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Don’t Lose Your Assets by Failing to Properly Monetize Your Domains

December 12th, 2007 by Mike Mann

Domains worth over $100,000 are essentially unique, branded small businesses. You can choose to ignore them and leave them idle, or place an enormous amount of resources on each, or somewhere in between. In any case, they are ongoing business concerns, which should be respected and managed accordingly.

The fluctuating market for domain brands is thinly traded. The risk inherent in owning them, the Internet advertising market, the stock market, and the economy overall are constantly in flux. So if you own a digital asset of this value, then its valuation is fluctuating whether you like it or not. If you have a domain worth $1M, then throughout its lifecycle, the domain may have been worth $70, $1,000, $50,000, $1M, $5M, $1M, $500,000, $1M, $250,000, etc. while being left to its own devices.

But our assertion is that if you are actively working on design, ecommerce conversion, SEO, SEM, arbitrage, application building, partner building, staff development, etc., or some combination of those opportunities, then you are optimizing your asset or small business the right way. If it has a significant value, as proven by its 100K plus valuation (which is constantly in flux), then you would be harming yourself by not building the asset or at least trying your best. And by proactively adding value and traffic into a business with ideas, code, customers, etc., instead of lame basic PPC parking, you keep the valuations moving up during what would ordinarily be stressful cycles of asset fluctuations.

Under this improved model, the domain valuation that you had been mistakenly banking on merely serves as a downside hedge. Your killer, evolving business, using a world-class domain brand, may not grow the way you had planned. Yet you are still covered by owning a great domain and any value that you added to it in the same risky fluctuating market where you started, hopefully at a higher natural baseline due to an evolving market (similar to a convertible bond).

If you really own some of the world’s best, unused domain brands, you are being negligent every day that you aren’t working on improving them. You are losing opportunity, which is extremely expensive for you. Look around, and you will find that Phone.com, SEO.com, Software.com, HappyBirthday.com and thousands of others are MUCH better off as companies being built, not domains being parked and neglected.

From my book:

“Every time you fail to assertively take advantage of all opportunities and employ all Best Practices, you are essentially throwing cash right in the garbage (or even worse, into the hands of your competitors). This money is called Opportunity Cost.

Controlling opportunities requires a careful setting of priorities. An example would be if you spend 100 hours to make $100K when you could have chosen a better business option and spent 100 hours to make $200K, then the Opportunity Cost is $100K. You lost $100K–the cost of making the wrong decision. The opportunity to improve in all areas of business is always at hand if you pay attention.”

In this case, the opportunity cost of not developing the world’s best domains is too high, so they should all be proactively developed like any other ongoing business.