Google doing nicely from typosquatting

February 21, 2010

Harvard University researchers in a recent study, estimate that Google could be making $497million a year from the practice known as ‘typosquatting’ according to ZDNet

How does typosquatting work?

Typosquatters register domain names, usually a well-established trade mark, in bad faith to gain a commercial advantage. This usually involves holding the domains in a portfolio for web advertising revenue. The function of the domain is to attract traffic and generate click revenue.  The revenue is by way of a commission from Google or other search engines. Although the amounts per click may be quite low, for a high volume site the numbers soon mount up to large figures.

Pay Per Click advertising

The reason the revenue comes from Google or other search engine is that these will feature their advertisers’ Pay Per Click ads on the ‘content network’ (those of their advertisers that have not opted out of the content network distribution).  These include sites run by cybersquatters, who receive payment whenever someone clicks on the ads.

The way Pay Per Click works is that in order to get their ads listed high in Google’s or other search networks’ paid search results advertisers bid on keywords.  So, if the amount being paid per click for a keyword like “computer equipment” were $3.06, then Google or other search engine would keep the entire amount if the click on the advertiser’s ad came directly from the results displayed on its own pages.

But if the ad is sub-contracted out to others who are part of the wider content network, then these third party sites will display the ad too.  So if the click on the advertiser’s ad comes from a third party’s page or website then Google or whichever other search engine has the primary contract with the advertiser, would share the $3.06 with the click farmer, as they are sometimes called.

Click farming

The model specifically depends on the small number of surfers (15-20%) who type a url into a web browser rather than entering the name into a search engine. So, if a common mistyping of a brand’s url is entered into the browser, this “direct navigation” traffic (as opposed to indirect traffic through a search engine like Google) goes straight to the page at which the domain is “parked” (that is the place the domain address arrives at), or to its website if there is one developed, as there sometimes will be.  Then ads relevant to that brand will be displayed on the page in question.

Example of typosquatting

So, for example, if the typosquatter has registered ‘micresoft’ and  by accident when you are seeking information from Microsoft, you type into your web browser “micresoft.com”.  Instead of going to  Microsoft’s page you reach a website populated with related keywords – possibly selling computers or software. The domain owner, (sometimes referred to as a “click farmer”) would collect revenue each time you clicked on one of the featured ads, while Google or other search engine, would also take their cut from the advertisements.

The difficulties that have arisen between trade mark owners and registrants of certain domain names have been some of the main reasons giving cybersquatters a bad name, and it is interesting how online businesses such as Google are profiting from what is direct trade mark infringement by the cybersquatters.  Until the trade mark owner takes action to recover the domain name from the typosquatter, money is made from the ‘wrong’.  Also interesting is that while the typosquatter might receive a claim in damages from the trade mark owner, Google seems to get away scott free, although there were moves last year by litigants in the USA to claim against Google. Do any readers have more information about that?