February 2009         DNJournal.com     The Domain Industry News Magazine

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Domain Name Investments in 2009 and Beyond

The final seminar of the Domainer Mardi Gras conference that was held in New Orleans Feb. 19-21 focused on a topic of special interest to domain portfolio owners and those thinking about entering this business - that being the outlook for domain name investing in 2009 and beyond. Though we touched on this discussion in our show review article, the broad scope of that piece did not allow us to go into detail about what was said in individual sessions like this one.

Since this is a subject that we think virtually all of our readers are interested in, we thought it would be a good idea to use this month's newsletter to pass along some of the panelist's comments in the domain investing session. 

Before investing in anything you first have to ask yourself "is this an area that I should be investing in at all?" The first panelist to speak, Parked.com President Donny Simonton, addressed that, noting that while the collapse 

Donny Simonton
President, Parked.com 

in the general economy has affected almost everyone, domains have been more resilient than other classes of assets. A primary reason for that is the ability of good domain names to produce revenue in multiple ways.

"We've seen about a 20% downturn in our business (domain name parking), but a lot of other businesses out there have dropped much more than that," Simonton said. "Also, understand that just because your revenue goes down 20%, that doesn't mean you can't offset that by, for example, adding 10% to your customer base and making landing page improvements that lead to a 10% improvement in click through." 

Sedo VP of Product Management, Sam Nunez, said that is also true of the aftermarket side of the equation. "While we have seen a decrease at the high end of the market, that has been offset by an increase at the low end. Our volume of sales for the first two months of this year was actually better than it was for the same time frame last year," Nunez noted. 

With domains, you also have the option of undertaking full scale development - a strategy that can produce a quantum leap in income if it is done right. However, Simonton cautioned that developing successful sites is easier said than done. "Make sure that if you are going to develop something you know exactly what you are going to do. You have to put everything behind it." 

Because total focus is needed to build a site that stands out from the pack, Simonton observed "You really don't run into too many companies that have hundreds of sites that 

Sedo VP Sam Nunez

are built out. Even very successful developers like the Internet Real Estate Group only have about ten sites built out at once. But when they build them, they build them really really well," Simonton said.

"That's the most important thing. If you do it - make sure you do it right. Make sure you have the money and the time to see it through. It might take six months to two years before you make a single penny," Simonton added. 

In a session about Diversification that proceeded this one, noted domain investor Rick Latona said that he was investing heavily in country code domains. In fact Latona's company will stage a T.R.A.F.F.I.C. conference devoted entirely to ccTLDs June 1-4 in Amsterdam, Holland. One of the panelists in the domain investing seminar that followed (the one we are focusing on in 

Ivor Sequeira
Senior Director, Neustar 

this article) was Ivor Sequeira, a Senior Director from Neustar, the company that operates the .US registry (America's country code). 

Since .com still overshadows .US in America, Latona has not been a big fan of the extension, but Sequeira said Neustar was ready to start spending money to raise the profile of .US (as well as .biz, a global TLD that Neustar also administers). 

Sequeira said that .US fell behind in the race for mind share because the ccTLD had been reserved for government use until the spring of 2002. By the time it was finally opened up to the general public, .com had become the default extension for most Americans.

Many current .US portfolio holders think the brand is a natural with great potential, but believe that the registry has let it wither on the vine for the past seven years. "I know there has been some criticism that we have 

not done a lot of promotion or advertising to make .US more visible, but doing that will be a major priority for us in 2009," Sequeira said. "One of the main reasons I am at this conference is to build awareness for .US and .biz and this year I think you will see that we continually have things out in the marketplace for both brands."
"We did a survey that showed that people really like the .US brand but they have some reservations because they just don't see it a lot," Sequeira said. "We learned that we have to work with registrars and resellers to the end user market to build visibility for the .US brand."

We will be doing more advertising and are also looking at an incentive program aimed at end users. If they register or buy a .US domain for their site we would reward them with some sort of incentive that hasn't been settled on yet. We as a company are willing to spend some money and we are willing to partner with people to do what it takes to build the space."

Sedo is the dominant aftermarket in the ccTLD space and taken as a whole, Sam Nunez said country codes are steadily whittling away at .com's dominant position. Nunez said "In 2007 .com accounted for 60% of our sales. Last year that slipped to 58% with most of the 2% decline going to ccTLDs." However Nunez 

acknowledged that .com is still the world's most powerful brand. He said that when you consider where to invest in 2009 you should recognize that there are now some great opportunities to get solid .com domains at bargain prices. "Now is  the time to buy," Nunez concluded.

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