for the clicks than the money you make from the advertisers. In other words, your clicks can outweigh your sales.

While SEO tactics are much cheaper, they’re also much more focused on long term results and take a longer time to realize profits. Another problem comes from the search engines themselves, which are slowly learning to ‘filter out’ affiliate sites. To optimize your site and keep from getting ‘black listed’, you’ll need a fresh array of original content, links from other sites, and time (Google will usually list an older site before a new one when both sites compete for the same keywords).

The best way to promote an affiliate site is to combine the PPC and SEO strategies, making sure the long term and short term campaigns are both receiving the proper amount of attention.

... This guide is not a sure-fire path to overnight wealth in the domain market. Rather, this guide is intended to help the beginner who desires to become a serious domain name investor; one who is willing to put their time, effort, and a little bit of money into the business.

What this guide will not do is make you a domain name expert. This guide is intended to answer some of the initial questions that most beginners ask, leaving your mind open to new questions and then directing you to the right places to ask those questions.

One of the most important things to remember as you enter the world of domain name investment is to look before you leap.

If the jump in front of you is small (meaning the amount of money you want to invest is small), then it’s not that great a risk to move forward. But if you’re considering a big leap, and you stand the chance of hurting yourself (meaning the investment amount is large and you’re risking a lot), then do some careful research before jumping.

The fact is, registering a few domain names isn’t all that much of a risk and it offers the opportunity to get some experience in the industry. But, taking a big risk you may not be prepared for financially or research-wise (like buying hundreds of domains that begin with the word ‘best’) would cost a lot of money with a very low ROI (Return on Investment). So, sit on these kinds of creative ideas while you take time to research the industry and figure out what works and what doesn’t.
What are the different ways to monetize a domain name?

There are several different categories of domain investment and monetization; below are quick descriptions of each. Some methods are easier than others. Some methods have a higher return than others. They all have their pros and cons, and they all take time and hard work to utilize effectively.

• Affiliate Websites – Think of a good domain name, register it, and then build a website filled with various advertisements for other sites that bear a similarity to your domain name, making money off anyone who clicks on the ads and purchases the advertised products.
• PPC Websites (Pay-Per-Click) – These are very much like affiliate sites, except the revenue generated comes from PPC advertising systems like Google AdSense and Yahoo Publisher Network.
• Domain Parking – There are several services, like sedo.com, where you can “park” your domain. The domain will have a variety of keyword targeted ads, similar to the ppc and affiliate sites mentioned above. You make money off the ads that your parking company puts up. Additionally, you can also list your site for sale at the same time.
• Domain Leasing – Rent the domain name out to advertisers or other interested parties.
• Domain Purchase and Resale – Register a domain or buy an existing domain with hopes of reselling it to other domainers.
• Domain Development – Register a domain name and develop a website for it, with unique content and some sort of business model.

... The Domain Name Monetization Guide walks you through the steps of monetizing your domain, teaching you the ins-and-outs of the domain monetization market and giving you the knowledge and tools to start making money from your domains.

... Since every domain name transaction is unique, it’s very difficult to give advice that will be beneficial to a specific deal. Here are some general pointers that should help novice investors tiptoe around some of the pitfalls of domain investing.

#1 Waiting for Bigger Fish in the Sea

The scenario: a potential buyer emails you what appears to be an almost insultingly low offer for a domain name in your portfolio (e.g. $100.) It may be very tempting to simply delete the offer or to fire back a terse email saying “The minimum offer on this name is $x thousand”. After all, a buyer with deeper pockets is bound to come along eventually…right?

Before rejecting any offer, no matter how insignificant it may seem, think about the answers to the following questions:

A) How long have you owned the domain?

B) During that time, how many offers have you received on it?

C) How much was the highest offer?

D) How frequently do you get offers on that domain?

E) Does the domain pay for itself with dividends (see the section on domain monetization)?

You may see the transaction in a different light once you’ve had a chance to consider the big picture. For instance, a domain that you have owned for 3 years and which has received no unsolicited offers before now is hardly a hot sales proposition. Perhaps it’s worth taking the $100 (or trying to squeeze the transaction up to $150 or so) and writing off that particular investment with a narrow profit margin.

#2 Comparing Today’s Offers to Yesterday’s

Domain name offers are discrete events. In other words, an offer made by one party has no influence on the likelihood of receiving offers from other parties. A common trap that many domain investors fall into is the assumption that a given offer will automatically repeat itself. For instance, a domain may have received an offer of $2,000 18 months ago, but today a potential buyer is offering just $500. The problem is that the market 18 months ago was completely different from the market now and the market in 18 months will be different still. Holding on for an ever-higher offer when the grass is getting less green in the domain name field with every passing day is not particularly advisable.

#3 Thinking a Domain Sells Itself

It’s a typical novice mistake: “I’ll register a few domains, and buyers will be lining up to buy them from me.“

For starters, the buyers won’t likely be lining up. The domain market just isn’t that simple. However, an equally fundamental point is this: how are they going to know the domain name is for sale? Novices often do nothing with their domains, leaving them unresolved (not pointing to anything) or pointing to the homepage of the Registrar they used to buy it.

