Domains Take On the Economy
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I'm no economic expert, but with America on the brink of recession (or so they say) it's probably a good time for web hosting connoisseurs to examine how the domain industry might be affected. Is it truly a cause for panic, or simply incessant fear mongering? Hopefully this article will help you decide for yourself.
Let's get one thing straight: people love money. This country became great because you can make money doing just about anything – usually the stupider it is, the more money you make. So when talk of recession starts to creep its way back into the lives of working people everywhere, as it always does eventually, people tend to wonder whether their way of doing business will be able to survive the latest economic plague.
Domain names have already taken a beating once back in the early part of the decade and seem to have come back just as strong with the growth of pay-per-click (PPC) advertising and direct navigation. PPC, as the name might suggest, is when the advertisers only pay when a user clicks on the ad linking to their site. The advertisers bid on keywords their target market will likely use when searching for a product they offer. The ad is then “sponsored” on the search engine results page (SERP) or on a relevant website.
Direct navigation entails a user navigating to a website directly through the address bar. This interesting thing is that the people at WebSideStory published a report showing that direct navigation results in twice the sales that search engines do, mostly because they own multiple unused domains in their portfolio that redirect to the sites they are actually running. Also, a user could type in a domain and a page will come up with categories (sponsored ads) relevant to what they are looking for. Two words: Ching ching!
So clearly the domain industry has been good to many people. But the question remains: will PPC and direct navigation continue to thrive enough to allow domain names to garner the extravagant prices we've been seeing recently? For example, at this year's DomainFest, Bookmarks.com sold for $300,000, Photograph.com gathered $195,000, and Porn.net got $400,000 (Porn.com raked in $9.5 million last year, hotchee motchee!).
With the recession likely to wreak havoc on any number of industries, will the casualties left in its wake be able to fall back on the domain industry, or will they find themselves in the same spot they were in in the early part of the decade?
Next: How Safe Are Domains? >>
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