How to buy and sell domain names in 2020
It is a well-known fact that investing in domain names can result in some of the highest ROI among all investment classes. In this article, I will introduce you to investing in so-called New gTLD domain names (or alternatively, a new generation of domain names). Those are domain names that were launched in late 2012 by ICANN to enhance innovation, competition, and consumer choice in domain names.
Basically, before new gTLDs, we had globally only 3 main options:
.com, .net and .org
I wrote globally, as on national levels, there were and are also many national domain extensions: .fr for France, .pl for Poland, .co.uk for the UK, or .co for Colombia.
Since 2012, we have literally hundreds of new domain extensions, which are aimed at global companies. This means they are not restricted to a particular country or location. Some of my favorites are:
.life, .world, .store, .online, .live, .vip, .expert and .ninja
Using new domain extensions, you can create easy to remember, short, and most importantly memorable domain names. For example:
Some of those new domains have been already sold for a very large amount of money. Few examples:
online.casino was sold for 510,000 USD
free.games were sold for 335,000 USD
home.loans were sold for 500,000 USD
Reported prices for top new gTLD domain names so far are in hundreds of thousands of USD (I am writing this article in summer 2020). While most transactions seem to be not reported, even those few reported indicate that good new gTLD domain names can be a very interesting investment.
So if you are considering this asset class, here are the 10 tips from Marek Eckhaus, CEO of Brands.International, which might increase your chances for success:
1. Register 1-word domain name, and in most cases, try to avoid 2-word domain names.
Example of 1-word domain name: holy.life. Example of 2-word domain name: myholy.life or ourholy.life.
Why is this important? It is important because chances of reselling a 2-word domain name in the new gTLD space are still pretty small in 2020 (you can consult namebio.com for more details, the database of reported domain sales). Do not think you can outsmart someone with your word1word2.gTLD combo…in most cases, you will not outsmart anyone, and usually, you will be dropping such names after 1 year. There are exceptions from this rule of course, but the safest bet is to simply avoid 2–word domain names, particularly when you just start with domain investing.
2. Register names with not many alternatives in new gTLD space
This simply means that end-users (potential buyers of your domain name) can not find good and cheap alternatives for your name in other new gTLD extensions (use registrars like GoDaddy.com, NameCheap.com or Dynadot.com to check that). Particularly when you ignore point no.1 and you register a 2-word domain name, you will usually find that your string exists in dozens of other new gTLD extensions…and is available to be registered by anyone for reg fee, usually for something like $10. This subsequently means you will have no leverage when it comes to negotiations with end-users. To learn exactly what “alternatives in new gTLD space” means, read for example this new gTLD appraisal thread here.
3. Register names with large pools of potential end-users.
You can have a perfect new gTLD name, but if there are only a few suitable end-users who can use your name, it will usually take a long time to sell it. If you register name where millions of potential end-users exist (so something pretty broad and generic), you will be getting many more offers, and you will be able to close much more sales.
4. To be first is not always better…sometimes it is better to be second.
When registering new gTLD names, consider this: when the extension is brand new, there is almost zero awareness about it among end-users (unless there is a huge marketing campaign for it you know about). It can take years for awareness among the general public to be created. This also means that for many extensions there is almost 0 aftermarket in early times. Usually only fellow domain investors. This is natural — if something is very new, almost no one knows about it. So if you want to be first to get the best names, fine, but budget for your investments accordingly — it is not wise to expect that you will buy something totally new for $10, and you will be able to flip it to end-user for USD 10k after few days or weeks. It happens, but rarely. So be ready to wait even some longer time.. after all, you are after great ROI, and this usually comes with some patience.
5. Make sure yearly renewal fees of your domain names are sustainable.
The second most important thing in new gTLD domain investment (after the quality of the name itself) is that you make sure you do understand renewal fees of your domain names. In order for you to be in a long term game, renewal fees of your domain names must be sustainable for your personal financial situation. Otherwise, you might be ending up dropping many of your names after a few initial years, and all your effort will be wasted.