It takes just a few minutes to put together a simple one-page site saying that a particular domain name is for sale. That way, people typing in the domain to see what is there will know it’s available on the secondary market. Of course, you can also incorporate affiliate links and PPC search engine links on that page to monetize the traffic (see the section on domain monetization).

#4 Hiding from Possible Buyers

When you register a domain name with the intent to resell it later, it’s important to make it as easy as possible for potential buyers to get in touch with you. That’s why the information you enter in the domain’s whois record is so important. If you enter an incorrect telephone number or an email address that you never check, you will never hear from the majority of buyers. Unless you own the next “business.com”, potential buyers are not going to go to extreme efforts to contact a hard-to-find domain name owner.

#5 Getting Excited Over Breaking Even

If you feel a sense of satisfaction, or even relief, when you manage to sell just enough domains in a given year to pay for the renewals on the rest of your portfolio, you may need to rethink your strategy.

If you’re buying and selling domain names as an investment, it’s important to always focus on making a profit from your portfolio, after all, that is the goal of any investment. If you’re only breaking even, you’ve gone through a lot of trouble and effort and, at the end of the day, made no money, which is not exactly an exciting business proposition when looked at in an objective way.

#6 Seeing Double the Money

Be very careful about overpaying for domains. If you see a domain on the market for $500 that you feel confident you can resell for $1000, you should probably just walk away from that domain.

Domains are so incredibly hard to sell that there has to be a clear profit margin of many multiples of your original investment. This is especially relevant in the case of secondary purchases; if you’re registering new domains, you’ve only lost the small registration fee on a bad domain. However, a domain purchased on the secondary market for $200 is a much larger loss if it doesn’t pay off. This is why it’s necessary to hunt for the real hidden gems: the $500 name that should fetch $5,000 or more (or the $200 name that should fetch $1,000 or more, etc.)

The higher the potential profit margin that comes built into the deal, the more you can allow yourself to experiment, diversify, and make mistakes. If the best you can do is double your money on a domain name sale, you would have to sell half of your entire portfolio just to break even.

#7 Not Diversifying

There is no “rule” dictating how investors should set out to make money from domain names. Some people content themselves with scooping up large numbers of new domain registrations and counting on their skills in selecting marketable names to seek out a small average profit per name (e.g. registering many names for $10 or less that will sell for $50). Other investors hold out for larger prizes with the potential of greater payoffs. Both methods can pay off, but diversifying your portfolio to take advantage of many different approaches increases your likelihood of making a profit.

#8 Betting Money on Credit

It’s incredibly important that you don’t get trapped in a cycle of “betting” that the next domain name registration will wipe out your losses. Many people have become trapped in a cycle of registrations, gradually sinking further into debt as they continue to search for the one domain sale that will help them break even. In short, only invest money that you can afford to lose. For every success story, there are dozens of people who have lost money, often significant amounts, betting on domain names.

Now let’s look at different ways of using your investment to make money in the domain monetization section of this guide.

... Domain names are being registered at such an enormous rate that it’s becoming increasingly difficult to come up with good domain names that have not already been snapped up by somebody else. These “Golden Rules” are designed to help shape your creative process in dreaming up new names. However, they are not a recipe for “instant success”. You still have to put thought and effort into coming up with suitable domain names.
Rule #1: Avoid “Clever” or “Joke” Names

A joke that cracks you up when you hear it for the first time after knocking back a few beers with friends may seem funny at the time. However, beyond this threshold the joke rapidly loses its edge with each repetition.

The same can apply to a “clever” domain name. If you’re expecting to use the domain name for years as part of your company’s identity, branding, and promotion, make sure you won’t go red with embarrassment every time you repeat the domain name. One domain name twist that lost its luster almost instantly was beginning a generic word with ‘dot’, as in “dotfactory.com”.

You should also avoid abbreviations and “minimalist” spelling if at all possible. If you buy the domain name “4ever.com” you will be sending free traffic to “forever.com” every time you mention the domain name in conversation or on the radio. You can also expect an endless series of conversations explaining the “clever” spelling. The use of “2” for “to”, “u” for “you” and other similar shortenings are also best avoided.

Other domainers and webmasters have known this for a long time and they’re not going to buy up your collection of substitution domain names. As a matter of fact, many such names have already been registered and dropped again because of their lack of resale value.
Rule #2: Think Like an Investor…

A good commercial domain name must be able to distinguish itself from the crowd of pretenders. There are several ways to achieve distinction: Consider the target market

Try to aim your domain name at a specific, but broad, market. Use search tools, such as Google’s Keyword Tool, and other resources to narrow down categories of businesses. Next, try to find domain names that would have clear appeal to such businesses. Focus on a specific sector such as “biotech” or “travel”, for example.

