Perhaps the biggest scam of them all is the scam new domainers pull on themselves when they decide to go out into the domaining world and start buying domains without the requisite knowledge and experience. We’re going to look at niche domaining and trendwatching in this article, two important concepts in modern domaining for those on a limited budget and those aspiring for enormous returns on their domain investments.

Successful trend watching or niche domaining requires skill, discipline, patience, and persistence. Ideally, choose a topic which interests you so all the work involved doesn’t feel like such a burden. That said, it’s important to make sure your niche has both a reasonably large audience (or the potential for a reasonably large audience) and is reasonably wealthy — this applies not only to niche domaining and trendwatching, but domaining in general, really. The wealthier potential end users and applications of products in this niche are, the more likely you are to turn a profit should it pan out.

For most trend watching domainers, it’s a good idea to find like-minded individuals whom you’ll be able to consult with and ensure you don’t register a bunch of silly domains. It’s great to envision a future full of interstellar spacecraft powered by antimatter and deuterium-tritium fusion if you’re working on a sci-fi movie — if you’re planning on turning a profit on your domains in this century, you’ll have to unfortunately look at technologies which are a bit closer to being realized today, such as wind power and hydrogen in the alternative energy segment.

Trend watching isn’t about looking into a crystal ball and trying to predict the future, rather, trend watching is about using what information is readily available in the present and observing how this readily available information could and is shaping the near future.

Many new domainers make the mistake of entering the trend watching field unprepared. Trend watching requires excellent information sources. Bookmark websites and subscribe to blogs, forums, magazines (preferably online magazines), scientific publications, organizations, and books pertinent to your niches. Make a habit of staying up to date on current events and keep a pen and paper handy wherever you go. Trends come and go like fashion — it’s important to keep up to date on what’s hot and what’s not, realizing when it’s a good time to accept an offer and when it’s a good idea to hold out for more.

Google Insights is a free tool that tracks search query data, giving you an upper hand on the competition and helping you better estimate trend popularity. Google Alerts allows you to receive email updates whenever there are new results for your chosen search terms. Technorati and Google Blog Search should help you rapidly discover blogs relevant to your niche and keep you informed on the latest news making waves through the blogosphere.

Look at the big picture, study trends occurring across industries and relate them to your chosen niches. When studying trends, try your best to remain impartial and realistic about future potential. Don’t underestimate any technical or technological barriers which need to be overcome prior to mass consumer adoption. I often find it beneficial to keep asking why something is important until a final answer is reached. Called “5 Whys”, it’s a popular problem solving technique developed by Sakichi Toyoda.  Another technique is to think of ways to cause the problem (eg. Pollution) you’re trying to solve (eg. What are good ways to pollute?). If you know the cause, you should have a good idea of how to solve the problem.

In competitive niches, it’s important to remember that time is never on your side. The best domains related to new technologies, discoveries, or buzz words are often registered within minutes of hitting the airwaves — it’s not uncommon at all for the domain to have been taken long before then in certain niches like technology and medicine. There simply is no time to procrastinate. Effective time management starts with prioritizing what’s most important. There’s likely no better way to keep yourself motivated than to assign yourself an hourly wage and observe how expensive procrastination is. Keep an up to date To-Do list of tasks which need to be completed with each task ordered by priority. Proper organization is a must.

Don’t put all your eggs in one basket — not every trend will materialize. Others will take far longer to come about than you initially anticipated. By diversifying your holdings, you reduce your overall risk. While it’s important to have a broad perspective and observe trends occurring across industries, it’s also important to remain focused on your chosen niches. Choose niches small enough that you can invest the necessary time to become an expert in them.

“Focus on quality, not quantity”
While cornering a niche puts you in a much better position when it comes time to sell, having 20 domains in the same niche also multiplies your risk 20-fold should it not pan out. Consider that carefully before going on a buying binge. Newer domainers and trend watchers alike often get carried away registering far more domains than they should when they think they’ve found “the next big thing”. Resist the temptation and stick to strong .com, .net, and .org keywords only. As a general rule, I recommend staying away from registering multi-keyword terms in anything but .com. Ask yourself, “Would I buy this domain if I was a business in this niche?” If the answer is no, then you have no reason to register this domain.

Buying niche domains with the goal of reselling to other domainers is a very risky, albeit potentially profitable activity. Finding end users takes time, there are renewal fees associated with waiting for a trend to mature to the point where an end user might be interested, and there’s always the possibility a potential end user won’t be interested or a trend won’t pan out.

Purchasing niche domains which were previously registered but which haven’t been renewed is another option. Expired niche domains will often be backordered and this will drive up the cost of acquisition significantly. Should you choose to purchase niche domains at secondary domain name marketplaces or via backorder, it’s imperative that you stay up to date on domain name prices to avoid overpaying. If you’re putting in hours each day studying your chosen niches, you’ll likely attain expert status in those niches in no time. Share that information with others through a website or blog – place some advertising on your site and begin profiting from your knowledge months or even years before the end users come calling. Building websites out of your domains and getting them ranked in the SERPs is never a bad thing and will only add to their value when it comes time to sell. Authority sites in most niches were among the first to cover their niche (first-mover advantage).

Final Note: Niche domaining isn’t Fad Domaining (we’ll cover that another day). There’s lots of money to be made registering current event domains and what’s temporarily popular in “the now”, however niche domaining and trend watching are more about focusing on new industries and products which have the potential to achieve critical mass adoption. In certain fields (eg. health), existing products may have functional benefits which aren’t discovered until a later date – here, there exists the opportunity to purchase  these domains on the aftermarket before they really catch on. Aftermarket purchases increase the risks involved in niche domaining considerably – tread carefully should you go down this route.

Related posts:

1. First Mover Advantage
2. Domain Names in 2009
3. Domaining.com