GENERAL MARKETING | 5 MIN READ

There is a form of marketing that not many people know about. It’s called digital real estate marketing and it’s proven to be a very lucrative way to earn a living for some. But what is digital real estate marketing, how does it work, is it legal, and do we think there’s a place for it in the future?

We answer all of these questions and more in this article. By the end, you’ll understand digital real estate marketing at a level that will help you know how (if at all) you wish to leverage this strategy for your company or as a personal enterprise.

First, to understand how to properly use digital real estate marketing to your financial advantage, we have to know what it is…

Not a lot of time? Jump to what you need:

What is Digital Real Estate Marketing?

What is Cybersquatting?

How Does Digital Real Estate Marketing Work?

Is Digital Real Estate Marketing Illegal?

What’s the Difference?

What is Digital Real Estate Marketing?

Digital real estate marketing (sometimes confused as cybersquatting) is the act of purchasing website domains and selling them to interested parties at a future date, often for substantially higher prices than their original purchase values. This is typically accomplished by purchasing a very specific domain that would be valuable to a company or person with a connection to the domain name (ex: johnsmith.com). A digital real estate marketer would list and sell such a domain name through a broker or hosting company.

What is Cybersquatting?

Cybersquatting is the act of purchasing a domain (sometimes intentionally to target an individual or company) and leveraging it to receive a premium on the purchase of the domain address.

The motives behind this have been gray in the past. Some individuals see this form of digital real estate marketing as extortion, and in some instances, it certainly can be. We will go into the differences between the two later in this article, but first, how does digital real estate marketing work?

How Does Digital Real Estate Marketing Work?

People have been purchasing and selling web domains since it was possible to purchase domains and build websites. Over time, though, this has become increasingly more difficult to make profitable.

Back in the early ’90s, domains were plentiful. Digital real estate entrepreneurs could purchase common domain names easily and relatively cheaply. Companies would pay large dollars to make sure they had the perfect domain. After all, if a domain is clever or short, it’s going to be less likely someone will forget it.

That principle still applies today, but it’s slightly more complicated now than it was a few decades ago. Yes, short domains that are the exact name of a company are still valuable, but since companies know they need a website from the beginning, the opportunity isn’t available like it used to be. It is rare to find a company who has selected a company without being able to secure a domain that they find satisfactory.

Now, digital real estate marketers need to have more than a good domain name. Yes, that’s still important, but because it isn’t as lucrative as it once was, these entrepreneurs have pivoted to more full-service models.

This means that instead of “sitting” on a domain until someone comes along to buy, they build out websites and increase the domain’s value and authority. Now, a person buying a domain may be able to rank their site and its content more quickly if they choose to purchase their domain from someone who has taken these extra steps.

Other digital real estate professionals choose not to sell domains and instead offer a rental service that includes a fully functioning website. This creates a consistent stream of income for the domain owner and a cheaper alternative to purchasing the perfect domain for the business owner (at least short term).

The downside to this approach, of course, is that the business owner never truly has autonomy over their domain and may find themselves forced to rent indefinitely or pay an even higher premium to own the domain in the future.

Is Digital Real Estate Marketing Illegal?

Is Digital Real Estate Marketing Illegal

No, it isn’t illegal. It is perfectly legal to purchase a domain and market it to be sold. There is, however, precedence for individuals who willfully purchase a domain just to sell it to a single entity at a high premium.

In 2000, a cybersquatter named Russell Boyd was found to have registered juliaroberts.com in bad faith after it was determined that he had “no rights or legitimate interests in the domain name.”

Boyd had registered the domain in Julia Robert’s name along with several other famous celebrity names. He didn’t receive a fine or any other type of punishment, but he did lose the rights to the domain name without compensation.

So, what’s the difference between cybersquatting and other kinds of digital real estate marketing?

What’s the Difference?

At the end of the day, anyone can claim that you’ve purchased a site to capitalize on them, specifically, but unless they can show proof, there really isn’t much they can do. As I stated earlier, many tech-savvy individuals have been able to make a good living through digital real estate.

It is a gamble, and in many ways, it’s a lot like playing the stock market. You purchase a domain in the hope that it is something that could be of interest to a company or individual. Just remember, you’re paying the annual renewal fee till you find a buyer and that buyer may never come. There are trillions (maybe more) combinations of domains out there, but if you’re going to jump into this line of work (full-time or as a hobby), then follow these rules:

  • Never purchase a domain that could be the individual name of a person (especially if it is someone famous). It’s difficult to prove you didn’t purchase it in bad faith unless you plan to create a fan club with that domain.
  • Purchase a dot com domain because those are the most popular and the ones people seek out the most for domain purchase.
  • Consider purchasing related domains to large corporations. Some companies will purchase the .net or .org versions of their domains to avoid customer confusion. This is also true of popular keywords related to their products. For instance, Coca-Cola might want to purchase the domain bestsoftdrinks.com (and already owns separate websites based on individual product names).

If you follow the simple rules above, you might find yourself as the next digital real estate tycoon. So, get out there and start building your online empire!