Should You Develop Your Premium Domains?

shane imageToday is another special day for Domainer.com.au – we have our first guest blogger!

Shane Moore has been involved in domaining and online marketing for over a decade and owns a number of online businesses including Nuts.com.au and NumberPlates.com.au.

He also runs a very successful insurance brokerage in Queensland specialising in insurance for tradies. Have a look at TradeRisk.com.au – it’s a great example of a thriving business website!

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Author: Shane Moore

Development is a hot topic when it comes to domain names.

Whilst we’d all love to make six-figures from flipping domains, the reality is that only the very best domainers can achieve this.

So we need other ways to supplement our income.

In years gone by parking was a great option for monetising a portfolio, but revenue certainly isn’t what it used to be.

So if you can’t make the money you want from flipping domains and parking, the next option to consider is development.

But before you get stuck into developing your domains there is a very important questions to ask:

Is developing my premium domain going to help or hinder my overall goals?

We all know that premium domains can be very valuable assets.

We also know that great development can increase their value, especially if the development has resulted in a profitable business.

Some people may argue against development, but there is no doubt that a developed domain which is already providing a decent ROI is going to be a more attractive acquisition target.

On the flipside, poor development may actually hurt the value of your domain, and could make it more difficult to sell the domain at all.

Development Does Not Suit All Domains!

This may seem obvious, but development is certainly not going to suit all premium domains.

For certain product or service related domains, development can work very well.

On the other hand a two-letter domain may be every bit as ‘premium’, however there is absolutely no point developing a domain like this.

I would only be developing a domain where the development matches what a likely buyer would be doing with the domain.

Ultimately your development should have one or both of the following goals:

1.      To create an income stream – either from advertising or ecommerce.

2.      To show prospective buyers the potential in the domain.

If neither of these goals seem realistic for your domain, then you probably shouldn’t be spending time or money on development.

Weighing Up The Positives And Negatives

Good development isn’t cheap, especially if you have to pay others to undertake the work.

So before jumping in, here are the positives and negatives as I see them:

Positives

The biggest positive impact will come from developing the domain to the point where it is generating ongoing revenue.

The benefits of this are twofold.  Firstly, you are generating an income for yourself, and secondly you are showing prospective buyers that the domain will generate a return for them.

A revenue generating domain may make it easier for an end-user to justify the purchase.

For example if the domain alone is valued at $20,000, this could be a big ask for many SMEs without knowing for sure that the domain is going to work for them.

On the other hand if the domain is already generating $10,000 a year in revenue (or potential revenue from leads), the buyer may be able to justify a purchase price of $40,000 or more.

Any asset, be it a domain or otherwise, that comes with recurring revenue is always going to be more attractive to a buyer.

Great development that results in high search engine rankings may also increase your chances of a sale by increasing visibility.

If a business owner or marketing manager Googles their core product or service offering and sees your website above theirs, they may be more likely to contact you to make an offer.

At the very least they will be more familiar with the domain and the benefits that it could bring to them if they can see that it outranks their current site.

Negatives

There are some very serious potential negatives when it comes to developing a premium domain, so it’s important to know what you’re doing before you jump in.

The biggest risk is that you prove the business model doesn’t work.

Say you have widgets.com.au and you setup a great looking website selling widgets.  You do a great job with design and SEO, and there’s not much left to improve.

What if you do all this, but the site makes very little profit?  You’ve just proved to any potential buyer that the business model best suited to the domain does not work!

In this case it would have been better not to develop, and wait for someone else to come along with the same idea and spend their money on acquiring the domain from you and developing it.

The second risk is that you do a very poor job with development.  This could lead to a number of negative outcomes.

For starters, you’ve put time and money into something which has provided no return.

Potential buyers may also be put off by seeing the domain developed in such a poor manner.

And if you do end up with a potential buyer, your amateurish development may lead to the buyer seeing you as an amateurish seller, putting you in a weaker position from the outset.

In this case, again it would have been better to leave the domain parked.

The final risk is that no potential buyers contact you as they presume the domain is in use and not for sale.  This would not happen if the domain was parked.

This is not a major issue, especially if you are proactively contacting potential buyers, but it is still something to consider.

Should I Do It…?

Successful development is not easy, and it takes a lot more than installing a WordPress site and throwing up a bunch of $10 outsourced articles.

In years gone by this may have worked thanks to Google’s love of Exact Match Domains, but as we all know this is no longer the case sadly.

So think hard before developing your domain.  If the answers to any of the following are no, then development is probably not the right option:

  • Is the domain related to a product or service?
  • Do you have sufficient time/money/expertise/motivation to develop the domain properly?
  • Is there potential for the developed domain to produce meaningful income from advertising, ecommerce or lead generation?
  • If the developed domain cannot generate revenue, can it at least generate high levels of relevant traffic that will provide value to an end user?

Personally I am very pro-development, and I would encourage people to give it a try provided that both they and their domain are right for it.

You never know, you might develop a domain so effectively (and profitably) that you no longer wish to sell it!

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16 thoughts on “Should You Develop Your Premium Domains?

  • November 26, 2015 at 12:27 pm
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    I agree, development is the best thing you can be doing with your portfolio. It greatly minimises policy risk, gets the site indexed and ranking (number of years indexed is a factor in determining domain name value), and attracts buyers. But I completely disagree with your sentiment that LL or LLL or brandable names shouldn’t be developed. Development of such names shows would-be buyers that the name is a business asset and is in use, hence a higher price would need to be paid to acquire it.

