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Tools of the Trade: Free Resources That Will Help You Identify Domains That $ell

By Ron Jackson
Editor/Publisher



When I entered the domain business I thought I had discovered a magic kingdom that had been built just for me. A place where people were going to reward me for something I could do in my sleep. It was going to be like Kirstie Alley getting paid to eat!

    


Coming from a media background, words were my stock in trade and here, hidden in the deep recesses of the world wide web, was a business based entirely on words. All I had to do was pluck some good ones from the vine, attach an extension to them and decide which bank I wanted to deposit the proceeds in.

Unfortunately a little problem cropped up along the way. My magic kingdom turned out to be a country where commerce was done in a language I didnít understand. That came as a real shock because the language was English! However, it was a unique mix of English in which large blocks of the dictionary were practically useless and where some words were valued far more than others. It didnít take long to realize that if I didnít get a handle on this strange dialect I was going to be toast.

When most people start a job, they get a check within two weeks of clocking in for the first time. Five months after I reported for duty in this industry I still hadnít received a dime and my wife was ready to sign me in to a state institution. She knew pay at the asylum would also be paltry but she figured locking me away from Internet access might restore my sanity. Fortunately I was able to beg, plead and prevaricate just enough to keep her at bay until I was able to turn the tide.   

How did that happen? In a nutshell, I eventually learned (from participating in the major domain forums, online research and good old trial and error) that I was basically trying to build a house with my bare hands. Have you ever tried to saw lumber, drive nails or install plumbing with your bare hands? Iíll let you in on a little secret here Ė you will have a lot more success if you use tools! The domain business is no different except that here the tools are a lot cheaper than at Home Depot Ė theyíre free! 

After assembling a tool kit that helped me identify the words and terms that buyers wanted (rather than those I thought would be good) my business did a complete 180 degree turnaround. In the past 30 months I have sold over 1,500 domain names with profits coming from all major extensions, including the new ones (.info, .biz and .us). At this writing, I own 5,700 domains and every one of them has been paid for (including renewal expenses) with profits from sales (with enough cash left over to cover living expenses and continue investing in new inventory). Iím still a long way from the penthouse occupied by the industryís pioneers, but Thank God, the outhouse is now far back in the rear view mirror. 

In this article Iíll tell you about the tools I use. Most old-timers can probably go watch a Seinfeld rerun instead of reading on, but newcomers may find this to be one of the most important articles they will ever read. Using these tools were the difference between making it and washing out in this industry for me. 

This tool kit is designed to identify domains that will have a chance to sell regardless of whether or not they have existing traffic (in most cases they will have little or none). In the past year traffic domains have just about pushed everything else off the stage. Much of that stems from Marchex paying $164 million for a portfolio of traffic domains, which in turn has attracted swarms of venture capitalists into the field looking for more of the same. That has pushed the prices of good traffic domains to levels that most newcomers can only dream about paying. 

While the highest demand is for names with existing traffic, there is still a nice opportunity in non-traffic names. They are more affordable, yet (if well chosen) still have enough suitors to let you build a profitable sales business, a business that might even generate enough money to let you go after decent traffic domains down the line. That is the path that I followed. About a year ago I started building a traffic portfolio to complement the sales portfolio I had assembled the previous two years. It is very hard to beat a financial model that pays dividends around the clock and will likely continue to do so for many years to come. I would never dissuade anyone from going after traffic domains, but if you want to put your eggs in more than one basket or financial circumstances dictate that you look in other directions, domains purchased for resale could be your ticket to the dance as well. 

New businesses are coming online in droves and they are looking for domain names that are suitable for their enterprises. I deal primarily with small businesses. The vast majority of my customers arenít at all interested in traffic. In fact the notion that a domain they have not yet developed could already have traffic is completely foreign to them. They want a domain that is descriptive of the product or service they offer, one that their customers can easily remember. For that reason I focus primarily on nouns that describe a commercial product or service. Verbs or adverbs normally need to be coupled with a noun (QuickLoans.com for example) to deliver the message.   

 Now letís get down to specifics. Go ahead and put on your helmet, gloves and goggles. Youíll be handling a lot of high powered machinery and I don't want anyone to get hurt! If a name looks promising but isn't an obvious home run, I will evaluate it with multiple tools before deciding whether or not to register it or chase it on a drop. Each tool turns up another piece of information and it is only after I have run a name through the whole gamut of gear that I feel I have enough information to make a good decision. 

