There seem to be two sets of minds operating in the domain industry: those who get the concept of branding, and those who flatly refused to be weaned from domain parking.
Those who get branding are normally the ones who understand the importance of quality domain names, and possess the wisdom of choosing quality over quantity when doing domain investments.
I have been preaching the gospels of quality domains and branding form day one. But lets look at the reason why some domainers will never get it, or flatly refuse to accept it.
Domain parking provided a lot o people with a bottomless revenue source in its heyday. Lets look at some numbers.
Let’s say you had a $10,000 credit card, or better yet, that amount of money at your disposal for domain investing.
At the average $10 cost per domain registration, you could pick up 1,000 domains. Lets say you did the research and employ the right tools and resources to acquire domains that do get a bit of traffic.
Let’s further assume that this traffic was sufficient enough to earn you $6 per month per domain name, an average of $0.20 per day, per domain.
With 1,000 domains, that would be $6,000 in revenue each month, or $72,000 annually. Are you excited yet? You should be.
Remember that you are only earning 20 cents from each domain name on a daily basis. Pay attention. With $6,000 in monthly revenue, you have almost earned all of the monies invested in the very first month. You can repay your credit card fully after just 2 months.
That would be 720% annual return ($72,000 on a $10,000 investment).
Stocks hardly do that, and the banks couldn’t match that. Even real estate would struggle to come close.
Now if you were smart, you would reinvest part or all of your earnings into more traffic domains.
This is going to get complex now.
Lets say you reinvested 50% of your earnings each month.
Month One – 1000 domains = $6000 revenue
Month Two – 1,000 + 300 domains x $6 = $7,800
(300 domains = $6,000 revenue x 50% = $3,000 divided by $10 registration fee = 300 domains)
I won’t bore you, but if you do the maths, you should get something similar to what the following table illustrates:
| Month | New Capital | Existing Domains | New Domains | Total Domains | Revenue |
| 1 | $10,000 | 0 | 1,000 | 1,000 | $6,000 |
| 2 | $3,000 | 1,000 | 300 | 1,300 | $7,800 |
| 3 | $3,900 | 1,300 | 390 | 1,690 | $10,140 |
| 4 | $5,070 | 1,690 | 507 | 2,197 | $13,182 |
| 5 | $6,591 | 2,197 | 659 | 2,856 | $17,137 |
| 6 | $8,568 | 2,856 | 857 | 3,713 | $22,278 |
| 7 | $11,139 | 3,713 | 1,114 | 4,827 | $28,961 |
| 8 | $14,480 | 4,827 | 1,448 | 6,275 | $37,649 |
| 9 | $18,825 | 6,275 | 1,882 | 8,157 | $48,944 |
| 10 | $24,472 | 8,157 | 2,447 | 10,604 | $63,627 |
| 11 | $31,813 | 10,604 | 3,181 | 13,786 | $82,715 |
| 12 | $41,358 | 13,786 | 4,136 | 17,922 | $107,530 |
| Totals | $179,216 | N/A | 17,922 | N/A | $445,962 |
| Profit = $445,962 – $179,216 = $266,746 | |||||
Please be aware that these are just assumptions, and there is a degree of impracticality in that domain parking revenues are not paid out until the middle of the following month, and domain research does take time.
At the end of the first year, you would have accumulated 17,922 domain names costing $179,216 in domain registration fees.
You would have earned $445,962 in domain parking revenues by the end of the year, which would result in a profit of $266,746, before any interest and taxes.
That is based on the following:
- An initial investment of $10,000
- An estimated $6 monthly domain parking revenue
- An assumption that 50% of each month’s revenue is reinvested immediately to acquire new domains at the basic $10 registration fee
- An assumption that each new domain name acquired earns the same average amount in domain parking revenues ($6 per month or 20 cents per day)
Either you are excited or you are confused. The reality is, it is possible. But in order to consistently earn an average of $6 each month in domain parking revenues, you have to acquire the “right” domains.
The “right” domains are those with the right keywords, search volumes and Cost Per Click (advertiser) or Revenue Per Click (domain owner).
To obtain the right domains, you need to fully understand statistics, know how to research keywords and be able to decipher search statistics and analytics.
You wouldn’t need to focus on domain quality and branding potential. You would only need to focus on domains with traffic (by analysing stats) and the more traffic domains you have, the more money you earn.
