Credit markets, home prices, and stock markets are down. What does it mean for your domain portfolio?
Here are some of the headlines on CNNMoney.com right now:
“Gas prices surge nearly 5 cents”
“Industrial output dives more than forecast”
“AIG pummeled 51%”
“What to do if your broker fails”
“Worst far from over”
“Lehman files for bankruptcy”
Ouch.
So what does this mean for domain owners?
If you look at domain names as an asset class (and relatively few people do), one of two things could happen. First, if stock markets look like they’ll continue their slide then people would move money to more stable assets. That may include high quality generic domain names. Or, if people have lost lots of money in the stock market they may not have much left to invest in domains.
The keys are diversification and a long term view of the market. As I wrote last week, domain names seem to have more stable values than stocks right now. Your domain values won’t drop 50% overnight just because some CEO made a bad decision.
But won’t that affect pay-per-click revenue in the long run? Perhaps. Let’s face it, there are fewer people buying mortgage leads online these days. Or at least they aren’t willing to pay as much for them. Nevertheless, no one would argue that ten or twenty years from now online advertising revenue will be less than it is today.
It’s going to be rough, and long tail domain investors in particular are being squeezed. But that doesn’t mean you should run away. I took a breather from the domain market after the dot.com bust. I saw all of these guys hanging out on the GreatDomains chat board and I wondered why they were wasting their time trying to come up with ways to still make money with domains. I missed out on the biggest buying opportunity since 1994. I don’t want to miss out again.
David J Castello says
Good article, Andrew. Here’s my take:
In the short term, there will be less money to invest in domain names (which means that, like 2002, now is a great time to buy). However, this plateau will not last long. The next boom will be soon after the first wave of Vanity TLDs are released. These will flood (confuse) the public and will drive the price of top level generic and Geo dotCom/ccTLD domains through the roof. Furthermore, those who believe that search engines will nulify the value of domains are betting on the wrong side of the track. It all comes down to simple branding that the public can instantly remember and search engines have no effect on the power of domains in cable, radio, billboards and print advertising.
Shuwix says
Yes, might be good time to buy.
US economy will go up soon. FED will bring cripsy new money to save Bankers asses, US will bomb for example Iran to make more power above crude oil to make inflating dollar still NEEDED currency. People that have lost thier weekend houses are now free from loans so they will have more spare money and pump up consumption of goods and services.
And then all the “cheap” domains with rising value cause there will be less and less good names for hand reg will rise on value.
Johnny says
Andrew… nice article.
I keep hearing about the long tail being squeezed. Why is this? Long-tail domains convert better than broad keyword domains, so why would big G want to squeeze it? What’s their point?
Thanks… Johnny
Andrew says
Johnny – a couple reasons. First, it’s difficult to manage the long tail. Second, the arbitrage crack down has significantly reduced the number of advertisers for long tail terms.