Selling domains is all about the odds. You may acquire some very nice domains that never attract a buyer. So, the object is to build an assortment of appealing domains so that when a buyer falls in love with one of them, the proceeds will be enough to offset the cost of the many that, often through no fault of their own, never add black ink to the bottom line. 

To increase your chances of selling you generally want words and terms that the largest number of people are looking for. One exception to this is in niche industries. If you have experience in a specific area that gives you more expertise than others, you may find it very profitable mining words and terms specific to your field that the general public might not be aware of. If you donít have such expertise, then follow the numbers. 

There are several tools that will help you determine the popularity of any word or term. The one used most often is the Overture Suggestion Tool.  In fact this tool is used so much that it is often inaccessible, especially in the days after monthly updated results are posted. We have heard that Overture is considering charging a fee to access this tool to cut down on overuse and the resulting downtime but as of now if it still free to use. When you put a word or term in the Overture search box it will tell you how many times people searched for that term in their system the previous month. 

How do you know if the resulting number is a good one or bad one? Views will vary from person to person, but I get interested if the word returns 10,000 or more. Still that is just one piece of information. Other tools weíll be talking about may tell me that a word or term that only returns 2,000 in Overture has some other valuable attributes. Monster keywords can return Overture numbers that are off the chart. "Sex" for instance returns close to 5 million. If you see any like that, go ahead and pick them up for me, I'll reimburse you for the reg fee

Overture also returns a list of popular terms (more than one word) that include the word you enter. This can trigger more  registration ideas. Overture is also relied on very heavily by domainers looking for traffic. If you type in the word or term with the extension, you can get a pretty good idea if the actual domain is getting traffic. Someone will register virtually any domain that returns a number in Overture with the extension. Where 100 without the extension should be a sign to move on, 100 with the extension will draw a flood of competing buyers. Numbers go on up into the thousands with the extension and the prices rise quickly along with those numbers. You will not be finding domains like that available for registration but they do turn up on drop lists on a regular basis. 

Everyoneís favorite search engine, Google, is also a good tool to use for checking word/term popularity. Since the number of Google pages returned is simply an indication of how many pages contain the word, use some common sense here. It is most useful for product/service nouns, surnames, city names (smaller cities since large city names are obvious buys), etc. Again the number of returns someone wants to see will vary from person to person. I like to see a million pages or more, but a half million might be fine if other tools point to value. 

Speaking of peopleís names and city names, there are U.S Census Bureau lists you can look up to gauge how popular those names are in America. For surnames as well as men's and women's first names, visit here. For a list of U.S. cities with 50,000 or more population (a common cutting off point used by domainers), check here. While I use those lists periodically I have done it long enough now that a quick check of Google will tell me if a Christian or city name is popular enough to go after.    

Acronym Finder may also be useful for researching ever popular 3-letter domains. Acronyms are always in demand by companies with long names that want a short handle to go by (the reason Internatinal Business Machines goes by IBM for example). If you put a 3-letter acronym in this tool it will return a list of companies and organizations that use that letter combo. Google is even more useful for seeing how popular an acronym is and how it is being used, but a simple personal rule has served me better than anything else in this category. I just avoid most 3-letter acronyms with q, x, y or z in them and go  lightly on those with j, k, u or v. All you have to do is pick up a dictionary to see why. The sections for those letters are considerably smaller than those for other letters. Since there are fewer word options you won't find as many potential buyers for acronyms with those letters.

Another good tool for checking real world name usage is Switchboard.com. If you enter a word there it will return a list of businesses that incorporate the word in their name, complete with their address and phone number! That can be useful if you want to try cold calling to market your domain names, though I have never found that to be an effective means of selling domains. Weíll talk about what is effective a bit later in this article. 

Another thing I always like to check is whether or not a word/term has been taken in other major extensions (for me that would be .com, .net, .org, .biz, .info and my country code - .us). I prefer to see the word I go after be gone in all of the other major extensions as that lowers the odds of the buyer considering an alternative. If they are all gone it is also another indicator of how much interest there is in that word or term. You can check this information at virtually any registrar but some return more extensions than others. The one at NetCheap.com is my personal favorite as it very easy to read and returns 13 extensions at the top of the page, just enough to be useful without wasting my time with dozens of others I would never consider (many others do appear, but they are shuttled to the bottom of the page where you can ignore them). 

