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Understanding Online Real Estate

Positioning

Establishing market positioning is vital to success.   On the internet that is all about having the right name to begin with.   A powerful domain name will take you places and allow you to send the right message to prospective client.

Domains

Watch this auction for ad.com and you'll see what the smart money is willing to pay for premium online real estate.

Your internet presence starts with your domain.  Strong domains have the potential to reach a wide audience and deliver the message you want to send.  Your domain name establishes who you are as an individual or a company.  It is the most important part of your brand.  A great domain name is the most valuable asset your company can have online.

There is a reason this domain, not website, just an undeveloped piece of internet real estate created an auctioning frenzy. The branding power and search volume for the term is extraordinary. While your pockets may not be deep enough to get a site of this caliber, there are some very interesting options available

Online Real Estate

Your website is your own piece of internet real estate. The domain name is the address, or location of your site. Like a land based business it has a huge impact on your ability to make sales.

In the same way that a store in a high trafficked area in the city is more likely to find customers, the virtual storefront in a well trafficked area is more likely to succeed.  Like a land based business, if your site is in a remote location, you will have to work much harder at advertising your business to stay competitive.   You will have to reach out to people and convince them to come your way, and if its out of their way you are going to have to spend a significant amount of capital on your advertising budget if you want to see results.

A good name is easy to remember, just as a street address on a major road is easier to spot than a location in some out of the way location.

A good location is easy to get to.  On the internet that means your customer has to be able to find you.  If your prospective client or customer is not familiar with your brand or company name, then your brand is of no value when he is searching for what you have to sell.

Getting Traffic

The first order of business on the internet is to be what you are selling.   If you are selling jewelry then jewelry is the perfect domain name.  With a name of this type you will get people who are looking to buy exactly what you are selling.   Additionally the internet will tend to point signs directly to your storefront.   If your site name is jewelry.com, the search engines which map the information highway will easily identify what your site is all about.  

It is much easier to work with the search engine than to work against it.   If your name represents exactly what your products are then search engine optimization becomes much easier.   Even in heavily competitive areas of the web, having the exact search phrase for your name is going to put you miles ahead of the competition.

To take a hypothetical example.  

This choice is completely arbitrary and random, no idea if this is a real company...at this time it is literally a vacant lot on the internet.  Apparently unregistered, certainly no site resolving at that location, at the time of this writing.

Say you had a travel company "Overland Destinations" and you parked yourself on the internet using your brand name as your address space.  You snapped up OverlandDestinations.com, which may have well been available for a nominal fee. 

In this scenario you now have a cheap piece of real estate.  Unfortunately it is a long ways from where your customers are looking.   

Immediately you are faced with several challenges, which to the knowledgeable virtual realtor are immediately obvious.

1. Overland Destinations is only loosely related to travel.  While your existing customers may know about your great service and will follow the domain on your business card, to the rest of the world you are unknown.  

2. If by chance overland destinations is searched for, chances are good that the visitor is not even looking for a travel site.   Chances are they are in a learning mode rather than a buying mode.

3. You are remote.  In a very distant and dark corner of internet namespace.  I know this because I checked.  There are so few searches for "overland travel" that the search engine tracking systems show completely undetermined results.  Only rarely will a lone straggler have a reasonable chance of finding your site, even if you dominate the search engines for overland travel.

4. About this time it dawns on you that you have built your business in the virtual equivelant of the gobi desert.   Miles away from any living thing, let alone a potential customer.   After having a site up for a month and no traffic you suddenly begin to realize why the virtual real estate was so cheap.  In fact the name overland destinations begins to take on an entirely new meaning. 

Strategies

At this juncture you have a few options.   You've built up your property a bit and realized that customers are hard to find.   You can go out of business, promote aggressively, relocate or expanding to a new location where people will actually find you.  Lets break down these strategies in the virtual marketplace.   We will assume staying in business is the first priority.

Relocation

This is usually the best choice.   Now that you know what you are doing, go find a good piece of real estate and build there.   In most cases it is easier to move a virtual asset than a physical asset.   Depending on the amount of development you've done, this can be a daunting task.   Regardless, a mega-mall in the middle of the Gobi Desert is probably not a winning business decision.  

Purchasing a strong piece of online real estate is a winning strategy.   The expense may be significant, but negotiation is often an option.  As in real estate, some deals are simply better than others.   Ideally you identify your market and move to where your products or services will be seen.

In virtual real estate, as in land based real estate the same rules apply. 

Location Location Location

Promoting Online

Another strategy in online retail is to promote like crazy.  This can yield results, but works best if you have a simple and memorable name.   A short memorable name like Zogza.com is going to work much better for this than a long and undistinctive name such as OverlandDestinations.com which in turn will work much better than a name such as UltimateOnlineDestinationsForYourFavortieStuff.com

A domain such as Zogza.com is defined as a brandable.   It is short enough to type, remember and talk about, sounds cool and has potential for promotion.   It has almost no competition in its name space, but has the potential to be the core of an online empire.   Examples of established brandable domains would be YouTube.com, Flickr.com, or Orbitz.com

On the face of it, this seems like a good strategy.  Even from the outset.  The problem is this strategy is very expensive to implement.  Yes, you will stand out from the competition, but you will spend a fortune getting the word out.

