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12|11|2007 12:47 am EDT

Don’t Lose Your Ass By Failing to Properly Monetize Your Domains

by Mike Mann in Categories: Editorial

Mike MannDomains that are worth over $100,000 are essentially unique, branded small businesses. You can choose to ignore them and leave them idle, or place an enormous amount of resources on each, or somewhere in between. In any case they are ongoing business concerns which should be respected and managed accordingly.

The market for domain brands fluctuates and is extremely thinly traded. The risk inherent in owning them, the Internet advertising market, the stock market, and the economy overall are constantly in flux. So if you own a digital asset of this value than its valuation is constantly in flux whether you like it or not. If you have a domain worth $1M then throughout its lifecycle to date it may have been worth $70, $1,000, $50,000, $1M, $5M, $1M, $500,000, $1M, $250,000, etc while being left to its own devices.

But our assertion is that if you are actively working on design, ecommerce conversion, SEO, SEM, arbitrage, application building, partner building, staff development, etc., or some combination of those opportunities you are optimizing your asset or small business the right way. If it has a significant value, as proven by its 100K plus valuation, which is constantly in flux, then you would be harming yourself by not building the asset or at least trying your best. And by proactively adding value and traffic in to a business with ideas, code, customers, etc, instead of lame basic PPC parking, you keep the valuations moving up during what would ordinarily be stressful cycles of asset fluctuations.

Under this improved model the domain valuation that you had been mistakenly banking on, merely serves as a downside hedge. If your killer evolving business using a world class domain brand does not grow the way you had planned you are still covered by owning a great domain and any value you added to it in the same risky fluctuating market where you started, hopefully at a higher natural baseline due to an evolving market, similar to a convertible bond.

If you really own some of the world’s best unused domain brands you are being negligent every day you aren’t working on improving them, you are losing opportunity which is extremely expensive for you. Look around and you will find that Phone.com, SEO.com, Software.com, HappyBirthday.com and thousands of others are MUCH better off as companies being built, not domains being parked and neglected.

From my book: “Every time you fail to assertively take advantage of all opportunities and employ all Best Practices, you are essentially throwing cash right in the garbage (or even worse, into the hands of your competitors). This money is called Opportunity Cost.

Controlling opportunities requires a careful setting of priorities. An example would be if you spend 100 hours to make $100K when you could have chosen a better business option and spent 100 hours to make $200K, then the Opportunity Cost is $100K. You lost $100K–the cost of making the wrong decision. The opportunity to improve in all areas of business is always at hand if you pay attention.”

In this case the opportunity cost of not developing the world’s best domains is too high so they should all be proactively developed like any other ongoing business.
Thanks and LMK what you think.

-Mike
http://mikemann.com/

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6 Comments

Snoopy

December 11, 2007 @ 2:28 am EDT

If development is a far superior model to parking how come the parking guys still seem to win most of the domains at auctions even those those guys constantly “harm themselves” with those “lame basic PPC parking” pages.

art (bob)

December 11, 2007 @ 9:20 am EDT

Helpful info as I’m strategizing my website development via SEO and affiliate marketing.

[…] Don’t Lose Your Ass By Failing to Properly Monetize Your Domains Domains that are worth over $100,000 are essentially unique, branded small businesses. You can choose to ignore them and leave them idle, or place an enormous amount of resources on each, or somewhere in between. In any case they are ongoing business concerns which should be respected and managed accordingly. […]

Mike Mann

December 11, 2007 @ 9:28 pm EDT

Snoopy, first of all my team has won as much in history on auction as anyone.
Secondly winning a name on auction and being profitable with it does not mean they exploited the name to its maximum potential.

Parking is a temporary idea by definition, you park your car before you actually use it for something productive. Of course if you dont have a name that will take you the distance or dont have any air in your tires, leave your car and domain parked. 99% of the names will not make a profitable ecomm site anyhow, we are only addressing the very exceptional 100K+ segment.

A PPC page is lame because it offers no relevant value to consumers, is not a usable or sellable business either. Its a name gathering dust whether nominally profitable or not.

We took parked names like SEO.com Phone.com and Software.com and created killer businesses for consumers and have added hundreds of times the value that keeping them parked would have.

Paul Rubillo

December 16, 2007 @ 11:28 am EDT

Mike Mann is 100% right. You can leave them alone and watch others take over a certain niche and then when you finally decide to take the plunge, you will most certainly be the 8th or 9th replica of someone else’s idea. The only thing you will hear from venture partners, is that you are late to the space and the only thing you have is the domain name. For example, if I had wanted to launch an online broker 12 years ago, and I owned onlinebroker.com and there was no Ameritrade.com and Scottrade.com, I would have a shot at making noise with onlinebroker.com. Try putting a business plan together with that now and people will laugh at you. The longer you wait, the harder your chances of success are. That’s just one example. Whether it’s the best example, hopefully everybody gets what I am going at.

Adam Strong

December 16, 2007 @ 5:23 pm EDT

Paul Are there many niches that you know of where a premium (six figure or more) domain represents a niche/product/service that isn’t already well represented online? IMHO high value domains have high values based (among other things) on the niche/category being solidly represented and having a solid advertiser base. I don’t believe these names would be worth 6 figures if the category they represented was “underdeveloped” online or had no competitors. Some examples of names that are for sale right now or sold for high sums recenlty : Computer.com, Auction.com, DSL.com . In almost all cases having a premium name you’d inevitably be starting way behind the leader as an “8th or 9th replica” already. I’m not saying you can’t “overturn the applecart” or dance circles around the dinosaurs with a better idea or execution. The domain certainly provides a leg up.

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