The new domain extensions are the new internet. While .COM is the king, it has taken 25 years to become what it is. The new domain extensions, on the other hand, are what .COM was 25 years ago. Needless to say, they are poised to grow much faster than .COM did, even though it had many years of no competition. Today, 1200+ new domain extensions are competing with other and growing at a much higher rate, especially since all the good .COM names are either already taken or are very expensive.
This has opened new opportunities for domain investors who are looking to make money in the secondary market for domain names. The new domain extensions are lucrative avenues since they are available at competitive prices with a plethora of options. Imagine how they would grow in 25 years from now!
However, before investing in a domain name on a new extension, you should keep in mind certain factors indicative of their success. Since not all TLDs (top-level domains) have the same growth potential and given that there 1200+ options to choose from, it can be hard to figure where to invest money for maximum returns. Here are top tips to keep in mind when investing in a new domain name:
1. Think stock market
The way you are bullish about certain sectors in the stock market and invest in them, the same goes for domain names. If you are leaning towards technology as a sector in a certain market, you should look at investing in domain extensions specific to that sector; such as .TECH in this case. As the industry grows, the value of domain names for that industry will grow too.
Consider how many users have active websites on domain extensions that you are considering investing in. It’s easy to get carried away by how many domains are sold on an extension but it doesn’t really matter. What matters is the level of engagement for that extension. Look for numbers that indicate how many websites, email addresses, established brands or people are on that domain extension. If big brands and funded startups are already using a new domain extension, it’s a healthy sign for domain investors. For example, .SITE has 19.60% of its registered domains as developed websites, which is a healthy proportion when compared to .COM’s 23% development rate.
3. Aftermarket sales
Consider the movement in aftermarket sales for a domain extension before investing in it. For example, .ONLINE recently secured the highest ever sale for a domain name on a new extension when casino.online got sold for $201,250. In fact, at least 26 .ONLINE domain names purchased at a standard price ($1.2 — $55) generated $60,697 in secondary sales. That’s an RoI of 8308%! Thus, basis how the secondary market is performing, you can gather what to expect as returns when investing in a string.
Pricing is a good indicator of what kind of quality a domain name carries. A domain extension that offers very low pricing will attract wrong type of users that will lead to a lot of domain name abuse and spam, thus spoiling the quality of that extension for good. As an investor, having premium names on these low-quality extensions will make it harder for you to make a sale in the aftermarket because the value would eventually go down. So, it’s important to check what kind of users an extension has and at what pricing did they buy the domain name in the first place.
Hence, just one indicator is not enough when it comes to checking the investment potential of a new domain extension. A qualitative evaluation of each domain is crucial in deciding if they will make for a good investment. With these indicative checks listed above, you can assess which domain extensions are most likely to fetch you higher returns.
This article is also published on Medium.