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Are Typosquatters Hijacking Your Brand?

Domain Typos Cost Marketers Millions a Year, Annoy Consumers

By: Josh Bourne

Brands only have a few seconds to make an impression and engage a visitor online. Companies that deliver their message where and when consumers expect to find it will grow trust, loyalty, and ultimately garner a wider consumer base.

Many brands are missing the chance to engage visitors. The companies behind the 250 most visited U.S. websites are losing about $327 million per year through domains that contain typos of their brands, either because the domains are owned by third parties and used to divert would-be customers or because the brand itself is not using the domain properly.

This is a correctable problem that is often written off. Some companies consider it a low priority because they don’t really understand the costs, while others wrongly see it as a losing battle against infringers given the endless domain name permutations that are possible. It’s no wonder that brands often feel overwhelmed — we found that it would take $79 million for brands to recover all the existing infringements that fall within the scope of a typosquatting study it conducted. Luckily, not all typos are created equal. Typically, less than 1% of typo variations are responsible for more than 50% of traffic diversion.

The problem
Cybersquatting, the practice of registering domain names containing a trademark with the purpose of exploiting that trademark, inflicts significant harm on both businesses and consumers alike: businesses lose valuable brand equity, consumer trust, and spend excessive amounts on unnecessary click fees, while consumers are frequently exposed to misleading information, annoying pop ups, malware and viruses. Marketers who develop powerful campaigns and spend time trying to maintain their brand messaging are often thwarted by the fact that they either do not own or are not properly using the domain name variations that their consumers are visiting the most.

One form of cybersquatting is typosquatting, or the practice by which individuals look to monetize or otherwise benefit from the traffic generated when internet users make spelling or keystroke errors when typing a domain name directly into the address bar.

Examining the problem
We conducted a study to measure the full extent of the economic impact that typosquatting has on brands. By calculating the cost of unintended advertising, lost sales and lost impressions, we found that typosquatting costs the brand owners included in the study a total of $327 million per year.

We selected the top 250 most highly trafficked U.S. websites with at least six characters in their name (names with fewer than six characters could run the risk of being typo variations that are actually the correct name of another brand and thus were left out). We then examined the registered typographical variations of those 250 target domains (from hereon in referred to as “typo domains”). We found approximately 28,000 registered typo domain names that were not owned by the appropriate brand.

Lost sales and lost impressions
Eighty-four percent of the 28,000 squatted domains resolve to pay-per-click (PPC) sites. PPC sites host a collection of sponsored-advertisement links that typically pertain to the keywords contained within the domain name. A domain containing a brand name that resolves to a PPC site will likely host links to that brand, links to its competitors and links to related sponsored advertisements.

The most obvious problem that this type of site poses to brand owners is the risk that consumers will click on the link of the brand’s competitor, which leads to diversion — a lost sale or impression for the target brand. This is particularly troublesome for brands that do not pay for search advertising because their link is not even presented among the array of ads on a PPC site. In either case, a typosquatted domain that is used to host a PPC site provides advertising for the brand’s competitors and has a low likelihood of converting traffic to unique visitors on the site of the originally targeted brand.

FairWinds’ research uses the conservative estimate that 7% of internet users who land on PPC sites will click on a competitor’s link. While this figure may seem low, it accounts for over $31 million per year in lost sales across the domain names in the FairWinds study.

Click fees
A less obvious, but significant, cost that typosquatted PPC sites pose for brand owners is the unintended advertising cost. Brands that pay for search advertising allow search engines to populate sites with their advertised links where relevant keywords are found. Every time a brand’s link is hosted on a PPC site and clicked on, that brand pays a fee that is split between the domain owner and the search engine that provides PPC sites with the advertising links.

So, when a site displays a brand’s link on a domain that is a typo of that brand, the brand is essentially paying to advertise to traffic that was already looking for its site. In total, the cost of unintended advertising that can be attributed to the PPC sites in the FairWinds study amounts to over $184 million per year.

Lost impressions
PPC sites also cost brand owners money in the form of lost impressions and the reputational harm caused by consumers having a negative experience when trying to reach their intended destination online. Based on a conservative value of 2 cents per impression, the brands in the FairWinds study suffer a loss of $5.8 million per year in the form of lost impressions.

In this study, typosquatted domains hosting PPC sites alone cost brands over $220 million a year in aggregate. When added to costs of lost sales, unintended advertising and lost impressions associated with non-PPC squatted sites — the other 16 percent of the 28,000 domains — the total exceeds $306 million. Finally, if you add the losses of brands that own the typos of their domains, but don’t resolve those domains to any content, the cost of typosquatting in this study rises to $327 million.

Recovering typosquatted domain names is another cost that brands have to incur; in order for the brands in this study to recover the typosquatted domain names through the Uniform Domain Name Dispute Resolution Policy (UDRP), it would cost over $79 million. This cost brings the total amount of money lost to typo domains to $406 million.

This dismal $406 million figure does have an upside, however. Of the 28,000 typosquatted domain names in the study, only 16.5 percent actually receive a meaningful amount of traffic from Internet users. This is because certain spelling or keystroke errors are much more probable than others — not all typos are created equal. Therefore, not all typo domain names are worth the cost of recovery because they do not contribute significant value to the brand’s business. In fact, FairWinds found that it would be more beneficial for the brands to pursue a small and targeted percentage of the infringing domains names. By targeting just the top 0.42 percent of the 28,000 typosquatted domains in this dataset, brands can reverse 50 percent of the harm these infringements cause. Recovering just this nominal percentage of the typo domains would provide the affected brands a full return on investment in less than a week. Thousands more typos would yield a break even within the first year, while the majority of typos in the 28,000 name dataset are unworthy of the affected brands’ attention.

Brand owners can benefit greatly from first recognizing that typosquatting poses a significant problem, and second, by prioritizing which infringements cause the most harm and would contribute the greatest value if recovered. Finally, it is important that brands appropriately utilize typo domain names to deliver positive user experiences. It takes knowledge of online consumer behavior and the domain name space to develop a domain name strategy that will fully optimize a brand’s online findability.

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