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.
George Kirikos says
Using 35 cents, though, might underestimate it. For example, if I pay 10 cents/click for a certain search term, and someone clicks on it, my actual profit from that visitor (or average profit) might be $5, $10, etc. (depending on the niche, how competitive the other bidders are, etc.). If the visitor is redirected to a competitor, that might be a consumer lost for life. It’s the difference between ‘cost’ and ‘profit.’
But, I agree with you, it’s more complex, and there is generally a lot of “handwaving” in the typical reports (I’ve not had time to read all of the Fairwinds one yet).
An easier way to measure things would be to determine “who are the beneficiaries of typosquatting”, and look at how much the registry operators (e.g. VeriSign) make off all those domains, as well as registrars (likely less, becausse their profit margins are typically less than VeriSign’s on a per-domain basis), and the various domain parking firms.
It’s also a cost to owners of *good* domains that are monetized (either via PPC, or through CPA or other methods), as this flood of lower quality typosquatting traffic taints the overall market for traffic, and lowers the price per click of “clean” traffic.
Andrew Allemann says
@ George – yes, the Fairwinds report takes into consideration some of those lost customer issues.
mansour says
I believe that this report is bogus at best. It’s like picking fruit from a tree. The fruit that you pick by hand is what makes your profit. The ones that fell on the ground were either stepped on or spoiled. Back in the day, you used to have 4 hamburger stands in the same corner and they were all called hamburger stands or four gas stations and they were all called gas stations. For those who claim to have absolute domination over words or characters, there will come a day when the Internet is so busy and there will not be enough domains to go around, and what’s called cybersquatting today will be abolished in order for the Internet to continue its functionality. The question at hand is – why does ICANN continue to offer new extensions so more and more Internet users can share the same name. At the same time, those who can afford paying to secure a trademark are protected from the rest of us, while the little guy could not be protected by anyone.
Neelabh Rai says
I feel that the report given by Fairwinds with lot of assumptions is not the correct assumption. Even I have done research in the field of Typosquatting esp. related to Indian cyberspace but I never got such whopping data.
As per January, 2010 I was able to get the average rate per click to be around 24 cents (INR 11.40). So, if at all the cost to be estimated even by using the online bidding systems at numerous websites dealing in PPC, CPA etc.; even then one will not be able to get the average cost per click to be even more than USD 1 – forget USD 2.74 (INR 127.95).
It looks like (as earlier said by the author) they really have ‘Agenda’. They wanted to get the overall money to reach/cross the mark of USD 300 Milliion. And thats’ why they have over-estimated this average CPC.
Its’ true that there are many indirect harm too to the business e.g., lowering consumer confidence, damaging reputation, hurting competitiveness etc. But again one can’t quantify it.
My research report was published in:
“Information Management in Knowledge Economy, Vol. 1; pp. 147-161; ISBN 10: 0230-32936-5 / ISBN 13: 978-0230-32936-2, MacMillan Advanced Research Series Pubs., 1st edition 2010”
titled as
“Typosquatting as a New Weaponry-Platform in Silent Cyber Weapons Race”.
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