A colleague reminded me that Marchex, the public company roll up of online advertising plays, recently purchased Name Development, a company that owns a couple hundred thousand URLs. (SEW thread here). The price was $165 million.
The business model for Name Development is drop dead simple: they own a bunch of URLs, and when internet users type a word into the address bar (expecting it to resolve to something useful) or misspell a legit URL, often times one of Name Development’s URLs comes up as the resolved address. Name Development then sticks a sh*tload of AdSense or Overture links on the resulting page, and voila, free money!
This is called the “type in” traffic market, and it apparently is much, much bigger than most folks might think. According to folks I’ve spoken to, Name Development gets 17-20 mm uniques on its 200,000 domains, and is a profit machine.
Here’s an example of what one of their sites looks like.
These sites are often confused as clickfraud pages, and in fact, the do look exactly like robot or Indian click farm fodder. I would not be suprised, in fact, if some percentage of same folks who are playing the “type in traffic” game might also be dabbling, perhaps on the side, in some click fraud as well. I’ve seen these kind of honeypots (yes, that’s what they are) used for what clearly is click fraud, and when I asked Google and Yahoo about them, they said they were legit because they were “type in” traffic sites, and the ads actually served a useful, directory like purpose.
Feels slightly shabby to me. Can this model last? Will folks keep navigating by the address bar? Am I being too, well, patrician in my view of this model? What do you guys think?
Update: B2 has a good article on “domainers.”
take a look at the article in this month’s Business 2.0 on domainers
http://www.business2.com/b2/web/articles/0,17863,1132510,00.html
Link to business 2.0 article.
Also worth checking http://dnjournal.com/domainsales.htm
Patrician? Maybe a little, if you’re coming from the tiny world where “nofollow” and robots.txt and other such taggery is the lingua franca.
But in a larger sense, as nefariousness goes, there’s a lot worse out there. I’m always surprised at the quantity of users who use the address field for the search box and vice-versa – who type http://www.google.com into a Google search box, and who type search terms into the address field. If a company can capitalize on something like that, providing they’re showing relevant ads to real sites, more power to them.
Ultimately, though, I think we should differentiate more between a company that buys “camcorders.com” to bring in camcorder seekers, and one who buys “yahho.com” to bring in misspellers of “Yahoo.” Similar motivations, maybe, but in my mind, there’s an ethical line in there somewhere.
Translated to the real world, these sites are like plots of land with advertising signs along a traffic route.
Legal, yes, and within moral boundaries.
But probably economically inefficient – the real estate could be worth more to businesses who wanted to locate along that traffic route.
That whole market could have been owned/dominated by RealNames but they were just too early (ie needed google) . . . just another example of how Google transformed the eyeball business . .. previously unmonetizable/undifferentiated traffic gets sliced and diced a thousand ways so that the “premium” eyeballs could be sold while making sure the third rate traffic dont drag the down the average . . .
That whole market could have been owned/dominated by RealNames but they were just too early (ie needed google) . . . just another example of how Google transformed the eyeball business . .. previously unmonetizable/undifferentiated traffic gets sliced and diced a thousand ways so that the “premium” eyeballs could be sold while making sure the third rate traffic dont drag the down the average . . .
I don’t think there is a long-term opportunity for these types of sites… I stopped trying to guess URL’s a long time ago because of pages like these. People will catch on that their being fed auto-generated pages and just use a search engine to find quality content.
Misspellings in searches have always occurred and will continue to occur. Grabbing a misspelled domain name and monetizing it is just one way to profit. Even regular sites can profit from misspellings through simple search engine optimization techniques. Advertisers even target those misspellings, quite deliberately in fact.
Over the long term, some people will probably catch on to these kinds of sites, yes, but I think many of you are underestimating what the average user knows. There are people out there who don’t even use the address bar of a browser, they have their home page set to Google and just type a URL right into the text field.
And if people do start getting wise to these kinds of sites, the advertisers will find other ways to make those pages more eye-catching and/or compelling.
Too funny, people are finally getting around to knowing about this cash cow. John, ask Google how much it makes from types-in from its acquistion of Applied Semantics, which had a robust domiain park business to boot. Google is one of the top type-in owners out there.
>>>I don’t think there is a long-term opportunity for these types of sites… I stopped trying to guess URL’s a long time ago because of pages like these.
I agree. But rather think of them as parking lots. Generating revenue until such time as the demand or need generates further development.
Its a great model but most of the revenue/traffic is tied into miss spellings of brand name products. In the long run many legal questions will be raised and they don’t have a chance in hell of winning. Ie http://www.goolge.com may have supposed 16,000 uniques a day. or http://www.walmart.com etc The illegal part will come in where a site walmart.com has ppc ads for stuff that wallmart sells. Note that this is just a made up example.
I hate domainers, I totally agree that they are mostly lowlifes. Just read the Biz2.0 article – the main character is a total slimeball.
I wrote about some of this earlier
http://pythonzweb.blogspot.com/2005/12/plan-for-domain-name-spam.html
Kinda hoping for a Firefox plugin that would warn about a clickfacm during URL type-in.
It is acceptable to purchase a misspelt/ misspelled domain name and include RELEVANT/ VALID Ads – to the Domain Name that is being typed….
eg searchenginess.com
Search Engine related Ads are appropriate.
