I’ve talked about domain development and ways to develop domains a lot on this blog lately, however I haven’t spent any time discussing what type of websites would be best to develop. If you’re trying to build a website that will really stand out from the crowd and have a chance to be one of the best sites in it’s niche, it only makes sense to with with something niche — eg. creating a blog about domain names means your competing for visitors with 50+ other domain blogs out there, however if you pick something a little more niche, say 4 letter domains which is what this blog and my previous blog used to be about, you only have a couple competitors and it’s much easier to establish yourself as an authority.

Why would you want to establish yourself as an authority? For on thing, I’ve received a lot of links from people linking to my LLLL.com price guides — I was the first person to start actively blogging about the current state of the LLLL.com market and hence, it was relatively easy to acquire both visitors and links from people that were interested in 4 letter domains. Not interested in LLLL.coms but want to start a domain blog just the same? Why not blog about a ccTLD you like, about flipping domains, about developing domains, or news about companies important in the domain name world? Any of these are not only great topics to blog about however they also separate your blog from about 80-90% of the blogs out there and make it that much easier for yours.

It’s not necessary that you’re the very first person in a market, however if you’re the first person to make a significant entry into the market, your chances of success are much higher than people coming into the market after you. There are 2 ways to substantially limit your competition and greatly increase your chances of success:

1) Be the first significant entry into the market

2) Choose a very niche subject and build a reputation as an expert on that subject

3) Offer something radically different, better, or more efficent/cost-effective than existing competitors

If you’re able to capture the entire market before any competitors come along, it’s pretty easy to understand how you’re at a competitive advantage. There’s a strong correlation between smaller niches and higher probability of the first mover succeeding in capturing a significant portion of the market — competitors may have to win over your customers to even break-even which is an undesirable position to be in and will likely limit market participants. The one thing someone needs to be careful of when looking at entering a niche or new market is the expected size of the market. You don’t want to go so niche that the success of your website depends on external factors you have no control over or that won’t yield a respectable profit even if you capture 100% of the market.

First movers need to be careful of are what’s known as free-rider effects — someone making a late entry into your market, studying what you’ve done and finding a way to do it better. Google could be considered a good example of that in the search engine market — there were plenty of competitors already in that market however Google managed to capture the tech crowd with it’s better results and soon through word of mouth became an industry heavyweight. Even if you were to make a better search engine than Google today, you’d have a very hard time overtaking it for a few reasons — not the least of which is the enormous costs associated with building a search engine as capable as Google and finding angel investors willing to back such a project. That having been said, I’m sure most people thought that of Google when they made their market entry in 1998.

If we look at the blogging world, we can see that Steve Pavlina, Darren Rowse, John Chow, Mashable, etc were all among the first to enter their respective markets and hence, received a lot of extra attention they likely wouldn’t have received had they entered today instead of when they did. Not really any different than domaining — a few people manage to do okay for themselves while coming late into the game, however pretty much anyone who bought domains in the early 90s is sitting pretty.

I’ve talked about niche domaining and trendwatching before — that really is the best way to acquire a first mover advantage. What do you think is going to be popular in 2-3 years time? Niche development means you need to establish yourself as an authority before it goes mainstream — otherwise you’re just one of the many vying for market share. There are plenty of tools out there to monitor trends — check out Trend Domaining to see a domain blog dedicated to the study of trends. Another nice thing about going niche is that advertisers are getting highly targeted traffic which will no doubt yield a higher CPM than had you gone with something broader (read as: less targeted). It’ll be easier to come up with unique content because of the limited number of competitors and visitors will most likely be much more interested in what you’re writing because they’re specifically interested in the exact subject you’re covering. Another bonus of getting into a market before it really takes off is that you can easily rank high in the SERPs.

Everything I talk about on this blog seems to invariably go back to the quantity versus quality debate — do you want a lot of untargeted visitors or targeted visitors who are bound to come back day after day because your site is exactly what they’re looking for?

Related posts:

1. One Reason to buy a few Cheap Domains
2. Reputation Management
3. Domaining.com