Most of the highest value generic domain names have already been registered, but by using search tools like the Google Keyword Tool, you can narrow categories down and focus more on niches. Lately, there has been a lot of hype talk about the long-tail, which, when it comes to the domain market, would be longer names with keyword phrases, instead of generic one-word names.
Follow trends… or create them

If you’re serious about picking good names and prepared to invest the necessary time, try to follow the latest news and trends on the Internet. Try to see what has staying power and what simply fades away. “Cold fusion” is a great example of the latter from the early 2000’s. For weeks, the media was full of stories about cold fusion, but then they died out. A related incident took place in 2001, when there was a lot of fuss about “Project Ginger”, a predicted life-changing wonder invention. The “Ginger” turned out to be a code-name for the Segway scooter, and most “Ginger” related domains that were registered during the initial media coverage lost their desirability.

Longer term trends include nanotech, plastic chips, genetic engineering and cloning, global communications, etc. None of these is likely to disappear in the next few years, although the popularity of each may fluctuate. And this is just in the technology field, one of thousands of different fields of interest!
Act on a whim

Creativity is not a slave to logic. If you’re hit with a great idea, go for it! Don’t hesitate, have second thoughts, or dither. Considering the sheer number of domains registered every day, it’s not as uncommon as you may think for someone to have the same idea as you and beat you to your choice of domain name. But, don’t put too much money into it. Remember that if it was a good choice, low investments could pay high., but high investments could easily pay nothing.
Rule #3: Buy All The Alternatives to a Domain

When you’ve found a domain name that really clicks, one that you’re going to use for your site or business for years to come, spend a bit of extra money on securing variants of the name. There’s no need to go crazy on alternative extensions (unless you want to), but make sure you at least buy the .com, .net and .org versions of the domain.

Consider registering the singular and plural forms of the domain name, along with the hyphenated version(s) as well. For instance, “EmailAddress.com” and “EmailAddresses.com” but also “Email-Address.com” and “Email-Addresses.com”

As we’ve mentioned in previous articles, you may want to consider registering popular misspellings of your domain name as well. This will help to avoid potential typo-squatting from others in the future.

Basically, when you have a great idea, why let somebody else have a free ride on your tail? For a nominal fee per additional name, you can buy yourself some serious protection.
Rule #4: Don’t Tailgate

On the other side of Rule #3, if you’re a serious domain name buyer, avoid “tailgating” off another domain name unless it has enormous potential. Don’t buy “ABC-DEF.com” if somebody else owns “ABCDEF.com”. While it’s not a misspelling, it’s a variation of typo-squatting.

As stated several times through this guide, never try to tailgate on a registered trademark or well-known servicemark. For example, Dell filed lawsuits in 2000 against several domain owners who had registered domains with their trademark ‘Dell’ in it, such as DellSolutions.com and DellBackup.com. Be aware that if you register domain names with trademarked terms, you could very easily find yourself with a letter from the trademark owner’s legal department. For more on the legal aspects of domain name ownership, check out our Domain Legal Issues guide.
Rule #5: Don’t Rush - But Don’t Wait

Don’t automatically buy the first domain name you think of. Think some more, sleep on it, and ask your friends for their opinions. Although the supply of domain names is diminishing daily, it’s better to expend more thought at the beginning and save money later. After all, an unmarketable name you’ve decided not to use for yourself is purely a liability.

At the same time, don’t sit on a good idea forever, because “forever” will come soon. Somebody else will stumble upon your idea when you least expect it and, if they react quicker, you’ve lost your chance at that domain name!
Rule #6: Remember the .com Rule

.com is always worth more than any other TLD for the same name. As a matter of fact, most other TLDs don’t even come close to the .com price of a domain name in the aftermarket. However, the smaller price tags on alternative TLDs could make them ideal for someone starting on a low budget.

Don’t be fooled into putting loads of money into second-choice names with an alternative TLD though. A name like computer.com is great. A name like computer.net is good, but not nearly as good as computer.com. But a name like thebestcomputers.org ends up being practically worthless in terms of resale value, unless a fair bit of online marketing is done to earn traffic for the site.

Once you understand all the rules, look at some of the most common mistakes that novices make in the domain industry.

... There are a number of parallels that can be drawn between investing in domain names and investing in the stock market. You can make money from stocks by buying low and selling high and by pocketing the dividend, if any, paid out on the stock during the time you own it.

Similarly, the primary profit in most domain name investments will be unlocked at the time the domain is sold or leased. Even a relatively minor transaction can yield a several thousand percent profit. After all, at $10 a registration, in the case of a new domain, it doesn’t take much to make a profit. At the same time, if the domain name is receiving even a modest stream of targeted traffic, this can be harnessed and turned into an ongoing revenue stream while you wait to complete a transaction for the domain (essentially, this is the “domain dividend” of owning that domain.)

There are also a number of significant differences between stocks and domain names. For instance, there is a well-established market for stocks with firm prices agreed upon by a large number of players – a liquid market in which stocks can generally be bought and sold at any time. The domain name market is far more nebulous, with many players and few rules. It is a highly illiquid market with no guarantees that a particular domain name can sell in any given time frame, or indeed, at all.