If  you want to zero in on the most commonly searched words on the internet, Wordtracker.com and Reystar.com provide useful lists. Just as important as knowing which words are most popular is knowing which words have the highest advertiser bids on them. If advertisers are bidding $2 per click on a word it could make a considerably more valuable site than a word that has a top bid of 10 cents. In addition to their Suggestion tool, Overture has a View Bids tool that will tell you what advertisers are currently bidding for a word or term (Editor's Note: since this article was published the View Bids tool has been discountinued). If you want to approach it from the opposite end, 7Search.com will show you a list of the 500 highest priced keywords in their search engine. They are not one of the larger engines so these prices may vary from what is being paid elsewhere but it will give you a good idea of going rates for the most valuable words and terms. 

Since buyers are usually looking for a specific name, advertiser bid prices will probably make no difference to them, but there are a couple of reasons why they can make a difference to you. While you are waiting for a buyer to surface your domains should be parked on a PPC (pay per click) page. PPC pages are offered by many companies (including DomainSponsor, Fabulous, Sedo, Afternic & others) and come with built in forms so potential buyers can contact you with purchase offers. In the meantime visitors may click on the ad links on your page enough to at least pay for your annual domain renewal costs. 

In addition, as someone who has developed several websites, I like to know that a word has a high advertiser bid because if I decide to develop it myself rather than wait for a buyer, I'll likely earn more from an advertising program for publishers like Google AdSense if the word has a higher pay per click value. For example, it is not uncommon to earn $4 a click from a casino advertiser. You would need 40 clicks to earn the same money from a site built on a word that advertisers only pay 10 cents a click for. 

I have met a number of people who have purchased dozens or even hundreds of names and never parked any of them! That could be a very costly mistake. Even though you have been buying for resale you might be pleasantly surprised to find that you have accidentally acquired a few traffic domains! It has happened to me many times. Just as one example, I bought a pair of 3-character .coms on Afternicís Bazaar for $15 each. I put them on parking pages (as I do with all of my domains), not expecting anything. I was pleasantly surprised (OK, delirious) to see each of them getting steady traffic and earning $1-$2 a day. Thatís an annual return of over $1,000 on a pair of domains that cost a total of $30.  As you might guess, those have been moved from my sale portfolio to my traffic portfolio (which contains domains I do not offer for sale). 

Another tool you should use from time to time is TESS, the database at the U.S. Patent & Trademark Office, which will tell you whether or not the word/term you are interested in has any trademarks on it. Most will be obvious to you but sometimes there is a question and those are the ones to look up. A trademark usually only covers a specific class of goods or services, so you still might be able to use the domain in a non-infringing way. Knowing in advance can avoid problems later. 

Once you have used these tools to identify and acquire domains that have the potential to sell, how do you find buyers? The answer is you donít. They will find you. In my experience nearly all buyers already have the name they want in mind and will approach you if you have the name they want. That is why it is critical that you have a contact form (or your contact information) on a landing page for your domains. Even though I maintain two separate domain sales sites (one for com/net/org domains and another for the new extensions) I find that well over 95% of my sales come from inquiries buyers send me through an email link on the parked page for the individual domain. 

Some newcomers also set up sale sites to list their domains but do not have them parked. Odds are most buyers will never see the list on your site and will move on to other options if the name does not resolve to a page that makes it easy for them to contact you. Some who are savvy enough will know to look up your contact information in the public WhoIs database (and some sellers even make a point of stating ďThis domain may be for saleĒ in their WhoIs information), however many small business buyers donít even know what a WhoIs record is. 

No matter how good a job you do in identifying and acquiring desirable domains, you may not sell them if you donít price them realistically. Weíve all seen the $2 names listed on Ebay for a million dollars. You need to study the market and follow what similar domains are selling for in the various extensions. Our weekly sales report (published every Tuesday night) will give you a good sampling of prices that were paid the previous 7 days. We also have expanded lists showing you the top reported sales of 2004 for both old and new extensions, as well as a new list we've just published with the top sales for the first quarter of 2005 in both old and new TLDs. 

In my first couple of years in the business I tended to sell a bit (or even a lot) below current market values. I did that to generate cash flow to make the business pay for itself and fund expansion. I have now built up a large enough portfolio that sales come frequently enough to give me the luxury of holding out for market level prices. The numbers are still fair to both sides and if you can reach that equilibrium you should have no problem running a profitable domain business. Experience truly is the best teacher and one thing it has taught me is to keep that tool box by my side!


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Editorís Note: For those who would like to comment on this story, we invite you to make use of our Letters to the Editor feature (write to editor@dnjournal.com).



If you missed our previous Cover Story click on the headline below: 

High Impact Sites: Inside Adam Dickerís Domain Empire 

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