In today’s web-centric world, the right domain name has never been more valuable, offering serious business advantages like online visibility, professionalism, and brandability. But with over half a million new websites being registered every day, companies are often unable to secure their first choice domain, forcing them to either go for something else or pay above the odds to take it off the owner’s hands.

The demand for premium domains—and the money that can be made from them—has given rise to the practice of domain investing. Many speculators are now spending money on what they deem to be potentially valuable domain names with the hope of making a future profit. Some domain names are known to fetch tens of millions of pounds, and many are regularly selling for tens to hundreds of thousands, so it can certainly be a viable investment route—as long as you know what you’re doing.

1.    Put quality over quantity

Domains are typically pretty cheap, so you could probably register hundreds or even thousands of them without breaking the bank. A lot of people do just this, in the belief that they will strike gold with at least a few of them. But does owning so many domains give you a realistic shot of turning a profit? Probably not.

These domains are often cheap for a reason—perhaps they’re just unimaginative or have an undesirable extension (more on that later). Whatever the reason, this means that people will be unlikely to spend the big bucks on them in the future, making them a poor investment choice. This strategy is also inadvisable due to the hidden costs involved. You will not only have to pay fees to use auction sites in the first place but will also end up paying registration fees for any domains you do register. So, instead of buying a high volume of random domains in an attempt to make a profit, focus on carefully selecting a few, good quality domains.

2. Consider brandability

Arguably the biggest measure of a domain’s quality is the brandability—in other words, how it conveys “the character, values, or qualities of the brand, product, or service”. A brandable domain doesn’t even have to indicate what a business is actually about, although this requires a long-term strategy. Take Amazon.com, for instance. While the domain doesn’t tell users exactly what Amazon does, it is certainly not generic and was chosen to evoke scale, considering the size of the Amazon. This fits in perfectly with what the business does, with its ethos of becoming the “earth’s most customer-centric company”.

Generic sounding domains like ‘popcorn.com’ or ‘computers.com’ probably won’t become in-demand any time soon, unlike unique domains which could easily become the next big brand name. Generally speaking, the shorter the better, as brandable domains should be catchy as well as unique. If you have to repeat the name four or five times before somebody understands or remembers it, chances are it’s not brandable.

If you’re struggling to think of inspired names yourself, a great shortcut is to consider some domain generator tools. Take brandable domain company Novanym, whose business name generator is aimed specifically at prospective business owners. The generator takes the user’s inputted keyword, business sector, and selected name style—with options including dynamic and corporate names—and gives them a selection of relevant domain names, as well as their prices. This makes it a useful way of gauging the cost of different domains, which can inform your purchasing choices, and investments, further down the line.

3. Avoid overhyped extensions

Another mark of domain quality is its extension, also known as a Top-Level Domain (TLD) and is what comes after the dot at the end of its URL. The king of TLD’s is .com, and as one of the first extensions to be created, it is trusted by internet users across the globe. Just under half of all websites use a .com suffix, while it also gives brands perceived value, with 99% of Fortune 500 companies holding .com domains.

Although you may be tempted to go for cheaper domains, you’re less likely to profit from them in the long run. As many as 67% of marketers admitted that they were less likely to trust quotes from a website with a .insurance extension rather than a traditional TLD. This can then affect your click-through rates, which has a knock-on effect on your SEO and rankings. As the majority of the public trust a traditional .com domain, we recommend sticking with this TLDs.