The following table compares and contrasts the major features of the stock and domain markets :

Stocks	Domains
You can make money from stocks by buying low and selling high	You can make money from domains by buying low and selling high
You can make money by receiving dividends (if any) on the stocks you own during the time you own them	You can make money from the traffic (if any) arriving at that domain during the time that you own it
A single share of stock is generally affordable (though some stocks can cost thousands of dollars)	A single domain is generally affordable (though some domains can cost millions of dollars on the secondary market)
All stocks of a given company of a particular class are identical and treated the same by the market	All domain names are UNIQUE
There are generally costs associated with the buying and selling of stock	There are generally costs associated with the buying or selling of domains
There is generally no cost associated with the ongoing ownership of a particular stock	There is an annual maintenance fee payable on each domain name
There is generally a highly liquid secondary market in any given stock (at any time, most stocks can be bought or sold within minutes if the market is open)	The domain name market is highly illiquid - it may take months or years to sell or lease a particular domain… and that’s if it sells at all!
Except in the rare case of a company going bankrupt, stock in a particular company always retains some value	Unless a domain can be sold or is producing traffic that can be monetized, it has zero value
There is a very well established market for trading stock, with defined players and clear procedures	There is a very chaotic market for domain names, with many players each with conflicting systems and procedures
You know the exact value of your stock portfolio at any one time	You have no idea of the value of your domain name portfolio at any one time
There is a vast pool of historical data available on transactions in any particular stock	There is no historic data available on transactions for 99.99% of domains (since they have never been resold) and there is very patchy data on any domain name sales
All players in the stock market (buyers and sellers active at any particular moment in time) agree very closely on the value of a particular stock	There is no definite value to any domain name - its value is whatever price can be established between buyer and seller at the time of a transaction
By diversifying, it’s relatively hard to lose all your money in the stock market if you’re purchasing ordinary stock	Even if you diversify, it’s relatively easy to lose all your money on domain name investments if you purchase the wrong domains
It’s very rare to be able to pick stocks that will bring a twenty-fold+ return on investment in a reasonably short time frame	If a domain name sells at all, it is quite common to be able to make back 20-times+ the initial registration cost of that domain
You can easily cash out of the stock market at any time (though you may of course have to suffer losses in doing so)	It is very, very difficult to liquidate a large domain portfolio in a hurry - most domains will simply fail to find buyers at any price.

By now, you should have noticed a pattern emerging. Stocks, while by no means a safe investment, are very low risk when compared to domain name investments.

Domain name investments are ultra-high risk,. They have the potential of a very high return on investment for the right domains, if a buyer can be found, and the prospect of losing the entire value of the investment if one can not. The latter scenario is by far the more common one as most people buying domain names to resell end up losing much or all of the money they invested.

The next section will provide you with some pointers that will help you stay cash-positive, even as you build up your investment in domain names. But before going into that, take a careful look at some rules for choosing the best domain names for investment.

...

IMPORTANT DISCLAIMER: If you’re looking for specific advice on picking domains that are going to make you a fortune, you won’t find it here. This is an informational resource, not an investment advisory service.

If you’re considering purchasing domain names for investment (either in the form of new registrations, or on the secondary resale market), it’s important to focus on how you’re actually going to make money from your portfolio of domains.

Without a clear, up-front vision of the “path to liquidity” for your domain investments, it’s better to stay out of the investment side of the business entirely. Remember, a domain name that is gathering virtual dust (i.e. that’s not generating traffic or sales inquiries) is worth nothing at all. In fact, it has a negative value since you’ll be required to pay a renewal fee every year to maintain the registration.

On the other hand, if you can find ways to generate revenue from a domain name even while you’re waiting to unlock much greater value from it through sales or leasing transactions, you’re in a much stronger position. As long as a domain name pays for its own upkeep over the course of a year, there’s nothing, in theory, to stop you from holding on to it indefinitely.

Before getting into the monetization of domain names, let’s look at some of the other risks inherent in domain name investments and how it adds up to the type of risks people take when investing in stocks.

... In the introduction to domain names, you learned that a domain name is nothing more than a set of letters meant to represent an IP address somewhere on the internet. You also learned that the main point of a domain name was to make it easier for people to remember and type in web addresses.

Just to Review -

When a computer wants to know where to find a site like iGoldRush.com, it first looks at the Registry. The Registry tells the user’s computer which nameserver to go to. So the user’s computer goes to that specific nameserver, which then tells it exactly which IP address to go to. The user’s computer goes to that IP address, and finds the information it was looking for.

Right now, domain names are all stored in ASCII characters. ASCII stands for American Standard Code for Information Interchange, which represents the most basic and necessary English language characters (A-Z, a-z, 0-9 and punctuation) in a standardized fashion that both computers and users can understand. If you live in an English-speaking country, chances are any character shown on the keyboard you are using is included in ASCII. Since the Registries only recognize ASCII (which is based on the English alphabet) the Registries only allow users to register domain names containing English letters, numbers, and hyphens. This rule of only using such characters is called the LDH (letter-digit-hyphen) restriction. Any domain name that follows the restriction is said to have an LDH-label.

The Problem with English Domain Names

So what if someone in China wanted to register a domain for their office supply business? They would have to use English characters, even though the domain name wouldn’t be recognized by the Chinese business’ consumers.

