HDG Explains : What Is a Parked Domain & What Are Its Advantages?

If you’re looking for an explanation of what is a parked domain and the advantages it can bring, you may find it difficult to find everything you need to know in one place. The concept of a parked domain is easy to understand, but it can get complicated. There’s an entire industry surrounding parked domains.

Where this article differs to others is in the smaller details. By the time you’ve finished reading, you’ll know all about parked domains, but you’ll also know the advantages of setting one up and why there’s such a large market for parked domains.

What is a Domain?

Let’s first start with the basics. A domain is the identification used to represent a website, app or email. For example, YouTube is a website we all recognize, but the domain for YouTube is www.youtube.com. Essentially, the domain is the web address.

What is a Parked Domain?

A standard domain is registered with the goal of assigning that domain name to a website. For example, www.youtube.com will send you straight to the YouTube website.

However, a parked domain is registered with the goal of keeping hold of that domain so nobody else can own it. The domain itself may not link to any content, but by being the owner of a domain, you can ensure nobody else will take it from you.

Anybody can purchase a domain through many different domain registrars. It’s as easy as searching for a domain on a website like GoDaddy and purchasing it if it’s available. For this reason, parking a domain can be very important.

There are many reasons why it makes sense for a company to park a domain, and there are also other opportunities available for those with a keen eye for good domain names. Let’s talk about this more in the next section.

The Benefits of a Parked Domain

To fully understand the benefits of a parked domain, you have to imagine two different scenarios. One from a company and one from a domain reseller. Let’s first start with the mindset of a company.

Let’s say you own YouTube, and you know that a portion of your users come from the United Kingdom. Many UK websites use unique .co.uk domains, and some websites have regional specific versions of their websites that use .co.uk instead of .com.

Because YouTube wants to make sure users from the UK visit their actual website, YouTube will purchase and park the Youtube.co.uk domain. On the back end, they can set it up so that Youtube.co.uk will automatically redirect to the main Youtube.com website.

By purchasing the Youtube.co.uk domain, UK visitors will still be able to find YouTube, and YouTube prevents a bad actor from purchasing the YouTube.co.uk domain. If another individual owned YouTube.co.uk, they could use it to spam users with ads, trick users into giving over their real YouTube credentials through phishing attempts, or demand that YouTube’s owners pay them a large sum of money to hand over rights of the domain.

These are just a few examples of the benefits of a parked domain for a company. But there are more examples too.

Let’s say you are Marvel, working to create a new movie that stars the character Quicksilver that you’re planning to release in 2 years. If you plan to run a marketing campaign that uses the domain quicksilvermovie.com, you’ll need to purchase and park that domain so that you can use it later before the name Quicksilver becomes popular.

If rumors were to spread about your movie early, and you hadn’t already purchased your domain, somebody else could purchase it and that could damage your marketing campaign.

There are other great benefits for parking domains for profit, too. In fact, there’s an entire industry around making profit on buying and reselling domains. These days, getting hold of a good domain to sell can be difficult, because the market is so competitive.

But let’s say you were able to get into the business early, and you purchased the domain chicken.com. Throughout the lifetime of the internet, the number of people across the world curious about what happens when you type chicken.com into the address window has to be pretty high. So how would somebody go about monetizing such an opportunity?

Monetizing Parked Domains

One of the main methods for monetizing parked domains is to place adverts on it. So when somebody visits your website, adverts will display that may be related to the website name.

There are services that specialize in monitoring traffic and displaying relevant adverts to parked domains. For example, above.com specializes in all things domain-related, and they have brought in over $500 million in revenue from advertising on parked domains. 

Advertising on parked domains isn’t the only monetization method either. Domain resellers will often purchase websites with good names and then resell them for profit. Companies will pay big money to get access to some domain names, so it can be profitable to hold onto domains if possible.

In fact, there’s such a thing as a domain broker – a hireable assistant that will help you to track down and negotiate with the owners of unique domains. Some domains have sold for multiple millions of dollars in the past. But who would pay so much for a domain? Below are some examples.

Hotels.com sold for $11 million in 2001 to help grow a worldwide hotel finder website. At the time, it seemed like a large sum of money, but 11 years later David Roche, president of Hotels.com said “Now we look back and think, what a bargain.”

Tesla.com sold for $11 million with great effort in 2014 as a marketing attempt by Tesla, inc, because they believed teslamotors.com didn’t fit their overall future plans for the company.

There are many other examples in history that explain how valuable it can be to own and park certain domains.

Summary

Hopefully our explanation on what is a parked domain and how they work has been useful. Do you have any other questions about parked domains? If so, leave a comment below.