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Perspectives Volume 3, Issue 8 Direct Navigation, part 2 of 3

Typosquatting The Business of Cybersquatting, Part 2 of 3 FORWARD As previously discussed in Part I of this series, Internet users frequently use Direct Navigation, which is the practice of typing keywords appended with an extension such as dot-COM directly into a browser bar or address bar, to locate the Web sites they are trying to visit. The prevalence of this navigation technique enables the widespread success of cybersquatting and more specifically, typosquatting. Typosquatting refers to the practice by which individuals seek to monetize or otherwise benefit from traffic generated by spelling or keystroke mistakes made by Direct Navigators attempting to reach popular branded and other domain names. It is important to point out that typosquatted domains are rarely reached via search engines. The following paper—Part II of our series of Direct Navigation Perspectives— examines typosquatting in order to offer readers a clearer understanding of its impact on brands, brand owners and Internet users. It was written as a follow-up to our report on the practice of Direct Navigation, a paper that offered a detailed overview of this practice and how it fuels the profitability of cybersquatting. The good news is typosquatting can be easily addressed—at a minimal cost—with a prudent approach to domain names. Similar to other FairWinds’ work, we analyzed the behaviors of Internet users and infringers in order to detect patterns that will help brand owners sharpen their domain name strategies. This paper focuses on understanding the logic and business behind typosquatting and aims to provide insight into what kinds of typos are the most valuable and, in turn, the FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Perspectives Volume 3, Issue 8 Direct Navigation, part 2 of 3

most harmful. By better understanding how and why typosquatting happens, and anticipating where it matters most, one can more effectively protect consumers and brands online. HOW TYPOSQUATTERS MAKE MONEY Typosquatting is extremely profitable for its practitioners and has evolved into an organized and large-scale phenomenon today. As seen in our previous Direct Navigation report, the pay-per-click advertising business model used in most cases of typosquatting generates millions of dollars for its most sophisticated masterminds. In order to understand the risk and impact that typosquatting poses to your brand, we begin by identifying the main drivers of typosquatting revenue: targeted site traffic and quality of the misspelled name. TRAFFIC Typosquatters rely on the mistakes users make when entering names into their browsers’ address bars. CitizenHawk Inc., a digital brand management company, claims that up to 20% of all hand-typed URLs are misspelled. 1 However, it is important to remember that the effectiveness of a registered domain is not substantiated by its mere existence. The main revenue driver for typosquatted domains is the traffic that the correctly spelled domain name (target site) receives. For example, fairwindspartners.com is the target site and fairwindpartners.com (with the “s” after “fairwind” dropped) is the typo domain. Pay-perclick advertising is the most frequent practice used by typosquatters to monetize their domains. The amount of people who end up on typosquatted sites is a key factor in driving profits, since a percentage of visitors to these sites typically click on at least one link, which generates revenue for the domain name owner. As we will demonstrate in this paper, the 1

"Do You Know How Many Domains Are Squatting on Your Brand?" CitizenHawk. FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Perspectives Volume 3, Issue 8 Direct Navigation, part 2 of 3

mere existence of a typo may not be a big problem in and of itself, but when combined with traffic, some names can be problematic and costly for brand owners. QUALITY OF TYPO DOMAINS The other main driver of revenue that typosquatters consider when deciding which domains to target and register is the value of one misspelling in relation to another. Two factors that affect which domains will be targeted include the length of the name and its monthly traffic. The quality of the typo domain depends upon the specific type of spelling mistake it exploits and the proximity of commonly entered or switched letters on a keyboard. A brand owner’s level of exposure to typosquatting is directly related to site traffic and name prominence. The more traffic and prominence the target name has, the more likely it is that typosquatting will be extensive and harmful. In other words, those domains related to brands and products that are top of mind for Internet users stand the greatest risk of being infringed. However, brand owners can take precautionary measures to prevent their sites from being exploited. Thoughtful consideration of traffic, the particular appeal that a domain name has among Internet users and the prevalence of certain typing mistakes can help to effectively combat typosquatting in both proactive and reactive ways. The research in this paper aims to further explore these important factors that must be considered. METHODOLOGY In an effort to more clearly understand typosquatting, we focused our attention on target domains that receive at least two million visitors per month. Since traffic ultimately equates to revenue for those who leverage pay-per-click advertising on their names, this

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Perspectives Volume 3, Issue 8 Direct Navigation, part 2 of 3

focus ensures that we had meaningful data to work from. After identifying the list of target domains, the sample was further limited to domain roots - the part of the domain to the left of the first dot - that were a minimum of six characters in length in order to allow for the analysis of a greater number of permutations of names that can be registered and entered into browsers. Doing so also helped to ensure that a typo of a target domain in our data set was unlikely to be a different correctly spelled word. With the resulting list of domain names, we generated a total of 13,198 singlecharacter typo variation domain names. We then estimated the traffic to each typo domain name in order to compare it to the traffic received by the target domain. Finally, we categorized 3,000 of the highest trafficked typo domains by specific type of mistake in order to draw conclusions about which mistakes can be most successfully monetized by criminals and where a brand’s attention is most needed. KEY RESULTS ! The three most common types of single-letter typing mistakes are: o inclusion of an extra letter (29%) o inclusion of an incorrect letter (23%) o omission of a letter (20%) ! The three most common TLD registrations among the TLDs we surveyed are: o dot-COM (70%) o dot-NET (13%) o dot-ORG (9%)