This issue has caused much discussion and argument from the very beginning, and many have proposed different ways to fix it. Right now, the domain industry uses a system in which domain names that use non-ASCII characters (for example, any domain name in Cantonese) are converted into an ASCII format in a process called ToASCII. Doing this, people are able to register Internationalized Domain Names (IDNs).

How the DNS Handles Multilingual Domain Names

The process starts right at the Registrar’s website. For example, someone in Russia wants to register the Russian translation of igoldrush.com. So, they type in the name яЗолотойПорыв.com in their ‘check availability’ window. The Registrar translates the letters into ASCII characters by first making sure all the letters are lowercase. This process is called the Nameprep algorithm. The “яЗолотойПорыв.com” would become “язолотойпорыв.com” (igoldrush.com). язолотойпорыв.com is the U-label (the label in Unicode format). The name must now be converted, or translated, to an A-label (the label in ASCII format).

The name now undergoes another algorithm called Punycode, in which the non-ASCII characters (or Unicode characters) are converted into a set of ASCII characters, preceded by the suffix xn—. The name that Punycode would come up with for яЗолотойПорыв.com would be xn—b1ajghobabilr7itb.com. Notice the xn—. These four characters precede all IDNs. The zn—prefix is reserved for multi-lingual domain names.

Once the Registrar has the domain name in ASCII format, it checks to see if xn—b1ajghobabilr7itb.com has been registered before. If not, and the domain name is available, the Registrant (user) goes on with the normal process of registering a domain name.

Some Registrars are able to register IDNs, but do not make the ToASCII translation as part of their service. In such cases, someone wanting to register the IDN яЗолотойПорыв.com would have to first have it translated by an outside source and then register the A-label (the ASCII translation of the name). Such ‘translators’ are relatively common. You can see one in action on VeriSign’s website.

When someone in Russia wants to see яЗолотойПорыв.com, they simply type the name into their browser and they’ll be taken to the site registered in the example above. Many modern browsers will automatically translate the Russian domain name into the corresponding A-label. Most of them will display the A-label instead of the Russian characters if the computer is set up in English. This cuts down on potential IDN scams.

As the IDN industry grows, changes are inevitable. But, as those in control try to preserve the stability of the current system, the inevitable changes are sure to be slow and incremental.

Now you know just about everything you need to about domain names. So let’s start looking at how you can invest in them and earn money.

... Domain names expire on different schedules, depending on the original Registrar they were registered with. Since desirable domain names can be grabbed in seconds once they become available, the only way to have a chance of securing a domain name of value is to be prepared by arming yourself with the knowledge of exactly when it will become available.

There are several sources of expired domain name information, some free and some that require the payment of a subscription or membership fee.

One of the best free resources is JustDropped.com. From this site, you can research which domain names have expired in the last 24 hours, 7 days, 30 days or 60 days.

Always bear in mind that crawling for interesting expired domain names requires effort, whether it’s thinking up search terms and feeding them into a search engine, or painstakingly stepping through a long list of expiring names. With over 20,000 domains expiring some days, the hunt for quality names can often feel like searching for a very small needle in a towering haystack, but the effort can be worthwhile should you succeed in tracking down and registering a highly desirable expired domain name.

Which Domain Names To Look For

One assumes you’re hunting down expiring domain names for one of two reasons:

1. To use the name yourself.
2. To invest in the name for possible resale later.

If you’re hunting for names to use in building a site or service, you’ll already have a list of criteria as to what makes a good name, including suitability to the product or service it is intended to represent.

When hunting for expiring names, you also need to bear in mind who the previous owner of the name was and what they were using the name for, if anything. While most expiring names can be considered “fair game” (meaning they are available to be registered by anyone), you clearly wouldn’t wish to run afoul of the legal department of a giant corporation such as Microsoft or IBM. Even if you’re eventually proved to be in the right, always watch out for trademarks.

Many times, a simple WHOIS search is sufficient to reveal the current owner of a domain name that has been placed on hold and ready for deletion. However, there can be times when the ownership information is not as readily available, such as when the original Registrant’s information has been deleted in the domain record and substituted for information provided by the Registrar.

This is where the “Wayback Machine” offered by Archive.org can come in handy. This site allows you to view stored “snapshots” of millions of sites around the web as they appeared at different points in time. To check for information on the expiring domain name you’re interested in, enter “www.ExpiringDomainName.com” into the search box at Archive.org’s main page and see if any snapshots have been recorded for an old site at that domain. If some snapshots exist, you can browse the snapshots to get an idea of who the previous domain Registrant was and what they were using the domain name for.

Buying Expired Domain Names

While it is still possible to manually register some expiring domain names near the moment they become available, the competition surrounding the most desirable names has become so heated that manual methods alone are unlikely to be successful.

An entire mini-industry has sprung up around the backordering, or grabbing, of expiring domain names. While none of the solutions below provide an infallible solution to the problem of securing expiring domain names, they can help even the playing field.

