Domain Monetization: What's Your Strategy?	3.5/5.0 (8 votes total) Rate: Select 1 - Terrible 2 - Poor 3 - Average 4 - Good 5 - Outstanding
Valerie Booth March 10, 2009

After fully explaining what a “domainer” is in last month’s article "If You Buy a Domain Name…", I introduced two ways to make money with domains. This article takes an in depth look at these two distinct domain monetization strategies.

Monetizing Your Domains

A “domain monetization strategy” is an overall plan for making money with a domain. While there are a multitude of ways to make money with a website, there are really only three ways to make money with a domain name: You can sell it a profit. You can park it. Or you can build a website.

Buy and Hold: Sell It at a Profit

The dream of every domainer is to buy a domain name then sell it at a profit. The idea that you can buy a domain name, hold on to it for some time then sell it and make money fuels many domain purchases. But I don’t consider this “buy and hold” strategy a monetization strategy. Certainly, money can be made. But the profit results strictly from the sale and not from the use of the domain name . Many of us own domain names that are not readily in demand and even when marketed, just aren’t selling – or aren’t selling for the profit we envisioned. Consequently, savvy domainers seek ways to make money with their domains prior to selling them.

Monetizing Your Domains: Park It or Build It

Which monetization strategy should you use? This is the big question; the parting of camps. Given any one domain name, these two strategies are mutually exclusive. You can either build a website on the domain or you can park the domain. But you cannot do both at the same time. Thus a Domainer must choose between one strategy or the other with regard to making money with that domain. One strategy allows for passive profits but requires buying “right.” The other strategy requires a bit more web skill but offers greater potential returns.

Park It: Making Money with Domain Parking

Domain Parking is a relatively passive way to monetize a domain that relies, primarily, on type-in traffic, or, “direct navigation traffic.” Instead of creating a hosting account and building a website after buying a domain name, a domainer will choose a Domain Parking Company then "point" the DNS (domain name servers) to a pre-determined set of IP addresses provided by the domain parking company. Without any development on the domainer's part, a webpage, filled with ads, links to pages with more ads and a search box will be served up anytime someone types in the domain name - or happens to click on a link to that domain name. Revenue is generated when a visitor clicks on one of the advertisements displayed on the page. Those who park their domains rely almost exclusively on Type-In Traffic. Type-in traffic is traffic that results from someone simply typing the domain name into a browser. This means that the domain name contains either a very popular keyword phrase or a misspelling of a popular keyword phrase. Unless the domain name once had a website, there are no inbound links to the domain. Thus there is no organic traffic or organic search engine listings. All revenue generated depends first on type-in traffic then on pay-per-click ads. Most hosting companies and domain parking companies offer a variety of templates from which to choose. You’ll also be able to enter a set of keywords for your domain and possibly write a description. Other than this, though, you have very little control over traffic generation. They key to success with Domain Parking is in the pre-purchase inspection! Look for a domain name with a popular keyword, keyword phrase or misspelling. These domains have the greater probability of receiving type-in traffic. Also, look for domain names with existing traffic. Two handy tools I use are Alexa.com and dnscoop.com. Both offer traffic rank (dnscoop.com pulls its traffic data from Alexa). Alexa breaks down the traffic by country and also provides pageview data and up/down trend views. DNscoop fills in the gaps with a domain “age,” page rank check and inbound links.

Build It: Making Money with a Website

Increasingly, domainers are choosing the Build It monetization strategy. Employing this strategy, a domainer will buy a domain name and build a website. Some build affiliate sites, some start a blog and some build eCommerce sites selling their own products. Monetization occurs through sale of ad space, pay-per-click revenue, affiliate revenue and/or outright eCommerce product sales. The reason many domainers choose the “Build It” monetization strategy” is clear and was said best AskShane.org: "the big, safe money is in the development.” Other Domainers, like Richard at TooManySecrets.com feel the same:

"We all know that parking is not development. There are some new flavours of parking available in 2009, and I tip my hat to the guys building these systems, but parking is only a short term revenue stream. If you want to squeeze the most revenue out of your domains, development is the way to go."

Mike Cohen at WannaDevelop.com, is a bit more persuasive:

"Domain parking is in its final days and simply put, there is no future or any potential for things to get better with parking... It's only downhill from where we are today."

I, too, am a strong advocate of the Build It strategy for several reasons.

• Building a website instead of parking a domain provides more control over the type of traffic received. Simply parking a domain offers very little control over content and keywords.
  
  
• Developing the website allows me to control what my visitor sees once they get find my site. I can respond to visitor feedback, honing my pages and improving site content to offer the site experience they desire.
  
  
• I choose the location and size of the ad space on my pages, I choose the advertisers, the products and the ad network(s) employed on my sites. When a block of ads does not perform, I can change the ads, offering my visitors options beyond the content.
  
  
• Finally, having built a site instead of parking the domain, I now have a domain name with organic ranks in the search engines and steady traffic. When a Buyer can profitably leverage a domain name's existing traffic, the domain has more value to them. And greater value to the Buyer makes the purchase more attractive.

Domaining: Getting Started

When you consider that an ordinary person can buy a domain name for less than the cost of a meal and have a global voice and global reach, you realize how great the potential of the web is. Crossing the potential gap, though, requires an input of energy. For a person who is computer-literate but web-ignorant, there is much to learn, no matter which monetization strategy you choose. It is highly advantageous to learn how traffic moves around on the web, to understand the major search engines like Google, Yahoo and MSN, to become intimately familiar with keywords, link-building and search engine optimization and the newest trend: social media and social networking. It is also profitable to keep your eyes on major trends: globally, culturally and politically.

At a minimum you will want to understand
• what domain parking means
  
  
• what companies offer domain parking and the revenue share you will receive if you park your domain with that company
  
  
• what PPC (Pay-per-Click) means and who the major players in the PPC market are

You may also look into learning HTML (HyperText Markup Language), CSS (Cascading Stylesheets), PhotoShop and DreamWeaver. Learning more about blogging with services like WordPress and Blogger will serve you well also.

Further Reading: The Money is in Development

If you would like to learn more about monetizing your domains, visit AskShane.org and read, How to Really Make Money with Domain Names. Shane is a long-time proponent of the "Build It" strategy, voicing his opinion on domain monetization well over a year ago. You might also give Richard's article, Get Started with Domain Development" a read. He offers more good reasons to develop your domains. Finally, have a gander at Elliot Silver's article, Don't Develop Dumb Domains. Without a doubt, "the Big Money is in Development."

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