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Typo-Squatting Comes with Money-Back Guarantee

Posted by Melanie Phung on Sunday, April 30, 2006 at 11:59 am

An article in today’s Washington Post business section, titled The Web’s Million-Dollar Typos, highlights the practice of domain parking by people counting on Internet users misspelling their destination URL. This tactic is known as typo squatting and can be a very lucrative business, because according to industry analysts approximately 15% of all web traffic comes from people typing a domain into the address bar — as opposed to search or bookmarks.

The Business of Typo-Squatting
Simply buy an unregistered domain that is similar in spelling of a major brand, put some Google AdSense or Yahoo ads on it, and share in all that “contextual” advertising revenue. This works because most web users will click on the ads to get to their intended destination, rather than retype the domain or do a search to locate the correct URL.

And there is very low risk for the ambitious typo-squatting entrepreneur, as the Washington Post explains:

Because purchasers can change their minds within five days and avoid paying the $6 registration fee for the name, many investors enter the names in Google’s ad program for a quick test and quickly drop those that don’t yield enough clicks to cover the domain registration fee.

But others, including those who speculate on potential traffic of a specific domain name, argue that the pages are helping people find information related to what they’re looking for. Typo-squatters and those who provide services to support them claim these pages benefit the customer by making unused pages “function as alternatives to search engines.”

The Losers and Winners
This is a huge problem for those of us who participate in paid search. Every one of those clicks costs the advertiser money. For small business owners who pay a couple of cents per click, as well as for larger businesses bidding one or two dollars for competitive brand terms, that adds up quickly. Basically you are forced to pay money for clicks you are almost guaranteed to get for free in organic search (a search on your brand name).

Result: higher ad budgets (and lower ROI) and brand dilution.

As search professionals, I suppose, we could try to educate consumers about this type of web spam, but there’s no incentive for them to refrain from clicking on those ads. After all, one click gets them where they wanted to go.

It works for the consumer, and it works for the search engine since they (as the owners of the ad network) get a cut of that ad spend. Because Google and Yahoo benefit from the advertising revenue there is a disincentive to pull the plug on this practice across the board. Even when they don their “what’s in the best interest of the user” hats, removing these pages is still not a pressing issue. Sure, they clutter up the Internet with low-quality content, but like I said before, the argument would go, if someone mistypes a URL and then is presented with a link to the site they actually wanted to get to… well, isn’t that better than just landing on a 404 error page?

But as the recent click fraud lawsuits against Yahoo and Google show, publishers are starting to get fed up with those companies turning a blind eye to practices that benefit the search engines at the expense of advertisers. It would be wise for owners of ad publishing networks, especially ones focused just on parked domains, to try to reestablish the goodwill of legitimate content publishers and help unclutter the World Wide Web by cracking down on typo-squatting. Not because it’s in their immediate financial interest, but because it’s the right thing to do.

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Category: Contextual Ads,Monetizing,Navel-Gazing,Spam

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