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Perspectives Volume 3, Issue 8 Direct Navigation, part 2 of 3

DISCUSSION The typos examined in the data set were broken down into eight overarching categories to create a uniform method for analysis. Each individual category contains variation in specific mistakes, but the groups provide a basic illustration of the most common types of mistakes. Wrong TLD – refers to those users who enter the wrong top-level domain (TLD), such as dot-COM instead of dot-ORG. Wrong Letter – refers to those users who type a wrong letter, such as myspsce.com Repeated Letter – refers to those users who repeat a letter, such as faceboook.com Extra Letter – similar to repeated letter, except that the incorrect letter (or number) is not repeated, but typically within one key of the correct letter that precedes or follows it within the domain Missing Letter – refers to those users who dropped a character from the domain name, such as myspac.com Missing dot – refers to dropping a dot (“.”) in the domain name, such as wwwmyspace.com Letter Swap – refers to transposing two letters, such as wellfsargo.com Extra Character – includes the typos that incorrectly contain an extra non-letter character, such as adding a hyphen in biz-rate.com

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Out of 3,000 categorized typo domains, the mistakes represented in Figure 1 were the most common: Figure 1

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Perspectives Volume 3, Issue 8 Direct Navigation, part 2 of 3

In addition to these general categories, this test was also able to identify more specific mistakes made by users. Figure 2 details the most popular typos. The percentages in Figure 2 were calculated based on the total number of misspellings and keystroke mistakes present in our data set; the number of misspellings and keystroke mistakes is a subset of the 3,000 highest trafficked typo domains that does not include use of the wrong TLD. These specific mistakes are the most important for businesses to be aware of when examining a brand’s level of exposure to typosquatting. Figure 2 Typo Mistake extra letter: s missing dot extra letter: r extra letter: e missing letter: s missing letter: e extra letter: w missing letter: i extra letter: i extra letter: o

Percent of Total Typos 3.47% 3.19% 2.44% 2.30% 2.10% 2.10% 1.92% 1.79% 1.72% 1.55%

By taking the number of typo domains identified for a target site and comparing this number to the target site’s traffic, we hoped to determine if typosquatters register domains based on site traffic or on other principles. Our analysis seems to support our hypothesis that site traffic is related to how many typo domains will be registered for a target site. As can be seen in Figure 3, the data suggests that most target sites with significant traffic have a range of 100 to 200 typo domains siphoning traffic and the overall data demonstrates a positive relationship between traffic and the number of typo names. FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Figure 3

These findings demonstrate that typosquatting utilizes a research-based method –the same method that can be used to understand behavior of a brand’s online consumers. Registering any and all typo domain names is not the most effective strategy for brand owners to employ when trying to combat typosquatting. Establishing strategic principles to determine which names are most harmful to a brand should be a priority when developing a targeted approach to registration and enforcement. An effective strategy will not look to completely eliminate typosquatting, but will seek to minimize its effects and maximize capitalization of brand assets thereby accounting for the growing user behavior of unintentional “Typo Navigation.”

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Perspectives Volume 3, Issue 8 Direct Navigation, part 2 of 3

IMPACT ON BRANDS Typosquatting causes both quantitative and qualitative harm to brand owners in the form of direct monetary loss and harm to brand name and image. Most obviously, the traffic that is siphoned away from target sites can lead to a loss in revenue that would have been gained from each of those lost impressions. Based on inferences from Interactive Advertising Bureau (IAB) research, we have estimated that the value of an Internet impression for a global brand is worth 15 to 25 cents. Using this estimate, one can then calculate the monetary harm being caused to a brand. Figure 4 shows the top 10 variations of four immensely popular Web sites, proving the importance of ensuring that users are not directed to a typosquatted page instead of their intended content. While these domains are actual registered typos, fortunately they are not all owned by infringing third parties.

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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Figure 4 2 Target Domain myspace.com

Target Traffic 52,000,000

Target Domain mapquest.com

Target Traffic 51,000,000

Top 10 Typo Domains mysapce.com myspce.com mysace.com myspac.com mspace.com mypsace.com myspacce.com wwwmyspace.com myspcae.com myspae.com Total Typo Traffic: Top 10/Target:

Monthly Traffic 573,961 419,531 400,562 390,264 325,885 247,149 243,565 205,882 142,168 139,922 3,088,889 5.94%

Top 10 Typo Domains maoquest.com mapques.com mapuest.com mapquet.com wwwmapquest.com mapqeust.com mpaquest.com mapqyest.com mapqest.com mapqust.com Total Typo Traffic: Top 10/Target:

Monthly Traffic 35,014 20,023 19,767 16,628 11,802 11,593 10,783 7,055 6,497 6,385 145,547 0.29%