The biggest firm in the expiring name acquisition game, and perhaps the most well-known, is SnapNames.com. For a fee, SnapNames will register expiring domains on your behalf, but if it’s a good domain there will likely be some competition. If two or more people attempt to “snap” the same expiring name, the name will be placed up for auction between the interested parties the moment SnapNames acquires it.

There are other such services that help you register expired domains in addition to SnapNames. Browse our Domain Backordering section of our Domain Resources for additional companies.

To maximize your chances of getting an expired name, it can be helpful to backorder the name at several of the automated services simultaneously. Since most of them charge only for successful registrations, you won’t be charged for any unsuccessful attempts.

Before jumping to the domain investment section of the guide, let’s talk about Multi-Lingual Domain Names.

... While originally domain names were registered for a fixed period of 2 years, most Registrars now offer the option of registering a domain name for a period of 1-10 years, often with substantial discounts for extended registrations

A domain name that is approaching its renewal date is said to be “expiring soon” and a domain name that has passed its renewal date (also known as its “expiry date”) without the renewal fee being paid is said to have “expired”.

The domain expiration cycle (the process by which the domain name expires, and then is made available for re-registration) differs significantly from Registrar to Registrar. Knowing what’s happening behind the scenes might give you a better understanding of what happens to a domain name once it has expired.

Here is a typical path a domain name will take during its “life-cycle”:

1. A domain name is registered for a fixed period of 1-10 years

• The user pays the Registrar $xx.xx for the usage of the domain for that time.
• The Registrar pays the Registry a smaller amount and enters your information as the owner of the domain.

2. As the expiration/renewal date approaches, the owner of the domain name is sent one or more reminders that they must pay the domain name renewal fee.

3. If the domain name owner renews the name, then the domain name returns to its status in Stage 1.


4. At the renewal date, if the domain name has not been paid for and the registration expires, several things happen at once:

• The Registry automatically charges the Registrar a certain amount of money to keep the domain for a short period of time.
• The Registrar puts the domain on hold, sometimes deleting the domain’s old nameserver information or modifying it. If the Registrar modifies the domain’s nameservers, the new information usually points browsers to either the Registrar’s website or to a page explaining that the site is expired.
• The user (as a result of being put on hold) loses the ability to transfer the domain name to another Registrar.

5. Most Registrars have a “grace period“ (sometimes detailed explicitly on their website or by email, often times applied without comment) after domain names have expired.

During that grace period, the original owner of the domain name can sometimes pay to renew their domain name and hence remove it from “expired” status and reactivated. Some Registrars may impose an additional administrative “penalty fee” to renew domain names during their grace period. If the domain name owner renews the name during the grace period, then the name returns to Stage 1.

For .com domain names, after the grace period expires and the name has still not been renewed, it enters the redemption period. During this period, domain owners must pay a fee, often several hundred dollars, to renew the domain and return it to active status.
At the end of this cycle, the existing owner can no longer renew their domain name and has lost all control over it.

6. The domain name enters the ‘pending delete’ status for five days. Once a domain name has reached Stage 7, it is about to return to the domain market (i.e. it will once more become available for registration). If the domain name is considered valuable, there may be many interested parties lining up to try and “snap” it up (i.e. to attempt to secure it as soon as it is deleted.) often through a backordering service.

7. After the domain name has returned to the market, the Registry refunds the ‘holding charge’ they had automatically charged to the Registrar.
The key to successful recovery of an expired domain name is two-fold:

• Awareness of which domain names are about to expire, and when they are going to do so - since this varies significantly from Registrar to Registrar.
• Mastery of the tools and services available to assist in securing dropping domain names.

Check out the next section on how to find and buy expired domain names.

... So what can a domain name do for you, your company, or your organization? Putting aside the investment value of domain names for a second, here are some of the benefits to owning a domain name.

1. Domain names build credibility on the Web.
If you are trying to do business online, a unique domain name is essential. It’s the difference between setting up a stall in the corner of a warehouse you share with dozens of other stores and owning your own store. With registrations costing as little as $8 per year (depending on the Registrar), this is a very small price to pay for increased credibility in the eyes of potential customers.

If your site is just a personal homepage set up for fun or as a hobby, you may not want or need a domain name. However, you’ll find it much easier to get your site noticed if you register one.

In the physical world, you often hear that the most important aspect of any business is “location, location, location”. Like the physical, brick and mortar world, on the Web there is no such thing as a “prime location” in which to set up a store or business. No matter how small you are, a good domain name can put your business on an equal footing with Microsoft or AOL. That’s the wonder of the Web: as far as public perception is concerned, it doesn’t matter if your site is run by a large team out of elegant offices or by one person in a spare room.

Domain names are being registered at the rate of several thousand new registrations a day. However, it is still possible to find a great name as long as you apply a little lateral thinking. In the section on buying a domain name in this guide, you’ll find plenty of tools and tips to help you come up with a domain name you can be happy with. The longer you wait to register a name for yourself though, the more limited your choice becomes.

