Typo-squatting, the practice of registering domains using common misspellings of popular brands, products and people in order to profit from consumer typing errors, is increasing dramatically. McAfee recently did a comprensive study of typosquatting, as part of its effort to filter web traffic with its anti-virus and security system. Read the McAfee Typo-Squatting Report here.
In an effort to further quantify and understand this phenomenon, McAfee studied 1.9 million typographical variations of 2,771 of the most popular and well known Web sites. Of these, we found 127,381 suspected typo-squatters.
Among McAfee’s key findings are the following:
- Typo-squatting is vast and common, affecting every segment of the Web. 7.2% of the possible typographical errors we studied were actively squatting. In other words, a typical consumer who misspells a popular Web site URL has a 1 in 14 chance of landing at a likely typo-squatter site.
- The five most highly squatted categories are game sites (14.0%), airlines (11.4%), main stream media company sites (10.8%), adult sites (10.2%) and technology and Web 2.0 related sites (9.6%).
- Children’s sites are highly targeted by typo squatters. The average for the category is 8.4% and 24 of the top most squatted sites are children’s properties for kids 12 and under. Add in sites like MySpace and Miniclip and more than 60 of the top most squatted sites are properties that appeal to the 18 and under demographic.
- Squatters follow consumer crowds. Popular, consumer-focused Web sites typically attract more squatters than business to business sites or niche content sites.
- The incidence of pornographic content on non-adult typo-squatted sites is just 2.4%, suggesting improvement since previous studies by other researchers.
- Automated ad syndication services like Google’s AdSense enable a significant minority of typo-squatter sites to generate revenue. Google-enabled advertising shows up on 19.3% of all suspected typo-squatter sites in this study. Yahoo-enabled advertising shows up on 4.4% of all suspected typo-squatter sites.
- The increasing use of automation to buy and sell vast numbers of domains, combined with a 5-day free trial (known as “tasting”) for new registrations to top level domains like dot-com appear to be two significant factors in the rapid growth of typo-squatting.
- At 3.4%, sites popular outside the U.S. are less than half as likely to be typo-squatted as overall sites.
- The five non-U.S. countries most likely to have popular sites squatted are the United Kingdom (7.7%), Portugal (6.5%), Spain (5.9%), France (5.4%), and Italy (4.1%).
- The five non-U.S. countries least likely to have popular sites squatted are the Netherlands (1.5%), Israel (1.1%), Denmark (1.0%), Brazil (0.9%) and Finland (0.1%).
- The top five parking companies, ranked by the percentage of squatters parked by them, are Information (28.5%), Hitfarm (11.3%), Domainsponsor (2.9%), Sedo (2.5%) and GoDaddy (2.3%). Together, the top five park 47.5% of the squatters we discovered.
Typo- and Cyber-squatting on the rise
Cybersquatting cases filed with the World Intellectual Property Organization’s (WIPO) arbitration system increased 20% in 2005 and another 25% in 2006. Microsoft says that “on an average day more than 2,000 domain names are registered that contain Microsoft trademark terms.” According to the US Government Accounting Office, at least 8.65% of all domain names are registered with false or incomplete Whois information, a practice that makes domain squatting easier. More recently, in September 2007, the managers of the .eu top level domain suspended 10,000 domains registered by a Chinese woman who was accused of being a cyber-squatter.
The Economics of Typo-Squatting: Why it Works
Most commonly, typo-squatters make money by putting pay-per-click ads on their domains. The ads are typically generated by keywords related to the misspelled product. For iPhone typos, one might see ads for cell phone accessories, ring tones or calling plans. Profitable typo-squatting is built click by click, penny by penny. No single misspelled domain will generate enough profit to provide a living to the domain speculator. But a large portfolio of even slightly profitable domains can generate significant income.
The domain speculator buys two misspelled domains for $6 each.He registers the two sites with a so-called Domain Monetization company – a parking company that automates the process of serving advertising to those sites.After a 5 day “tasting period,” he returns the less successful one for a full refund. The parking company uses an automated advertising syndication service like Google AdSense to serve ads to visitors who mistype the intended URL.Meanwhile, the true domain’s owner has often contracted with Google to serve his ads on what he hopes are appropriate sites.For every visitor who clicks on one of those ads on the parked, misspelled page, the domain’s owner pays the ad syndicator. In our example, we’ll assume a common cost per click rate of $0.20, but actual rates can become significantly higher (several dollars or more per click) for specialty categories. The syndicator splits this advertising revenue 50/50 with the parking company.The parking company then splits his 50% with the domain speculator. Net: the domain speculator earns $.05 (25% of the $.20 paid by the real domain’s owner) for each click consumers make on the squatted domain. To break even on his annual $6 investment, he needs 120 total clicks, or about one click every three days.If he gets 1 click per day, he makes $12.25 per year. If he grows his portfolio to 1,000 sites, he makes $12,250. If he grows his portfolio to 10,000 sites, he makes $122,500.
While it is often immediately obvious that a typo squatted domain is not the intended destination, some visitors still click on ads rather than navigate away from the typo site. In fact, the mere existence of the typo squatted domain is proof of this. If the site did not generate enough revenue to at least cover the cost of registering the domain, the squatter would abandon the site.
The economics of typo-squatting lead some analysts to describe this as a phenomenon of the long tail, the concept that the ease of Web navigation enables even the most rarefied content or product to earn some small amount of traffic and therefore, revenue. Professional domainers, including those who register typographic errors, often hold domain portfolios in the thousands or more. Individual domains may return only a few dollars a month. But multiplied by the thousands, those few dollars can become significant.
Product development and brand building is at the heart of our economic system. Companies invest time and money into building their products and brands. By contrast, typo-squatters use automated tools to siphon potential customers and profit off the brands built by others. In our view, typo-squatting generates clear-cut winners and losers.
- Consumers lose time when they must re-type or re-click to get to their intended destination and they lose money if they get sidetracked into making an unwise purchase.
- Brands that have invested heavily to build well-known names and marks lose money when their potential customers are re-directed away from their product Web sites, or when they have to pay the typo-squatter for traffic re-directed to the proper domain.
- Large Companies lose when they must wage expensive arbitration or litigation battles against alleged squatters.
- Small Companies lose because they can’t afford to even initiate legal action.
- Domain speculators win when unwitting consumers click on ads they see on the typo-squatted site.
- Parking companies win by splitting the ad revenue generated by that traffic.
- Search engines win by also splitting the ad revenue generated by that traffic.
- Registrars generate revenue when domain speculators register and keep the thousands of domain variations required for the speculator to generate significant income.
Ultimately, in our view, typo-squatters fail the added-value test. Parked typo sites filled with pay-per click ads don’t help the consumer find the site he was actually looking for. And they don’t help the company build and brand their product in the way they see fit.