Our recent piece about domaining attracted quite a bit of interest, so we thought we’d try to demystify a couple of related areas too.

We’ve decided to start with domain parking. This is, basically, a way to make money from domain names.

If you’ve spent much time registering domains, or reading about the industries that have sprung up around them, you’ve probably come across the concept at some point.

So how does it work?

A parked domain is one which has been bought and then used to display a single page. At its simplest, a parked domain could point to an ‘under construction’ page. You could even fit it out with an early-90s throwback roadworks sign for that retro feel.

A domain is usually parked in this way when the owner is planning to use it for something, but just hasn’t got round to it yet. Domain parking is also sometimes used to protect a brand name – usually the owner of the brand will redirect the parked domain to their main website (so yourbrand.co.uk might redirect to yourbrand.com).

How do people make money from it?

Many domain names are parked in a way which generates cash for the owner. The revenue usually comes from adverts which are displayed on the parked domain’s page. Each time an advert gets clicked on, the owner of the domain receives a small payment.

That’s fine, but where do the visitors come from?

If you run a website, you’ll know that it can be difficult to attract visitors to begin with. That’s because when a domain name is registered for the first time, it doesn’t have any online history. There aren’t any pages for the domain listed in Google, and people can’t type the domain straight into their browser, because they don’t know that it even exists.

To get round this problem, the people who want to generate meaningful revenue with parked domains look for specific types of domains to exploit:

  • Recently dropped domains. These are domain names which a previous owner has allowed to expire. Because they’ve been registered previously, they often have an established history in Google, and potentially some residual ‘type-in traffic’ (visitors who know the site and type the domain name straight into their web browser). A recent report found lots of expired domains get re-registered in less than ten seconds. Many of them will be used for domain parking.
  • Generic domain names. It’s surprising how many people type a word into the address bar of their web browser when looking for information. If you own a domain name containing a generic word or term (it could be computers.com, holidays.co.uk or anything really) then you might be surprised to see how much type-in traffic it gets.
  • Domain names containing typos. This one’s controversial and definitely towards the shadier end of domain parking. Essentially, people register domain names that are very similar to other words or brands. They’re usually a misspelt word or brand name. It can be unpleasant if you’re the target of this sort of ‘typo-squatting’, but judging from the amount of it going on, there’s money to be made from it.

The clever stuff

In truth, I’ve barely scraped the surface of domain parking here. You should have a handle on the basics now, but in practice, there are lots of clever things domain owners do with parked domains to maximise the revenue they generate.

For a start, many of the services that insert ads onto pages are context-sensitive. That means they look at words used in the domain name and on the page, and then display adverts they think will be relevant. This targeted advertising can boost the click rate significantly, because people who arrive at the parked page find the adverts relevant.

Some parked pages offer a search option. This usually displays adverts as results. Again, when a visitor clicks, the domain owner gets a cut. This works well because the parked page invites the user to enter exactly what they’re looking for, making it easier to show targeted adverts.

How much can you make?

There’s lots of hype surrounding domain parking, and if you hunt around you’ll soon encounter claims of huge returns.

While this may be possible for very generic domain names (something like cruises.co.uk, which isn’t currently parked, but did exchange hands for £560,000 last year), the truth is that most parked domains will produce rather less-impressive returns.

Having said that, they can provide a steady stream of income. Parking a domain you’re not using can be a good way to make it pay its way, and if you pick your domain names carefully, you can see a good rate of return.

More information

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Comment

6 Responses

  • Rachel Cuckson

    Interesting! So if I own the domain and YOU use it without my permission to place adverts on – who makes the money? And what gives the registrar the right to use a domain for parked adverts without the permission of the owner?

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    December 22, 2008 at 11:09 pm
  • Lee

    Unfortunately although there are a small number of parked domains which have a useful purpose the majority are the evil of the internet. While looking for a suitable domain name it has become aparent that something like 80% of all domain names are simple ad sites which are expoiting the way domain registration works. Worse still are the many that take on a domain that clearly refers to an existing organisation in order to make ad revenue from the accidental hits. Look at http://www.birchfieldharriers.co.uk for example. Birchfield Harriers is one of the oldest Athletic clubs in the UK and is also known around the world. However domain simply has athletics related ads. Obviously the club could appeal to Nominet but this costs something in the region of £1000 which for a charity is pretty much out of the question. This would also be true of any small business (especially in these hard economic times) and so unfortunatley for the people involved these scumbags get away with using a known name to make money. Also Nominet seems to be completely uninterested in the problems this causes (as they make their money regardless). As these names are all registered by robots it would be very simple to restrict the practice by limiting the number of domains any one person or company can register in a 24 hour period plus using captures to ensure that a person has to do the work of registering the domain. The problem is almost as big as spam in my mind yet no one seems too bothered.

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    December 23, 2008 at 10:04 am
  • John

    Hi Rachel,

    Thanks for the comments. You’re right – if a domain is registered, many registrars (including 123-reg) have a default a holding page which sometimes contains adverts.

    However, this is simply the default option while the domain isn’t being used for anything else. With 123-reg at least, you always have full control of your domains, and you can point them wherever you like.

    The easiest way to do this is to log in to your control panel and use the web forwarding option.

    Thanks,

    John.

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    December 23, 2008 at 11:01 am
  • Kirston Murray

    I have an Amazon affiliate site and guess what I am not earning a penny.
    This seems to be the story of most peoples lives and at the moment just paying every month my hosting account.
    The company hosting this are supposed to be doing advertising in the top search engines as well as article submissions for me of which I paid for but still nothing.
    I feel I have been ripped off with this site.
    I have been informed that I cannot park my site and if it is not used for a month they will re sell this.
    I would like to know more about your Domains and how this all works.
    It really would be nice to find something that really works.
    I have spent lots on advertising from bulk emailing to search engines and still nothing.

    Regards,
    Kirston.

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    June 9, 2009 at 12:43 pm
  • Dave

    Sorry Kirston, looks like you had to learn the hard way that you can’t earn money doing nothing.

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    August 27, 2009 at 1:29 pm
  • jim geraghty

    Thank you good fellow i have5 domain names exactly what you said i have been waiting for a chance to improve my status to open and display , you are right the time is now.

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    August 30, 2009 at 9:42 pm