This, ladies and gentlemen, is the reason why so many domainers focus on quantity instead of quality and fail so miserably in grasping the concept of branding.
With the above illustrations, you could avoid the complicity by simply investing $100, 000 in new domain registrations. If each domain name earns an average of $6, then you will earn $60,000 per month.
That would be annual revenue of $720,000, and at $100,000 in annual expenditure (domain registration initially, and subsequent yearly renewals); your annual profit would be $620,000 in profits before any interest and taxes.
You would collect $620,000 yearly by living the lazy life. Hmmm. Not bad, is it? And to think that you wouldn’t even have to sell a single domain name!
That’s how the “legends” could famously declare that they don’t sell domains.
I could go even further and complicate things a bit more by adding arbitrage to the calculations and assumptions, but I will save that for another day.
Oh how things have changed, eh?
I may write a part 2 to this blog post. However, without an explanation, I would advise you not to base your domain investments on speculations of what your domain parking revenues will be.
Have a great weekend!!
I have 9000 parked domains, and if you subtract out my top 10 domains, the rest just about break even (They make $6000/month which covers my $6000/month in domain registration fees). In fact, I estimate 80% make less than the annual registration fee. But, I keep them all because I sell 5-10 domains a month, and that is my real profit.
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I have about 50 parked domains and only one (jointodayonline.com)makes about $17 per day on average and all other get a big fat zero. I listed this domain and Sedo’s feature listing, created a PR release, and added a couple of key words. I did the same for joinmyaffiliate.com but no results. Can you explain this mystery?
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@Eric Borgos
Thanks for sharing such valuable information with us. It is great to have a real life illustration. It will certainly help new and current investors to keep their feet on the ground.
I checked out your portfolio and it is really impressive. You have a collection of quality domains, the majority of which a lot of end-users would be interested in.
I believe domain sales and web/brand development is the safest strategies to implement now in terms of domain investments. Domain parking should be treated as an added bonus.
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@Rafael
I am not an expert in domain parking, as I don’t employ the resources and tactics used by the masses. My forte is acquiring ebusiness (COMMERCIAL) domains for development or resale to end-users.
There are quite a few reasons why some domains get traffic while some get zero. The most popular reason is that the domain name previously had a website setup that got ranked in search engines, had a lot of link juice, and/or user bookmarks.
Another popular reason is that the domain name is very similar (in spelling or sound) to another domain that is currently developed. For example, if a successful website is setup on the .NET extension, you will get some traffic to the .COM version of the domain name from unsuspecting visitors.
To be honest with you, jointodayonline.com is not a domain name that I would be interested in acquiring or branding. It is not specific enough. So there is really some mystery to be solved as how it is generating $17 on a daily basis.
If you know what users are looking for when they visit your parked page, you could earn a lot more if you optimise the parked pages for the relevant keywords to meet the demands or needs or those visitors.
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One problem for me with domain sales is that although it is a great money maker, if I keep selling all my good domains I will eventually have none left. It is not like I am still buying domains; almost all of them are from the 1990s or early 2000s. Luckily, I have enough to last me many many years, but not all domain owners are in that situation.
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Great post. It is a simplistic view of the parking model. revenue projections get interesting in the 2nd and subsequent years do to renewals as well as ongoing purchases. You seem to be in favor of the ‘branding’ or development model. if you do a part 2 article, it would be interesting to see your revenue projections for tose models.
thanks for the post.
Michael
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@Michael
I prefer the branding model as the domain parking model is too risky, lacks transparency and does not provide any level of control or security. Having the power to change or optimise keywords is not being in control of your business.
The branding model is more capital intensive but the long-term benefits can be tremendously higher than the parking model.
The branding model is a totally different ball game. It involves very hard work and lots of upfront investment if it is to work. That is why the majority of domainers don’t favour it. With the branding model, one cannot live the lazy life afforded to them through domain parking.
Unlike with domain parking where all that is involved is registering the domain name and changing the nameservers and you are I business, the branding model involves a lot of research, strategising, creativity, originality and passion. Each project would have its own unique business plan and as such its own set of projections.
So providing a similar projection for the branding model would not be practical. Nonetheless, I will do a follow up post in which I will make a few comparisons between the 2 models.
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How can jointodayonline.com generate that kind of reveneue?
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