2. Domain names are portable.
As already illustrated, a domain name is just like a sign pointing to your site. You can move the underlying site (change web hosting services) and with very minor technical adjustments (such as changing your nameservers) the domain name will point to your “new” site. This way, you are free to change hosting services to find a better deal or if the service you are currently receiving is inadequate. The important thing is that none of your visitors’ bookmarks will need to change, nor will the move break any links to your site! This is impossible without a domain name.

If you currently use an eBay store, MySpace, WordPress, Blogger, BlogSpot, etc. as your home page, consider the advantages of buying a domain name and redirecting visitors to your site. That way, if someone went to http://www.Your-New-Domain-Name.com , they would arrive on your current site , but with a memorable URL. This makes it easier to advertise your site and for visitors to share with friends.

3. Domain names improve your promotion chances and therefore your site’s “visibility” on the Web.
As we discussed earlier, domain names that include common keywords can improve your site’s ranking in search results returned by major search engines. However, this is only the beginning of the benefits as far as web promotion is concerned. Many large web directories, which list or review websites, will not accept or list any website that does not have its own domain name.

In addition to improving your search rankings, a domain name will improve your visibility and branding when advertising or promoting your website. If a potential visitor sees a memorable domain name, particularly offline, they’ll be more likely to visit than if they saw a long, non-memorable URL.

4. Domain names produce a feeling of professionalism.
This topic goes hand-in-hand with the credibility produced by a domain name. Right or wrong, there is a perception that websites hosted under their own domain names are more professional than other sites.

This perception comes from two commonalities:

• Most well-known sites have their own domain names
• Most sites hosted on free or ISP hosting services tend to be hobby sites or non-professional blogs. Additionally, most free hosting services force their customer’s websites to display ad content, which gives it less credibility.

So while you can be successful with a free site or an ISP-hosted site, you’ll likely be even more successful with your own domain.

5. Domain names are memorable.
Which of the following URLs is easier to remember?

igoldrush.com

or

igoldrush.wordpress.com

6. Generic domain names are popular.
A generic domain name (not to be confused with a generic top-level domain) is one that would not immediately be associated with a company, but instead is a name that defines an entire category of business. Some examples of generic names include books.com, music.com, art.com, and candy.com. Companies have gone on to create successful brands based on a generic domain name, and these names tend to be very valuable if the word is a common one. As a matter of fact, in the world of domain investment, generic domain names are typically the most valuable.

We’ve seen many reasons why domain names can be useful, so let’s look at the lifecycle of a domain name, from the time it is registered, to the time it expires and becomes available for others to register.

... People and companies use domain names for many different things:

1. Domain names establish a unique identity in cyberspace.
Companies often choose a domain name that corresponds to their company name. For instance, IBM’s website is ibm.com and Microsoft’s is microsoft.com.

People who purposefully register domain names that contain trademarks belonging to other companies are known as cybersquatters. Knowingly registering another entity’s trademark in bad faith is illegal, and if a trademark holder decides to take a case to court the cybersquatter can face very hefty fines (US law currently provides for up to $100,000 in damages if a cybersquatter is found liable of deliberately infringing upon a trademark.)
What’s more, registering domains that can easily be confused with trademarks, which is known as typo-squatting, is quickly becoming a controversial practice. It is becoming more common for large companies to take such cases to court on the same basis of infringement as outright cybersquatting.

2. Domain names can be resold, leased and bartered.
Aside from being used to identify a website, domain names can be resold to other companies or people, leased, or even bartered for other names or for goods or services. An entire industry has sprung up around the resale of domain names, with domain brokers acting as middlemen in the sales process. The profits from a successful sale can be enormous compared to the original value of the name. In fact, some domains have sold for over $1 million and cost under $10 to register!
However, there are many more sellers than buyers, making it difficult to locate a potential purchaser for a given domain name. There are also too few quality names, so the more valuable names often get buried in a mass of low-quality listings on domain brokerage sites. If you want to dabble with making money from buying and selling domain names, check out our domain investment guide for more information. You should always keep in mind that the vast majority of registered domain names have little to no resale value .

3. Domain names can be used to provide a unique, permanent email address.
Many companies will set you up with email forwarding, where messages sent to name @ yourdomain.com will be redirected to your existing email address as provided by your ISP. This lets you choose a truly unique email address to give out to others. This will also allow you to keep the same email address if you change ISPs down the road.

4. Domain names can be used to improve a site’s ranking in search engines.
Even though the rules by which search engines “rank” sites change often, search engines generally favor sites with their own domain names over sites that do not have a domain name of their own (for instance, a MySpace page or WordPress blog hosted on the service’s site). Most search engines also give increased relevancy to domain names that contain “keywords” that people search for. For example, a search engine might rate a site with the domain name “FreeStuffGuide.com” higher than a site with the domain name “FreeBuyGuide.com” for the search “free stuff” since the first domain name contains the actual search terms. In addition, Google provides an exact match bonus used for determining search results if the search terms and the domain name’s SLD are an exact match. This provides a huge benefit over domains who’s Websites have many more favorable SEO characteristics such as Page Rank and Back Links.

Now let’s look at the different ways a domain name can help you, specifically.

