While the ultimate goal for a domain name investor is likely to be a high-ticket sale or lucrative leasing agreement, the downside is that domains cost real money to maintain. Each additional domain in an investor's portfolio adds $10-12 to the total maintenance bill due each year.

At face value, a $10 annual fee is hardly going to trouble a serious investor - but for a domain portfolio consisting of several hundred domains, the total fixed costs balloon to mid-$4 figures a year.

This hefty fee creates a significant "renewal hole" that has to be bridged for an investor to even maintain parity, let alone make any kind of profit from their domain portfolio. For example, the portfolio of a domain investor with 250 domains must generate $2,500 a year (assuming renewals at $10 each) every year just to pay the renewal fee for all those domains. This is beginning to sound like the Red Queen in Alice in Wonderland... you have to run as fast as you can just to keep up!

It therefore pays to squeeze every drop of revenue out of a domain portfolio, even while hanging on and waiting for that big sale.

There are 2 main ways to derive an income from a portfolio of domain names, assuming that they get at least a minimum of traffic. This traffic might be in the form of typeins - people typing www.DOMAIN.com into their browsers to see what's there - or from old links, in the case of domains that used to be websites before they expired.

1) Affiliate Programs

If you have domain names that are getting even a handful of visitors a day, and you can work out exactly what those visitors might be looking for, then affiliate programs are likely to be the easiest way to earn some money from the domains.

For example, if you have the domain MagazineSubscriptions.com, then every day you might find that a few people type the domain into their browser to see what happens. By signing up for an appropriate affiliate program LINK, and redirecting the traffic straight to it, you can capitalize on this traffic by turning highly-targeted visitors into buyers.

When you're looking for appropriate affiliate programs to join, you should consider the major affiliate networks such as Commission Junction, LinkShare, ShareASale and FineClicks.

2) Pay per click search engines and bulk traffic aggregators

If you have more general traffic - or traffic that is not immediately commercial - you can send it to pay-per-click search engines and bulk traffic aggregators (sites that specialize in taking in large quantities of untargeted visitors and matching them up with useful sponsored links)

Pay per click search engines will typically offer a bounty of a few cents for every visitor that visits their "landing page" (a special page populated by popular search terms) and then clicks on a link. Some PPC search engines pay a flat fee per click; others pay a percentage of the revenue they receive for each visit. Some examples of PPC search engines are 7Search.com and Search123.com.

Bulk traffic aggregators operate in a similar way to PPC search engines, in that they take unfocused traffic and try to shoehorn it into commercial interest categories that PAY. Many of these services have been established specifically to handle the needs of people with large portfolios of domain names, since they offer additional services such as the ability to add a "Domain for Sale" notice or personalized greeting on the landing page, something that PPC search engines generally lack. Examples of bulk traffic aggregators include Trafficz.com and NameRenters.com.

The importance of the "domain dividend"

The revenue that can be generated from dormant domains (domains awaiting a buyer, and not pointed at an existing site) using PPC/bulk traffic services and affiliate programs is the domain world's equivalent of the dividend that stockholders receive on the stocks in their portfolio.

A revenue of just $0.01 a day per domain adds up to be $3.65 per domain per year. This would effectively cut the "renewal hole" on a portfolio of 250 domains by over $900 a year - real money that never had to leave the domain investor's pocket!

In other words, it's worth setting up some method of income generation to monetize domains with even trivial amounts of traffic - a targeted affiliate program might generate $0.01 a day (on average) from just ONE daily visitor!

Before we leave the topic of domain investment, we'll take a look at some of the pitfalls lying in wait for novice investors.

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