6. Make proper landing pages for your domain names
After you purchase your new gTLD domain names as an investment, do not just let your domain names sit there without proper landing pages. Do not be lazy and immediately prepare landers for them. A landing page is a webpage that displays to end-users when they type your domain name in their web browsers. Some old school domainers are used to the fact that they were contacted by people who found their contact details in the WHOIS database — this is not possible anymore, as due to GDPR legislation most records from WHOIS database are now masked. This also means that when you have a new gTLD domain name, your details will be masked in most cases (again, there are few exceptions from this rule, but do not rely on them). Buyers thus have no way how to contact you if you do not setup your landing pages. Clear landing pages are simply a must in 2020.
7. Do not follow the herd.
Just because all people are registering .panda (just an example), it does not mean you also need to register .panda. Most people are not profitable when it comes to domain investing and are actually losing a lot of money — so if you will do the same thing as most people, you will have the same results as most people….
When you follow the herd, it is not only that competition is huge, but you will end up registering nonsense word1 word2 names, in times where there is no aftermarket created yet when you do not know if there are some renewal promotions (discounts) in future, when major domain selling sites not yet support that extension, and when there is no awareness yet among end-users. Likely result of your action: you will drop your names prior first renewal round. This is happening since 2014 in many forms and shapes, still, it seems like most people like to repeat those mistakes again and again.
You need to find your niche/extensions/areas of expertise and go from there. The most lucrative way is still to buy new gTLD names from fellow domain investors, but almost no one is doing it, except a few people. Typical newbie new gTLD domain “investor” will rather spend USD 10 on 200 bad names and will not sell even 1 of them, prior to dropping them all, then to pay USD 2000 for 1 great name which they can then resell for great profit. Which leads to the following advice:
8. Get 2–3 good names instead of 200–300 bad names
Buy only quality new gTLD names, as only the highest quality sells in 2020. And how do you know that you have a great new gTLD domain name? One of the indicators is that you have a good feeling of renewing it 9 years in advance. This should be always your test: am I confident enough for this name, so I have no problem paying years in advance for its renewal fees? Now to critics which would tell you that you are blocking unnecessarily your capital by paying renewals in advance, I would like to remind, that following can be very beneficial for you:
a) renew your name years in advance if there is a great renewal promotion (you can save sometimes 90% of the total cost, as some renewal promotions for new gTLDs are simply amazing)
b) when you renew your new gTLD name 9 years in advance, it tells your potential buyers something about your commitment…. and in my experience, it is much easier to negotiate if your name is renewed like that.
Some buyers are very clever, and of course, it is understandable: they will check everything possible about you and your names, and in most cases, they are simply waiting whether the name does not expire/whether you do not drop it. But when we are in 2020 and your name is renewed until 2029, this waiting game is simply over for them, and they need to approach you if they want the name. But to play this game, you really need to have good new gTLD names.
9. Get to social media and make a lot of connections.
Do not be a secret seller. Have your portfolio clearly visible to anyone, and go to Twitter, Linkedin, Instagram, Youtube, and Facebook at least. Domain investors with the most success have a great online presence and professionally looking marketplaces.
10. Price your domain names properly.
Look, if you price your domains with $120 price tag (for example), this will result in following: you will sell your best domains quickly for a low price (and when you report it, fellow domain investors will say Congrats congrats, congrats, and you will feel great as super-seller), but at the same time you will be left with a portfolio of bad domain names, which no one wants even for this low price tag. This is a sure way to poor financial status and poverty. You do not want that. New gTLD names are very unique, as they are pure language phrases without any suffix, and are therefore also geo neutral. They have great value, and this value will only grow in time as more and more people are moving on the internet, and they all would like to get some good and unique domain name. If you have a great new gTLD name, renew it for years in advance, and do not let it go for cheap — as one day you might retire on it.
11. Bonus point — do not listen to “voices of past” with “ONLY .com is a good investment” mantra
Remember that in 2020, both great .com domain names and great new gTLD domain names are a unique and perfect investment for investors who like to diversify their investment portfolio with the unique asset class of domain names.
Disclaimer: The above article is a personal opinion of a writer, and can not be considered or used as investment advice. Always make your own due diligence and your own independent research before making any investment decision.
This article was originally written for Medium.com by Marek Eckhaus, CEO, Brands.International