... Generic TLDs

You can choose between many different types of domain name extensions, but the most popular by far (and often considered the most “valuable” as well - if you are considering domain names as an investment) is the .com extension. The vast majority of large companies use .com domain names and they’ve spent hundreds of millions of dollars branding the .com TLD in the minds of web users worldwide. In fact, .com names are so widespread that many people don’t even know that other domain extensions exist!

.Com domains can be bought or sold by anyone. Consider them the equivalent of prime real-estate on the Internet. Most companies place a premium on having a .com name over any other domain extension.
Generic TLDs

You can choose between many different types of domain name extensions, but the most popular by far (and often considered the most “valuable” as well - if you are considering domain names as an investment) is the .com extension. The vast majority of large companies use .com domain names and they’ve spent hundreds of millions of dollars branding the .com TLD in the minds of web users worldwide. In fact, .com names are so widespread that many people don’t even know that other domain extensions exist!

.Com domains can be bought or sold by anyone. Consider them the equivalent of prime real-estate on the Internet. Most companies place a premium on having a .com name over any other domain extension.

As of April 2010 there are over 83 million .com domain names registered!

• Other generic international TLDs (also called gTLDs) include .net, .org, .info, .biz, .name, and .pro. They’ve each earned a certain level of respect as top-level domains.
• .net was originally reserved for network associations such as ISPs, but over the years, it has become a respected alternative to a .com that anyone can register and use.
• .org was originally reserved for non-profit organizations, but like .net, there are no longer stringent guidelines to registering a .org. While it is still a popular extension for non-profits, anyone can now register .org names as an alternative to .com.
• .info was created for websites that are there as an information resource, but like the other generic TLDs, anyone can register a .info domain.
• .biz was created as a new extension for businesses, although the extension never really took off as a business resource and most businesses still prefer .com names. However, if your chosen name is not available as a .com, .biz may be a great alternative.
• .name was created as an extension for individuals to give a “personal, memorable and lifelong address for your Internet identity”.
• .pro was created as a new TLD for professionals and has restrictions as to who can register a name with this extension.

You can think of these other extensions as distant cousins to the almighty .com. They may seem less desirable to a .com, but that’s not necessarily the case. In fact, the availability of these other TLDs allows webmasters to get a domain that would not have been able to otherwise get.

In terms of functionality, all of the above extensions are equal. This means that having a.com won’t help a website rank higher in search engines of get a higher ‘click-through’ rate. However, in terms of investment, the .com domains bring a significantly higher ROI. Statistically, .com names are worth more than 7 times what .net equivalents are worth.

Country Code TLDs

Most countries now have their own top-level domains (called ccTLDs), such as .uk for the UK, .fr for France and .us for the United States. The rules for buying domain names under each country top domain vary from country to country, so always check before you register a domain.

The most popular ccTLDs right now are .uk (United Kingdom) and .de (Germany) names although others are quickly gaining momentum such as .asia and .in (India). And, because of their popularity, they’ve become a good investment for domainers as well.

Some countries have essentially sold their cyber-rights to enterprising entrepreneurs. For example, anyone can pick up a .to domain name (Tonga) or a .cc domain name (Cocos Islands), or a .ws domain name (Western Samoa) and most people are not even aware that these were intended to be country-level top domains in the first place!

Some companies are even selling sub-domains, also known as third-level domains, of memorable domain names. For instance, you can buy a third-level domain of .uk.com (i.e. if you could not get the .uk domain name you wanted. These are not official, internationally sanctioned TLDs, but rather companies sub-domains of their own domain. As we mentioned in a previous article, they too are gaining momentum and in turn becoming quite valuable.

The choice of which top-level domain to register your domain name under depends on several factors:
availability
the impression you want to give
the reason why you are registering a domain name

ccTLDs are often firmly associated with that particular country, so if you are working for an international company or organization, you’re better off buying a .com name. However, over 81 million.com names have already been registered, so you may have to get creative with the name that you choose or compromise with an alternative gTLD such as .net. If you do business in one country, but you also want to appear as international as possible, register both the .com and the ccTLD versions of your new domain name.

In terms of search engine value, the search engines generally focus on your site’s relevance to the user’s search terms rather than TLD, except in cases of the international versions of their search engines. For instance, if you perform a search on google.co.uk, your search results will generally contain more .co.uk domain names.

More Than One TLD

If you are buying domain names as an investment and you are very confident that the name you have chosen is valuable, it can be worthwhile securing the .com, .net,.org and other extensions of the domain name as well. By doing this, you prevent others from “undercutting” you when you go to sell the name by offering a different extension cheaper.

You can follow the same approach to secure your company or brand name against people trying to cash in on its popularity. For example, Microsoft had registered windows.com, but had failed to register windows.net. Someone else ended up registering the name and the company had to get it back through legal means. For large companies, it may be easy to get these additional names, but for smaller operations, it may be better – and cheaper in the long run – to register the popular TLDs in the beginning.

Some take this even further and secure popular misspellings of their primary .com domain name as well. Registering these in the beginning will keep others from typo-squatting on your domain in the future.

Now that we’ve talked about the different TLDs and which ones are best for different purposes, let’s look at what you can do with your domain name.