Target Domain youtube.com

Target Traffic 39,000,000

Target Domain wikipedia.org

Target Traffic 37,000,000

Top 10 Typo Domains youtub.com yuotube.com yotube.com youtbe.com yutube.com wwwyoutube.com yourtube.com toutube.com youtue.com youube.com Total Top 10 Traffic: Top 10/Target:

Monthly Traffic 127,993 98,065 95,143 75,623 43,414 39,530 31,927 28,967 22,211 18,031 580,904 1.49%

Top 10 Typo Domains wikipedia.com wikpedia.com wikopedia.com wikpedia.org wikipeida.com wkipedia.com wikipeida.org wikipeda.com wikipeda.org wilkipedia.com Total Typo Traffic: Top 10/Target:

Monthly Traffic 342,770 18,844 16,197 11,960 9,334 8,147 7,510 7,106 6,204 5,963 434,035 1.17%

Traffic estimated by FairWinds Partners in Q2 2008. No traffic data was validated by the domain name owners. FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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The equivalent of 5.94 percent of traffic to myspace.com is going to its top 10 typos. Using the range of Internet impression values mentioned above, we calculate that if all 10 domains were held by infringers and used improperly to divert visitors to other content, the company would lose the marketing equivalent of between $400,000 and $700,000 each month. These numbers are calculated using the formula Value = Traffic x Impression Value. Sites that offer e-commerce transactions tend to have much higher computed damages since their formula would include additional components beyond just the value of an impression, such as lost sales. In addition to costing companies lost impressions, there are other, less tangible consequences of typosquatting. As previously discussed in our Direct Navigation analysis, landing on a typosquatted page can cause users to feel that they have been “hijacked.” When a user is directed to unexpected and potentially inappropriate content, this uncomfortable feeling may prevent the user from trying to visit the intended site again for fear of landing on more unintended content. For a particularly powerful example, think of Disney and its target audience. The majority of users trying to find Disney content online are young children and their parents. Therefore, a typing error that leads to a typosquatted page can be disastrous if the content on the page is inappropriate for children—such as the pornographic content that finds its way onto some typosquatted domains. While an extreme example, a negative experience such as this would certainly influence a parent’s opinion of the brand and affect their willingness to navigate to that site again. This leads to a decrease in site traffic and further lost revenues due to increased negative feelings about a brand. Users are likely to perceive a brand differently, and perhaps less favorably, after ending up on typosquatted pages. Increasing numbers of Internet users are turning to Evolved Navigation, in which they expect reputable brands to provide a high-quality online

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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experience at sites marked by domains they may invent, but expect will still lead to the brand. We will explore this in further detail in Part III of this series, when we examine combosquatting–the combination of a brand and a popular search term–which is favored by users who practice Evolved Navigation. STRATEGIC IMPLICATIONS What does this mean for brand owners in terms of their overall domain strategy? Typosquatting is a serious issue that needs attention if brand owners are to fully leverage the domain name space and be where their consumers attempt to find them. Implementing a logical and well-developed strategy is an essential key to success. Owning every conceivable typo of a domain name is both unfeasible and unwise since most are not valuable or useful. In order to most effectively guard against typosquatting, brands must identify the typo variations of their domains with the highest value (which are therefore the most likely to be cybersquatted) and then work to register and acquire those domains. By taking a domain name and comparing it to our findings about the most common typing errors, owners can logically determine the weakest points in their names as well as the ones most likely to be typosquatted. With a clear idea of which names are most important in terms of traffic and strategic value to the brand, owners can make the most of their portfolios while avoiding costly enforcement of names that are not causing as much harm. Strategic registrations, dropcatches, and enforcement activities can drastically reduce the damage caused by typosquatting.

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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In addition to the most common typing mistakes shown in Figure 2, brand owners should also consider the different available TLDs. Figure 5 shows the TLD breakdown across our data set, which included dot-COM, dot-NET, dot-ORG, dot-BIZ, dot-INFO, and dot-US: Figure 5

Because users occasionally enter a different TLD, registering additional TLDs can help all brands, particularly those registering outside of dot-COM. For example, wikipedia.org has also strategically registered wikipedia.com. Overall, TLDs remain an important consideration when building a domain name portfolio strategy. Interestingly, the infringers who monetize traffic are known to favor dot-COM. We think brand owners who tend to use dot-COM should be similarly focused on this extension in their domain portfolio.

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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CONCLUSION Based on this analysis and an understanding of online consumer behavior, it is clear that typosquatting has developed into an issue with strategic implications for brand owners. It is in the public interest for brands to understand the business of typosquatting in order to grasp the ways in which cybercriminals will most likely attempt to exploit their brands. By using this information to their advantage, brand owners can assemble an effective strategy to protect their brand and to help protect the Internet community from diversion and the potential harms associated with it. Regardless of the brand or company, all domain name portfolio managers can benefit from the knowledge and experience that goes along with an in-depth understanding of typosquatting. We hope that this study has helped you gain insight into the most effective ways to protect your brands and your customers, as well as offering sound strategies for furthering the commercial interests of your business. The data set used in this paper may be made available upon request.

FairWinds Partners, LLC | Internet Strategy Consulting 2122 P Street, NW | Suite 300 Washington, D.C. 20037

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