Domain Name investment: What is the fundamental purpose of domain names?

For domain name investors (domainers), the common thing that happens is that we end up  going so deep in domain name investing that we suddenly forget the basics. I think that the fundamentals are usually left behind, so this article I’ve written is about going back to the basics of domain names and why its important…

… Buying and selling domain names have always been a big business, as a matter of fact, average price sold I’m seeing in domain name auctions are around $500 or more. But we have to understand why the demand is there, and this is where the fundamental purpose of domain names come in:

Online Presence

– Be present online –

People invests in domain names to have their presence in the internet. When we say “presence” today, it somehow means that its about being found by search engines. Domain names play a big factor in the point system of Search engines, where related domain names get higher points (with everything else the same) than an unrelated domain name.

So today, domainers, companies and other individuals started to invest heavily into domain names as this is a way for them to compete against other domain names in search engines. For example, candy.com is bought for $3 million for a candy business startup.

Marketing

– Information sharing –

A domain name’s website is about relaying information to your visitors. So domain names must contain useful and unique content or information for their visitors to see to encourage repeat visits and the most useful SEO (Search Engine Optimization). By investing in diversified domain names, for example for candy.com, they could invest on sweetcandy.com or chewycandy.com, they could put information leading to their parent domain name which will then contain all the information about their company / business.

So basically domain names are used to give information but not limited to one website, companies / individuals should take advantage of this and invest on closely related domain name and link it back to their parent domain name.

Make money

– Make money using domain names –

The whole point here is that they we all want to make money (unless a charity or private purposes), whether it is a traditional business earning from physical sales from informed customers to e-commerce sales. Domain names are known to increase sales by multiple times hence the high values of the domain names. As traffic is directly proportional to income (higher traffic higher income), the same goes for companies that if the more people see and be informed and educated about the companies’ products and services the more they’re likely to buy.