Supernatural Agency: Online business tales

We are starting to see widespread indicators that we have been in a recession for a few months. There is a well-known meme that once you see acknowledgment of a recession in news headlines it means that the recession itself is nearly at an end. A glance at the NYTimes this morning has the R word popping up all over. So what does this mean for domaining and search marketing?

In search this means a big uptick in spending because PPC is so much more trackable and efficient when compared to costly traditional advertising. Traditional advertising is brand-focused, relying on strong brand awareness to create a premium over generic-branded products and services. In a strong economy brand equity has more value, in a recession people are looking to save money and brands are less important. In search value is the primary driver- we look for the best product at the best price. Marketers can easily track ROI in search. Ironically this makes search the more conservative marketing tool in that we know where the dollar goes and what it returned. You also do not incur the creative and production costs associated with print, video, outdoor, etc., a major cost differential. All your dollars go into bids and results. In a tight economy watch the dollars flow to the web.

For domainers this creates a long-term opportunity married to a short-term downturn. With less free flow of capital (liquidity) in the market the short-term market for selling domains goes down. Less liquidity equals lower prices and soft markets. The opportunity is in the recognition that if more dollars are flowing to search then there will be more demand for places online to host relevant advertising. As domainers, we are online media owners; that is, if you develop…

So, strategically, we need to sit down and plan for the long term so we’re situated to take full advantage when the economy turns upwards. Selling domains right now seems counterintuitive if you buy my theories here. Developing strong content around your domains and building traffic increases value as more marketers move dollars to the web. Think media ownership rather than URL ownership.

A final note. This recession is driven by the mortgage mess and oil prices. The mortgage mess will eventually be resolved with some short-term catastrophes. Oil will never go down to levels seen even a few years ago- worldwide demand is exploding ($2500 cars in India and China!). For domainers and online marketers this means more consumption on the web rather than costly travel to brick and mortar stores. It also means you should be thinking through a global approach to domaining- no matter how isolationist some dreamers would like to be, we’re in a global economy and our domains are global storefronts.