Reports

Volume 5, Issue 4 December 20, 2010

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The Simple Mistakes That Are Costing You Customers

90 Million Annual Visitors to Top Retailers Diverted by Typos

Foreword

Holiday shopping season is coming to a close after a huge Black Friday and Cyber Monday kickoff. According to online analytics firm Coremetrics, online sales were up 19.4 percent this Cyber Monday over Cyber Monday 2009, and the average order value rose to $194.89 from $180.03 last year.1 But most impressively, this year marked the first time Cyber Monday sales exceeded a billion dollars, with retailers raking in a combined total of $1.028 billion.2

Given these trends, FairWinds Partners sought to identify opportunities for online retailers to maximize their online impact and increase the number of consumers they reach and minimize diversion, customer acquisition cost, and instances of phishing, malware deposit and other fraud that targets consumers seeking brands online. To do so, FairWinds conducted a study to identify how the top Internet retailers are affected by one character-off typographic variations of their domain names, and how they can approach reducing the brand damage that can come about as a result of these typo variations.

Internet users typically access content online in three ways. The first is through Direct Navigation, where users type a domain name directly into the browser’s address bar. The second two are through Search Navigation, either organic or paid. When a user types a term or phrase into a search engine, both organic and paid links appear. Organic links are those that are ranked by the search engine’s algorithm; paid links, or “sponsored links” as they often appear, are those that companies pay to have appear among search results.

Our study deals specifically with Direct Navigation, which studies have shown that 100 percent of Internet users practice as part of their online navigating behavior.3 In fact, the EVP/GM of Interactive at one of the biggest U.S. websites recently told FairWinds that over 90 percent of the traffic to his site is the result of Direct Navigation, and that the direct audience “is our bread and butter.” While direct navigating, it is inevitable that at some point, every user makes a spelling or keystroke error. Brand owners often proactively secure typo variations hoping this will lead to the better protection of their online audiences. Frequently, individuals – unrelated to the brand owner – intentionally register domains that are typos of popular brands in order to monetize or otherwise benefit from traffic generated when Internet users make these kinds of mistakes. This practice is known as typosquatting, and not only does it exploit brand names, it also leads to confusion among consumers and even exposes them to cyberthreats such as malware or phishing schemes. However, typo domains can be problematic for brands even when they are not overtly typosquatted. If the domains were not registered maliciously, or even if the brands themselves own them but do not direct them to the appropriate content, they can cause Internet users and potential customers to have a poor experience or become distracted away from the target brand’s site. We found that for the 25 retailers in this study, over 90 million visitors per year are diverted by typo domain names.

METHODOLOGY

FairWinds has developed a proprietary formula to calculate the traffic that domain names receive, based on both public data as well as experience working with Internet retailers and other large enterprises. We calculate the traffic that each individual domain receives and examine the type of content it resolves to in order to measure how many visitors and potential customers each brand loses to typo domains.

To derive our data set, we consulted Quantcast’s list4 of the websites that receive the most traffic from Internet users in the United States in Fall 20105. We then identified which of those sites engage in e-commerce, and selected the top 25 most trafficked sites with five or more characters in the root of their domain name. We found that for domain names with fewer than five characters, there was a significantly increased likelihood that a typographical variation would actually be the name of another legitimate business or website. The following 25 sites were included in the study: Amazon.com, Walmart.com, Target.com, Apple.com, Netflix.com, BestBuy.com, JCPenney.com, Overstock.com, Sears.com, Kohls.com, Lowes.com, HomeDepot.com, TicketMaster.com, BarnesAndNoble.com, Staples.com, Cabelas.com, Macys.com, BabiesRUs.com, Kmart.com, LaneBryant.com, Walgreens.com, Zappos.com, Shutterfly.com, Borders.com and AllPosters.com.

After determining the list of 25 target websites, we used DomainTools’ typo spinning software6 to generate a list of typo domain names. We restricted our data set to domain names ending in .COM, because each of the brands in our study communicates a .COM address as its primary domain name. This approach yielded a total of 2,675 domains.

When we add up the traffic to all these typo domains, we find that they receive a total of 90,320,336 visitors annually. This means that for 25 of the top online retailers, over 90 million potential customers are being diverted or distracted, resulting in a negative online experience that reflects poorly on the brands in question. It can also mean that those brands are unnecessarily paying millions of dollars in customer acquisition: many squatted typo domains host pay-per-click (PPC) ads, and companies pay a click fee every time a user clicks on one of those ads. PPC sites are the most prevalent form of traffic monetization among infringers. Additionally, in extreme cases, visitors can be diverted and lost to competitors.

RESULTS AND DISCUSSION

It is fairly easy for online retailers to avoid such a high volume of diverted traffic. Just as a brick-and-mortar store can combat losses that result from shoplifting and theft by investing in improved security systems, online retailers can prevent losses from typo domains by investing in recovering the most harmful typos.

One big offender that our study identified was Khols.com, a typo of Kohls.com that receives over 10 million visitors annually based on FairWinds estimates. This domain name does not resolve to content, but rather leads to a blank page. When a user sees that the domain does not turn up the Kohl’s homepage, one of two things will likely happen. First, he or she may try successfully to retype the domain and will navigate to the desired page. But often, the user does not realize he or she has made a typing error and instead pursues other avenues; namely he or she may turn to a search engine to navigate to the Kohl’s homepage. In that case, Kohl’s misses the opportunity to provide a potential customer with a seamless and satisfying online experience. And on the chance that the user decides to navigate to a competitor’s site instead, Kohl’s loses a visitor and a potential sale.

As the traffic to Khols.com show, not all typo domains cause equal harm for the target brands – compare its 10,256,836 visitors a year with the 1,271,992 annual visitors Kolhs.com (another high-traffic typo) receives. In fact, we found that out of the 2,675 domain names examined in our study, the top 25 typos, or 0.93 percent, are responsible for 64,390,986 diverted visitors. That accounts for 71.3 percent of the total lost visitors from all the typo domains in this study.

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This finding is consistent with analyses we have performed in the past, and it’s good news for brand owners. It means that companies do not have to devote valuable time, money and resources to recover or register every single typographic variation of their brands (an unprofitable pursuit) in order to gain a significant positive impact. Rather, with the right analytics, they can identify the most common typos that garner the most traffic, and focus their efforts on recovering those domains. Most of the Internet retailers in our study could cut their levels of lost traffic in half with only a handful of strategic recoveries.

CONCLUSION

It is clear that typo domains present a significant problem to online retailers, but one that can be addressed relatively easily with the right research and analysis. Ultimately, these are significant opportunities as well. Owning and optimizing high-quality typo domain names will lead to substantial increases in revenue and reduction in paid search costs. As the holiday shopping season winds down and traffic and sales to Internet retailers continue to spike, it is more important than ever that e-commerce businesses become aware of this problem and take steps to address it. By pursuing a few key typo domains, they will be able to drive more organic traffic to their sites and, in turn, achieve even higher sales, both during the holiday season and beyond.