Fairwinds updates faulty report, but it’s still laughable.

Last month FairWinds Partners, the group behind CADNA, released a report suggesting that typosquatting costs the 250 most visited web sites $327 million a year. I immediately smelled something fishy about the biggest underlying assumption in the report: the average cost-per-click on ads on typosquatted domains was pegged at a lofty $2.74 per click.

The report referenced a VeriSign report for its CPC value. There was one problem, though: the VeriSign report didn’t mention anything about a $2.74 CPC value. (Representatives of FairWinds did not respond to my initial inquiry about the VeriSign reference.)

Today FairWinds updated its report with a new value of $2.03 a click. It’s still a joke.

Here are some recent average CPC prices for top verticals in search:

Automotive: 51 cents
Retail: 50 cents
Finance: $1.99
Travel: 60 cents

Keep in mind that the top typosquatted sites, according to FairWinds, include MySpace, YouTube, Facebook, and Google. Anyone at all versed in domain parking knows that traffic intended for these sites converts for pennies at best.

I talked to a major PPC advertising firm after reviewing FairWinds Partners’ initial report, and they said the price assumption was absolutely ridiculous.

So how did FairWinds come up with its new $2.03 CPC? It plugged in the term of each domain into the Google Adwords Traffic Estimator. It’s a convenient approach for FairWinds given the junk Google spews back.

For example, type in “You Tube” and Google estimates an average $1.59 CPC. Now go to Google and type in “You Tube” and you’ll only see YouTube’s official ad running. In reality, a typo of YouTube would show ads for lessor terms and pay out pennies, if that.

The Google estimator also shows only prices for the top positions and doesn’t take into consideration smart pricing and content network pricing.

Does typosquatting cost companies? Sure. But suggesting that each click on a typo of these domains is equal to $2.03 in advertising costs is ridiculous.

Stretch of I-70 is a big promo for .biz domain name.

This past weekend I took my daughter to St. Louis to visit her great-grandfather. We flew into St. Louis, and then drove 75 minutes along I-70 to his house.

You may be surprised by the domain name I saw most often on billboards on I-70: .biz.*

Why the asterisk? Well, it was mostly one company with a .biz domain name. Porlier Outdoor Advertising has a ton of billboards along I-70 between St. Louis and Kansas City. It looks like many of them are relatively new; they struck lease deals with land owners that place some of these billboards perhaps just 50 yards apart it seemed. Many of the billboards have yet to find advertisers, so they are adorned with the company’s URL: Porlier.biz.

Porlier.com is owned by a transport and storage company outside the U.S.

How damaging is it that the billboard company doesn’t own the .com? It’s hard to say. I noticed it was .biz, but I look for these sorts of things. As long as they have a lot of empty billboards, you certainly get a lot of repetition of the domain. And if you search for “Porlier Billboards” on Google you’ll have no problem finding the company.

Cloud computing company gets more marketing punch with good domain name.

Cloud.com VP of Business Development Shannon Williams admits that he wasn’t a huge believer in the power of a generic domain name for marketing. But when the opportunity for his company to purchase Cloud.com was discussed internally, he finally came around. Now he is a believer.

I caught up with Williams during HostingCon this week in Austin. He explained some of the benefits of having the company named Cloud.com:

-When Williams meets people and mentions his company, people think they’ve already heard of the company because of its good domain

-People think the company is bigger than it is

-Value for Search Engine Optimization

Putting on his corporate sales hat, Williams says that the domain itself doesn’t add value without a good underlying product. Their product was already selling, and they were doing well because of the product, but he says the domain is like putting some extra gas on a good fire.

It’s certainly more memorable than the company’s old name, VMOps.

Relaunch was successful, but hard work remains.

It comes as little surprise to me, but it’s now apparent that the .co launch has been successful. As of now, 279,000 .co domain names have been registered. I calculate gross sales of about $19 million to date.

There are a number of reasons I’m not surprised by the initial success of .co. I outlined many of these in my last newsletter. But regardless of how or why it has charged out of the gate, and regardless of how much time, money, and ingenuity has gone into the process, it all starts over now. The long term viability of any top level domain name isn’t determined in the first week. It’s determined in the ensuing years.

The number one driver: use and promotion by end users.

.Co already has some big coups in this area. Twitter is using t.co. Overstock bought o.co, although it’s not sure what it will do with it. Go Daddy plans to use x.co.

But what will be interesting to watch is use by other companies. Will any of them actually use it for unique and new web sites? Will they advertise them on TV? Will small businesses say “find us at xyz.co”?

I can’t think of any “new” TLD that has been successful by this measure. Yes, .biz is a great business for Neustar. And .info is a cash cow for Afilias. But are they successful? Will they wilt under the pressure of hundreds of competing TLDs in the coming years?

Given the thought and money behind the launch, I know .co is thinking about this. The work has only just begun.

Court says registrars can’t get away with gross negligence just because it’s in their TOS.

Domain name registrars, take note: you can’t just claim no responsibility for your actions in your terms of service and expect a court to uphold it.

That’s exactly what Register.com tried to do in a lawsuit brought by Baidu. If all the allegations are true, Register.com really screwed up on this one. Yet it claimed Baidu couldn’t hold it accountable because it agreed so in the terms of service.

But a ruling (pdf) today by the judge in this case says otherwise: you can’t just disclaim responsibility for your gross negligence:

If these allegations are proven, then Register failed to follow its own security protocols and essentially handed over control of Baidu’s account to an unauthorized Intruder, who engaged in cyber vandalism. On these facts, a jury surely could find that Register acted in a grossly negligent or reckless manner.

The judge refers to a case that is actually a good analogy here:

Green v. Holmes Protection of N.Y.. Inc., 629 N.Y.S.2d 13 (1st Dep’t 1995) (holding limitation of liability clause was not enforceable where alarm company was grossly negligent when it gave burglars keys to store and security codes to disengage alarm and failed to respond promptly when crime was discovered).

Register.com also argued that Baidu agreed that the search giant would be responsible for the security of its account. But the judge noted that Register.com did implement security features because this type of hijacking was foreseeable:

The attack by the Intruder was reasonably foreseeable — it was precisely because these cyber attacks are foreseeable that the security measures were adopted. While Baidu gave up, in agreeing to the Limitation of Liability clause, any claims for ordinary negligence or breach of contract based on ordinary negligence, it did not waive its claims for gross negligence or recklessness. If Baidu can prove gross negligence or recklessness, the Limitation of Liability clause will not be a bar.

Of course, it will be up to a jury to decide the ultimate outcome. But the judge has reaffirmed that a registrar can’t run away from its gross negligence in security matters.