Posted on June 14th, 2010The domain name industry is massive, representing billions of dollars in trading each and every year. What’s even more incredible is that this industry is rapidly expanding, and many new people are beginning their internet careers every year. Although the nature of every domain name is completely different, the uses of domains can be summarized into 4 stages – domains for sale, domains under construction, domains in use, and parked domains. While the first three are pretty self explanatory, the last one can be confusing to some. What exactly are parked domains, and how are people making money off of them?
Parking for Competitive Reasons
Some people buy domains to use them for their business immediately, while others simply buy them to horde them. Then there are those that strategically buy domains to prevent competitors from getting their hands on a domain that could potentially take profit our of their pockets. One example of this would be buying a domain that is similar to yours to prevent your competitors from cashing in on your success. For example, if you have a domain name called “domainname.com” then you may want purchase the domain name “domain-name.com” as this is a name that your competitors could purchase to take advantage of your popularity. Likewise, some competitors may try to do the same, simply to prevent you from buying successful domains. This kind of competitive domain parking is called squatting.
Making Money by Advertising With a Parked Domain
Another way people make money with parked domains is by selling ad space on them. There are companies that are willing to pay money to have their links placed on these parked domains, especially if the domain name pertains closely to their niche. In some cases advertising companies will pay by the month to have their links placed on your parked domain, after which you can sell the parked domain for a profit, by advertising it on business for sale sites. This is the primary method of generating funds with parked domains.
Reselling Parked Domains
Parking domains to resell them at a later date is a very common practice, especially in highly competitive niches like the health industry. Many times companies will buy domain names by thew hundreds, in an effort to create a monopoly in their industry. Some companies will buy many domains simply to resell them at a later date for a profit. A domain name only costs around $10, however the right client may be willing to pay a lot more for such a domain, simply based on preference.
Domain Drop Catching
One way to get good domain names is to assume domain names that have recently expired. This can be advantageous for people practicing SEO or reselling domains for profit. Recently expired domain often contain backlinks that are still active on the web, and in some cases they may even have a high PR already. Buying domains that are recently expired and then parking them and selling ad space on them is a perfect combination, since many advertising companies will pay more have their links on domains with higher PR and more backlinks.