Last summer, FairWinds published a whitepaper on the cost of typosquatted domains for the 250 most popular websites. Through our calculations, we discovered that typosquatted domains cost those websites, in total, millions of dollars per year due to unnecessary advertising costs, lost sales, and poor user experiences.

Yesterday, Bloomberg Businessweek ran a story by Tom McNichol detailing the threat the typosquatting poses for companies. McNichol cited our study, "The Cost of Typosquatting," in that article to illustrate how pervasive and damaging the problem is. It's a great article that really gets at the heart of the problem, so we recommend giving it a read. You can also check out our most recent typosquatting study, which identified a link between social media typosquatting and online survey scams.

Late last week, Facebook filed a lawsuit against 25 typosquatters over domain names that are typographical variations of Facebook.com.

Last summer FairWinds found that over 48 million visitors per year are diverted away from Facebook by typo domain names. In the lawsuit, Facebook contends that the “defendants’ schemes…diminish the goodwill associated with Facebook and its marks, injure Facebook’s reputation, breach enforceable agreements between Defendants and Facebook, interfere with Facebook’s business, and unjustly enrich Defendants”.

In a study that we are currently conducting, we are researching the prevalence of survey scams on typo variations of social network domain names. Some of the most common typo or keystroke mistakes that Internet users make lead to surveys promising prizes like iPads or gift certificates in exchange for answering questions. Unfortunately, these surveys systematically steal users’ personal information and, unsurprisingly, no prizes are distributed. This is plaguing the most popular social networks, including Facebook, Twitter, LinkedIn and YouTube. We will be releasing the study later this month, so check back with us.

A UDRP Panelist has, once again, sharply lambasted CitizenHawk for its mishandling of a complaint on behalf of one of its clients.  The Panelist went so far as to find the client, Tiny Prints, Inc., guilty of “reverse domain name hijacking” (RDNH). Tiny Prints, Inc. v. Oceanside Capital Corp. c/o Web Admin, NAF Claim No. FA1007001337650 (2010).

CitizenHawk describes itself as a provider of digital brand management solutions; the majority of the work the company does involves recovering cybersquatted or typosquatted domain names for its clients, managing those domains, and defensively registering other domain names.  It was founded in 2006 by Graham MacRobie, who is now the President and CEO of Alias Encore, a company that appears to have the same general business model.

One of the services that CitizenHawk touts is its ability to identify infringing typo domains of its clients’ brands.  But it uses automated searches to perform this task, meaning it simply provides a laundry list of registered typo domains without discerning which are actually worth pursuing.  While CitizenHawk avers that this approach is much more time efficient, removing the human element produces cookie-cutter results that are in no way tailored to their clients’ individual needs.  The company takes the same approach in filing UDRP complaints on its clients’ behalf, hence its repeated failures to recover names and chastisement by UDRP Panelists.

In the Tiny Prints decision the WIPO Panelist noted that “this Complaint, prepared by Complainant’s representative, CitizenHawk, is so poorly drafted and difficult to read that the Panel found it necessary to study the exhibits and review online data to make sense of the allegations.”  After denying the claim, it went on to find that the Tiny Prints and CitizenHawk had engaged in reverse domain hijacking since no proof of prior trademark rights had been submitted, even after the Panelist specifically gave them an opportunity to produce evidence after the complaint was filed.

Sadly, a prior CitizenHawk client had suffered at the hands of its production-style method of filing UDRP complaints.  In Letstalk.com, Inc. v. Inofirma, Ltd c/o Domain Administrator, NAF Claim No. FA1002001310279 (2010) the Panelist said it was “quite troubled by the apparent carelessness with which the Complaint in this proceeding was prepared.”   “[T]he Panel believes that it was prepared by some sort of automatic process with little or no human review.”  In support of this it was noted that “[t]he Complaint includes an obviously false contention regarding the timing of the registration of the disputed domain name.”

Speculation now abounds as to whether Tiny Prints or Letstalk.com will pursue legal action against CitizenHawk for either malpractice or negligence.

FairWinds recently released a study that calculated the cost of typosquatting for the brands behind the 250 most highly trafficked websites.  The total included costs from visitor acquisitions, lost sales and impressions and also recovery of typosquatted domain names, and came out to $327 million per year.

A major source of losses for brand owners is pay-per-click (PPC) sites; when a company invests in paid search, its ads appear on PPC and other websites in addition to the search engine’s results pages.  When an Internet user clicks on the sponsored link, either on the search engine site or another site, the company pays a click fee.  When an Internet user makes a typo or keystroke error while trying to reach a brand’s website and lands on a typosquatted domain site that is leveraging PPC to monetize traffic, we have found there is an 18% chance he or she will click on the targeted brand’s link (meaning the brand suffers a loss in the form of a click fee for gaining the visitor) and a 7% chance he or she will click on a competitor’s link (meaning the brand suffers a loss in the form of diversion while another advertiser pays the cost-per-click (CPC) and picks up the visitor).  The formulas that we used to calculate those losses are as follows:

For users who click on the targeted brand’s link:
18% x (Annual traffic per domain) x (Average CPC) = Advertising costs for the target brand

For users who click on a competitor’s link:
7% x (Annual traffic per domain) x (Average CPC) = Advertising costs for the target brand’s competitor

Originally in our calculations, we used an average CPC of $2.74 for each formula.  Given that we could calculate the CPC for the specific keywords in this study of 250 sites, we leveraged today’s Google estimates for each keyword CPC rather than looking at an historical average for a broad range of keywords.  Because there was a range of CPC and traffic values that could have created bias, we then extracted the weighted average CPC across the dataset.  We determined that $2.03 was the weighted average CPC for all the sites included in our study and therefore, $2.03 is the actual cost the site owners incur when a visitor lands on a typosquatted parked page and clicks on their link. Ultimately, this is the amount of money paid by the advertiser and shared by the contextual Internet advertising provider and the owner of the domain (and sometimes an intermediate party such as a domain parking company).

Obviously, this reconsideration alters our final calculation somewhat.  With the new average CPC, the total cost from ad clicks on typosquatted PPC sites in our study is $187,288,458 per year.  When added to the costs of lost sales and impressions, plus domain recovery costs, the re-calculated total cost of typosquatting is $364,276,874 per year.

If it’s not already apparent in the scope of this study, this figure applies to the 250 sites that we studied, and is not a comprehensive measure of all typosquatting (that figure would obviously be much greater).  To read the updated paper with an in-depth discussion of the damage that typosquatting inflicts on the 250 most trafficked websites, visit the FairWinds site for the entire paper, or the revised section for a discussion of how we calculated the sample set CPC.