I have seen many website owners who have purchased the domain & a hosting provider before the website is online. These websites generally says "Website coming soon".. I know that you need to purchase a domain since someone else might buy it. But why do you need a hosting provider, is there any SEO advantage? or is there any other specific reason?.
Of course the main reason is to reserve the domain name before others, especially if you buy a domain name as your brand name.
Otherwise, for SEO facet, having a hosting provider soon can be good to launch a site as soon as possible to specify to search engines your site is up since a date. The age of a domain name is an important SEO factor (especially if your domain name has already many years behind).
I would also add that a website with “coming soon” page can be used as an advertisement to what exactly is coming soon, with plenty of “white-hat” SEO tactics:
- semantic markup (headings, paragraphs, lists, etc.)
- metadata / microdata / microformats etc.
- any (respectable) in-bound links you can get would also help tremendously, especially from websites in similar fields or industries.
This will allow search engines to start "work" on applying rank to your website. I would also advise creating an XML-format sitemap, as described at the website http://sitemaps.org.
Then, register your new website with the “Webmaster Tools” services that Google and Microsoft (Bing) provide:
If your domain name is not new (i.e. there has been another website hosted there before, you may want to get the domain’s remaining content that is indexed removed from the search engines’ results pages – signing up with the webmaster tools services (above) can help with this issue.
I WOULD NOT advise any so-called “black-hat” SEO techniques, such as keyword-spamming, writing sections of repetitive or hidden texts (cloaking) etc. The algorithms behind search engines are very clever and will root out this type of thing as spam, which will be more of a disadvantage in the long-term. However, I see nothing wrong – and, time allowing, I would always personally go with hosting a “coming soon” page (albeit with the caveats described above) rather than having a domain that is just going to be returning a 404 or some such HTTP error.
(I also agree with what Zistoloen has said in his answer about the age of a domain name does have generally have a positive effect on a web content’s overall ranking.)