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Plenty of genericdomain name owners have acculated large collections of some great domain names to hold as speculation properties hoping they appreciate over time so they can sell them at a substantialgreater profit. Most of these sellers have so many domains in their little time to develop them out into real websites with unique products or services. Instead they place the names at a hosting business that creates a page with pay per click ads. That is why you will often see generic dot com names only links to other similar websites.

This used to be a good way of monetizing great domain names because most visitors would click on the links. However, now the trend of click thru rates has shrunk because visitors are savvy to these sites and exit quickly without clicking on these links because they are seeking more real listings – not these scavenger pay per click links. In addition, the PPC values have declined substantially too – up to forty percent.

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Because of this downward trend in both visitors and click thru rates and profits, the premium domains market has also seen a down trending of selling prices – up to fifty percent as well. The economy has likely contributed to this effect as well because the first thing to fall in value in any market – real estate or virtual real estate – are speculative properties. Prospective buyers are now seeking for acquisitions that provide a reliable ROI on their money. This would be like a commercial real estate investment with total occupancy, for example, or a established domain name that promotes products or services and provides real content.

Just like the caving real estate worth around the country – domainers, especially those with premium equity in their investments collapse. Many are in worrisome denial and believe their domains are more valuable than the market will support. Inevitably, they run the risk of holding on to a name and ride it right down to the bottom hoping one day it will swing back up. A more wise strategy may be to sell at market currently and hold until the market bottoms out and buy up deals at a depressed value.

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With foreclosures climbing month after month and more banks diving in deeper problems because of mortgage defaults growing at a record pace as well as credit card companies showing huge defaults, the ripple effect through every other market will continue to increase. Consequently, speculating on premium domain names is becoming severely more risky.

I have many clients who have been sitting on fantastic domain names for 10+ years – they missed the speculative boom prior to the bust of 2000 and they have been bypassed by the recent cycle which has cooled off late last year and dramatically more in 2007. Had they sold before 2000 they could have had a pile of dough to acquire premium domain namesin 2006 and doubled up. Holding on for the roller coaster ride of the market is not the wisest of strategy. Holding out for overblown prices for just an undeveloped domain name has become even more unrealistic and will probably lead to disappointment down the road.

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The top for premium domain name owners is to spend the time to create site that provides unique content, offers actual products or services and work towards getting indexed in the search engines for the most common keywords instead of relying only on direct browser type in visitors alone for traffic and income. There is plenty more money opportunity in a fully developed website business with a great domain name in the end. Business.com is a good example of this principle – bought for seven million dollars just before to 2000, but then the website was completely developed into a major portal netting fifteen million dollars a year and was listed in 2007 for a reported $400 Million . Now that is a tremendous approach and a excellent model to strive towards for any domain entrepreneur.

David Fairley
Websiteproperties.com