The bottom line is that its a lot less expensive to promote your brand by leading a search category than to pay for traffic by using adwords, affiliate marketing for your stores, using television advertising or other forms of traditional marketing.   Until Orbitz was an established household name, people were not typing it into search engines.   That brand recognition was created by a ton of advertising and marketing expenses.  

Had the name been Tickets.com, a highly searched and recognizable name, the journey would have been much easier.   A significant percentage of searches are typed directly into the address bar on the browser.   Thats the equivelant of having a real world store in a premium location, no advertising or even site development is really required.   Any work that went into site development has a huge head start because with a name like Tickets, the search engines expect there to be some sort of ticket sales going on there.    Any site content would simply reaffirm that, and make it easier to achieve top ranking.

Unless you have a prime piece of real estate in an undiscovered location, in the form of a solid brandable name, and the resources to develop it properly then the choice becomes one of relocation or expansion.

Expansion

Expansion in the virtual market place is often an attractive option, even if your virtual real estate is sub prime. 

After all, your existing customers know where to find you.   You have the advantage of being able to cross-promote your sites as the new and better location begins to be built up.   Additional sites allow for very focused or very broad marketing, depending on your needs.   

In almost all cases it is smarter to get quality real estate in the virtual marketplace than to promote what is essentially a bad neighborhood.   Advertising costs for some online operations run in the millions of dollars per year.  A solid domain name is usually a much better investment and budgetary decision.

When expanding there are a variety of strategies that can be employed.   You can simply get the highest quality name you can find and invest heavily.   This option may be out of reach of many business operations.  

Market Strategies

You can alternatively choose to get a solid piece of commercial real estate that is in a trafficked area, but maybe not right in the middle of virtual downtown where the prices are very big league.    A second strategy is to get a great location in a newer area of town that is growing fast.   In virtual real estate this would be choosing a great keyword in a non dotcom extension.   Ultimately that is an entire subject in itself.   The third strategy in this game plan is to get several very well defined locations and interlink them.

Each of these plans has their strengths and weaknesses.   The more assets you develop the wider you need to spread your talent and time resources.   It may take several second tier or third tier locations to produce the results that a single well placed location can bring.    However, the more defined a site is, the more likely it is to attract paying customers rather than window shoppers.

Niche Targeting

The web is full of niche targeted sites with a high degree of focus.   A quick exploration of most three or four word search phrases will bring up sites that are designed to capitalize on the specific traffic of that niche, whether it is "designer lingerie styles", or "long term care insurance".   Some niches are very competitive, due to the nature of what they represent and the market they can reach.

This focuses on a narrow segmant of virtual real estate.  However, it has a very specific name and will attract people interested in buying yellow sapphire rings.    A company in the jewelry business could use this as an anchor to diversify into a wider range of products by cross selling on the same site or to similar sites.   While it is not in the same prime neighborhood as jewelry.com or diamonds.com, the rent is reasonable and it will receive visitors on a regular basis.   Visitors can be converted to sales by a nicely developed portion of virtual real estate, but it is important to be on a clearly marked lane of travel.  

One advantage of having a very specific site is that you can compete aggressively for customers within the arc of your domain name's reach.   A site with a name such as "yellow sapphire rings"  will often outperform major retailers with broader scope, within that particular niche.   Major sites built on a major keyword can and often do use niche sites to funnel traffic to the main site or to increase their market share within niche sectors.    Related names also tend to reinforce each others credibility with the search engines which are the ultimate arbitrators of the virtual realty market.

Advertising Budget

If you consider your domain name as the most important part of your advertising budget, you have already adjusted your perspective accurately.   As a rule it is more cost effective to have accurate signage than to drive traffic to an obscure location.

While there are less expensive forms of advertising, such as guerilla marketing and viral campaigns, they tend to require a significant investment in terms of time.   While marketing rarely hurts a site, time and resources devoted to a marketing campaign can usually be better used in site development.   By making a single smart investment in your domain name you can save substantial amounts of money in the long run.  Ad support for a good name is much less expensive and more effective in terms of time and returns than trying to promote online real estate of lower quality.

Online Real Estate Sales

In conventional real estate sales, it is easier to sell a well constructed property in a quality location, than a house in need of repairs in an undesirable neighborhood. In the business of online real estate it is better for both the buyer and seller to find a location that suits their needs and develop a property with strong potentials.  

In a commercial setting, which most online realty involves, it is always a solid plan to start with a good location.   Development just increases value.   Development of quality real estate increases value of the property faster than development of a less optimal location.  

Whether you are looking to set up a boutique site and grab a small slice of the internet marketplace or planning to set up the biggest storefront in the online world, the same principles apply.   Targeted traffic is the key.   Even in very competitive sectors, location is a vital part of the online strategy if you plan on making sales of any type.

Learn more about becoming an online sales leader by following the business and real estate sections of this site as it develops.   In the spirit of virtual real estate, this site will soon be showcasing various virtual assets and making them available to buyers who know good properties when they see them.  If you doubt there is money to be made, a quick visit to dnjournal.com should help resolve your questions.