Think of how much bandwidth is lost by people checking to see if the domain is available.
Where ethics come in to play – is typing a BRAND NAME or TRADEMARK misspelling and coming in contact with Ads.
But these intrusions can be addressed to ICANN for (dot)COM domains, and if they rule in the trademark’s favor, they will gain access to those misspelt domains.. And for all new root domains there is a SUNSET period for trademark holders to request them eg. (dot)EU
According to CNET circa April, 2003:
Applied draws about a half billion unique impressions a month across its domain-name network, with a click-through rate of 50 percent on many of the listings.
According to me:
Could this now be 30-40% of Google’s revenue? How much of this “network” is just trademark misspellings?
“People will catch on that their being fed auto-generated pages and just use a search engine to find quality content.”
LOL. Anyone ever hear about “search engine autogenerated content spamming”?
The domain parking, PPC landing page industry has wised up and moved from delivering landing pages populated with “take all comers” generic links and moved towards a model that delivers landers populated with “on domain topic keyword links” that, when clicked, trigger the delivery of paid search feeds listing relevant websites. As a result the practice of direct navigation is likely to increase, not decrease.
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and when I asked Google and Yahoo about them, they said they were legit because they were “type in” traffic sites, and the ads actually served a useful, directory like purpose.
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did you expect something else?
Search machines finance themselves with adwords and adsense.
The visitor is nevertheless served with topic-relevant references better, as if he seek for camrecorder and get a sexsite 🙂
Think of this. Domain names could be used like mortgage backed bonds. Buy up a bunch of similar names say for vacations (i.e. seattlevacations.com, vacationsseattle.com and so on – there are 1000s of combos). You can than take these urls and lease them out as prepackaged traffic, or sell the package. If the site is visually appealing and doesnt look like just a bunch of adds, it may be another alternative to local search. As the site gains traction people may bookmark it and you would not need to rely on mispellings to attract traffic, people may consider it a desirable destination.
Estimates I’ve seen put “type-in” traffic at 15-20%. This is what someone at Yahoo said, and it’s the average of the informal poll I took at the recent ICANN meeting in Vancouver. See my longish post on the subject at http://www.namesatwork.com/blog/2005/11/19/15-of-all-web-traffic/.
Shabby? Perhaps. It’s just another use of a keyword. Is Google shabby because they monetize the exact same keywords being typed in to a search box instead of URL locator box?
Hi John,
I read your article about “Type In PPC Play”.
I own the rights to about 400 domains so I suppose I am a small PPC Player. These domains pay for themselves and they produce a modest income for me. It is not “free money”. I spent countless (hundreds of) hours over the years researching and gathering the types of domains that I thought would produce “type in traffic”. Many of these domains were other people’s garbage. Many of them were bought at a premium from domain drop listing services.
Your suggestion that those who play in the PPC market are linked to click fraud shows very poor logic and is nothing short of a direct and unfounded insult to a group of visionaries and successful entrepreneurs.
Domain names are virtual real estate, many of which attract qualified and interested customers on a regular basis and for a very low cost. To expect any entrepreneur to sit idly by and allow these valuable assets to go to the next registrant in the interest of fairness is foolishness; void of common business sense.
We have our bad players but there are a whole lot of legitimate and smart business practices that involve the buying, holding, and development of high quality type-in domain names and there are a lot of people involved in it that have the same right to display ads on their domain holding as this web property does to place an ad below your article.
I’d be happy to discuss or debate this with you more fully if you are interested. I felt compelled to at least write to you briefly since I think you have cast suspicion on a group of people who don’t deserve it and on a practice which does not get the objective credit that it deserves for it’s foresight and practical business benefits.
In my opinion, the model will last, people will continue to type in URLS in their address bars, and “patrician” is too nice of a way to describe your view, considering the insult and suspicion you have cast upon this growing and misunderstood group of visionaries.
Sincerely,
Joe A.
Marchex buys domain names that have English phrases like siliconeimplants.com, Informationjobs.com, and bigemployment.com, that are filled with Yahoo sponsored links (they are a distribution partner). Marchex is buying lower priced keywords on Google, driving traffic to their site, and then arbitraging the difference between what they paid and what Yahoo! advertisers pay. I talked to a guy who owns a bunch of domain names who has a similar agreement with Google, and he said his Google contract specifically forbids him to bid on keywords to drive traffic to his site because I guess Google views it as just keyword arbitrage and not valuable for their advertisers. Marchex had some really egregious examples with completely irrelevant links, such as buying “Arabic” and putting their siliconeimplant.com site as the link, but that violated Google’s advertiser rules so I think Google foced them to take it down. It seems the practice would not be good for Yahoo advertisers because essentially your advertisers are paying for higher priced keywords and Marchex is buying cheaper keywords to drive traffic to them. In the Arabic example, if Arabic costs 10c, each silicon implant advertiser is probably much more than that, so Marchex is making a spread.
Check out the slides of this nefarious practice here… http://berk.typepad.com/bshaw/2005/11/irrelevant_traf.html
Sure, such type of sites is legal to exist, but I don’t think, that a lot of users are interested in them.