Report makes some lofty estimates for typosquatting.
Fairwinds Partners, the group behind Coalition Against Domain Name Abuse, released a study today suggesting that typosquatting costs the 250 most visited web sites $327 million per year.
Like the creators of many studies, Fairwinds has something to sell — services to the very brands that are affected by typosquatting. There are a number of assumptions in Fairwinds’ report, and also a lot of references to its on research on click-through rates and such. But there’s one number used in the report that grossly overstates the final number.
To calculate the average pay-per-click costs charged to advertisers receiving clicks from typos of their domains, the company used a whopping $2.74 per click. It cites VeriSign’s June 2008 domain name industry brief as the source of this amount. I looked through that report and didn’t find any mention of PPC prices. But ask anyone who owns parked domains and they’ll tell you this is a far cry from what is being earned, and advertisers will tell you it’s a lot more than what they’re paying. Back around the time of VeriSign’s June 2008 report, Efficient Frontier reported its clients were paying an average CPC of 32 cents for content and 65 cents for search (January 2008). With “smart pricing”, domain clicks can be even lower. I’ve found a number of estimates of PPC prices, and none of them come anywhere close to $2.74.
If you assume that the average CPC is actually 35 cents, that lops over $150 million off of Fairwinds’ estimates.
And the average click price is probably lower for the domains in the study when you consider which sites Fairwinds says get the most traffic. Typos of MySpace, YouTube, Facebook, and Google, result in pennies clicks at best.
I’ve reached out to Fairwinds to ask them about the $2.74 click price. But regardless of how they justify it, just keep in mind that studies like this are usually undertaken by people with an agenda, and they’ll make estimates that help their cause. Yes, typosquatting is a problem, but not nearly as big as Fairwinds is making it out to be.