    • November 26, 2015 at 12:57 pm
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      Hi Paul.  Yes policy risk is another big advantage of a developed portfolio.  I wouldn’t recommend that anyone develops their entire portfolio, but certainly those domains which have significant value.

      Interesting point of view regarding LL and LLL names.  A savvy buyer may see right through it unless the development is of high quality, but yes I can see how development could advantage the seller.

      My idea of development is something which matches the domain, and is likely to match what a potential buyer would do with it.  If developing an LL, LLL or brandable you’re basically just making something up which could match the domain, but will not match what the end-user intends to do with it.

      • November 26, 2015 at 1:28 pm
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        Great post Shane, some really useful tips that people can take away from this.

        Just one point though:

        On the other hand a two-letter domain may be every bit as ‘premium’, however there is absolutely no point developing a domain like this.

        I have developed http://www.tm.com.au into a great lead generation and resource page which has been a great success for us, in some cases LL and LLL can be developed, but it can make it harder to achieve brand recognition and success.

          • November 26, 2015 at 2:19 pm
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            Hey Ned!  I completely agree that LLL domains are brilliant for branding and development, but I guess my point was that you wouldn’t develop a domain like AIL.com.au if your intention was to sell the domain.

            In light of some of the comments perhaps I should have clarified that the article is about domainers developing their domains, not end users.  If we’re talking end users, then yes they should all be properly developed regardless of whether it’s a EMD, acronym, brandable etc. 🙂

        • November 26, 2015 at 2:08 pm
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          Thanks Erhan.  TM is definitely an exception to the rule!  I can’t think of any other LL that has such a common and commercially attractive meaning.

          The development you’ve done on TM.com.au is brilliant.  I love the look of it.

          • November 26, 2015 at 2:47 pm
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            DJ.com.au, available for the peanuts price of $13,000 http://www.netfleet.com.au/dj.com.au

      • November 26, 2015 at 2:00 pm
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        True @Shane, but ‘matching’ can be problematic unless the keyword domain name in question is very specific. Consider Equipment.com.au, developed into a construction equipment site. -An office equipment retailer may be dissuaded from buying the name, not least because the inbound links are all from construction equipment related sites. Another example would be Supplies.com.au.

        That’s not to say ‘matching’ shouldn’t be done, only that it is a weak rationale for development. The number one reason (for domainers) to develop is because people only truly pay a premium for something that is ‘not for sale’, and the best way to communicate that your name is ‘not for sale’ is to be using it.

        • November 26, 2015 at 2:33 pm
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          *The above advice is only for quality names only. Dressing up a pig, or developing a name that is crap to begin with, doesn’t help at all.

          For the record, there are fewer than 5,000 investment-grade .com.au names still held by domainers in Australia. There are investment-grade names, crap names, but then there are names in between, which are still very valuable to end users -but not investors.

          • November 26, 2015 at 2:37 pm
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            “*The above advice is only for quality names only. Dressing up a pig, or developing a name that is crap to begin with, doesn’t help at all.”

            Couldn’t agree more.  You could apply the same disclaimer to the full article.

    • November 27, 2015 at 12:36 pm
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      ecomcrew is brilliant!  I almost didn’t follow the link because I didn’t like the name…  But wow, some great reading in there.

      Cheers.

  • November 26, 2015 at 3:51 pm
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    Nice article Shane. Having been in the business of developing a few premium domains in the past, I can see exactly what you are talking about.

    Shane I take my hat off to you as you have done so well at developing your domains.

    Don

    • November 27, 2015 at 12:38 pm
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      Thanks Don.  As you know it’s a battle to get them developed and ranking, but if you don’t try you’ll never get there. 🙂

  • November 26, 2015 at 9:41 pm
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    Great article Shane. Makes perfect sense and is great advice to new domainers.

    Nice websites too, I can see why they’re successful.

    I’m in the middle of developing a bunch of premium names, so I hope I have been spending my last year, 4-5 hours a day, every day, wisely.. Time will tell.

    I too am pro-development. I would say that 85% of the names I buy are for development purposes. It can take a while to get around to developing them all though!

    Don, your gutter guard website looks amazing and I’m pretty sure I’m going to be buying some before next winter. Stupid jacaranda trees! (which I love and would never cut down, but they’re painful for the gutters and pool!)

    Some good links there, David, thanks for those.

     

     

  • tim connell
    November 27, 2015 at 3:09 pm
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    i’m pro-dev, shane i think you missed 1 other point…………….

    giving up all your work whilst its still filling your wallet !

    one of my websites just ticks over without much effort, it was a hand reg, dev, bit of branding, lots of selling to vendors and now worth$xx,xxxx but nobody would buy it and its pointless selling it for less.

    i have a client with a great domain who just got offered $xxx,xxx for here online business, she said no as she makes that every 3 years so why sell?

    my only thought is to develop something you don’t care about, IN _ OUT and work towards the 1 you care about.

    i was talking to a coffee shop owner last year and i said ” so you like coffee and cakes” and she said “no” , but i know how to take run down shops and make them profitable then sell them. her last shop was tatts lotto booth in a shopping centre and she sold the coffee shop a few months later.

    my point: think about the end desire before you start anything.

     

    tim

     

     

     

     

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