httpTo most people, domain names are simply the addresses for their favorite websites. However, a select few understand that these Web addresses, also known as URLs, are a vital commodity in the real world, and large businesses and new startups are willing to pay top dollar for the right names. In some cases, this can amount to a foresighted investor becoming an instant millionaire.

Domain Names as a Commodity

When the Internet first started to become popular in the late 1990s, domain names were a fun part of establishing a presence in cyberspace. They gave Web surfers a way to remember you and find your website. As the Internet became more entwined with the everyday lives of ordinary people and consumers, domain names suddenly became big business.

Today, no comprehensive marketing plan is complete without a website, and the best websites have addresses that are easy to remember yet perfectly represent a company’s primary industry, specific business or brand image. When the Internet was still young, it was easy to find such a name, but now that everyone has a website, the list of available names is shrinking, but not gone entirely.

The importance of the right domain name is highlighted in the (speculative) article “Google’s 200 Ranking Factors: The Complete List” where factors 2, 3 and 7 refer to having your money keyword in your domain name. Obviously there are 200 other factors that Google takes into consideration, but the appropriate domain name is a good start. A good domain name, especially if it is related to your business can be very valuable.

Political candidates will register domain names of political candidates just to put up a website that is similarly-named to their opponent. Then they can publish unflattering commentary that will be indexed by search engines, due to their relevant content. A website like this would generate high amounts of direct search traffic, as web users type in the candidate’s name directly.

If you were going to start a new website today, what would your ideal URL be? The probability is high that the first name that comes to mind has already been taken, which leaves you three options:

1. Choose a different name.
2. Wait for the current registrant of the domain to let it expire.
3. Purchase the domain name from the person who registered it.

Large corporations and well-funded startups do not want to choose names that don’t fit into their marketing strategies, and they can’t wait for a lapse in registration by the current owner. This leaves them only one option: buy the domain name so that it can be used immediately.

High-Dollar Domain Names

According to a recent article published in The Tennessean, more than 252 million domain names are currently registered, and the demand for new names continues to grow. Like any other commodity, as demand grows and supply becomes scarce, its value increases.

Anyone with enough foresight and less than $25 can register an available name that may later be seen as a requirement by some company or organization. Once the name is registered, all you have to do is wait. This type of strategy is known as domain squatting, and it has yielded high payouts in several instances.

Like any investment, domains are not guaranteed to make you money, but take a look at some of the following names and the prices they commanded on the open market:

* Earlier this year, whisky.com sold for $3.1 million.
* In 2003, shop.com sold for $3.5 million.
* In 2010, sex.com sold for $13 million.
* In 2009, insure.com sold for $16 million, but that includes the whole company

“The most expensive sale, however, actually wasn’t for a gambling or porn site.” A review of 15 of the most expensive domains of all time tells you the surprising domain name champion.

Legal Issues

But beware of legal issues such as cybersquatting, especially of trademarked names. There have been many notable lawsuits between squatters and legitimate businesses.

Mis-spelled domain names are another twist in the art of domain names. There is even a term for this, typosquatting. Savvy marketers will register variations on their name or product, especially if it is commonly spelled incorrectly. Then a simple re-direct is enabled sending you to the main site. There are ways to manage misspellings and keyword typos.

While some people view domain squatters as a nuisance, it is impossible to deny the money that can be made from the practice. In addition to reaping the rewards of a big payday, squatters can also make money by hosting banner ads or leasing them for use by other Internet marketers.

Beware though, Is Your Domain Renewal Notice Really a Scam?

If you have any more questions on building a website, or need internet marketing that gets results, contact SunAnt today.