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Typed too fast? Google profits from your typo
The Washington Post
Google, which runs the largest ad network on the Internet, is making millions of dollars a year by filling otherwise unused Web sites with ads. In many instances, these ad-filled pages appear when users mistype an Internet address, such as "BistBuy.com."
This new form of advertising is turning into a booming business that some say is cluttering the Internet and could be violating trademark rules. It also triggered a speculative frenzy of investment in domain names, pushing the value of some beyond $1 million.
Google specifically bars Web addresses that infringe on trademarks from using its ad network, but a review of placeholder Web sites that result from misspelled domain names of well-known companies found many of the ads on those pages come directly from Google.
"It seems very hard to reconcile Google's support of this activity with their 'Do No Evil' motto," said Ben Edelman, a Harvard University researcher who has looked extensively into advertising on unused domains.
Google is defending its business practices, saying it removes participating sites from its ad network if a trademark owner complains those sites are confusingly similar.
"Unless it is confusing to somebody, trademark law doesn't apply," said Rose Hagan, Google's chief trademark lawyer.
The Silicon Valley search giant is the largest but not the only ad network showing ads on placeholder Web pages. Yahoo! and Australian firm Dark Blue Sea run similar services.
This form of online advertising relies on "type-in traffic": users who type the information they're looking for into the Web browser's address bar instead of using a search engine. Industry analysts estimate 15 percent of Web traffic originates this way.
That has created a demand for domain parking, which involves owners of a domain name "parking" that name with a firm that creates placeholder pages and then inviting Google or other Internet ad networks to fill them with ads.
When Web surfers arrive at those sites and click on those ads, Google and Yahoo! get paid by advertisers for that click and share their revenue with the owners of the domain names.
"We want those pages to function as alternatives to search engines," said Matthew Bentley, chief strategy officer for Sedo, a parking service that manages more than 1 million unused addresses placed with the Google ad network.
The parked ad pages are mostly unattractive, but Sedo, Google and Yahoo! said they are working to improve them by adding more information. The parking service usually handles the creation of the ad sites.
"It's such an easy process," said Ron Jackson, publisher of DNJournal.com, an online publication that covers the industry. "In two minutes, I can set up a thousand domain names."
The practice has sparked a speculative scramble to register unused names and test their ad potential. Because purchasers can change their minds within five days and avoid paying the $6 registration fee for the name, many investors enter the names in Google's ad program for a quick test and quickly drop those that don't yield enough clicks to cover the domain registration fee.
Of the 30 million dot-com names registered worldwide last month, more than 90 percent were dropped, according to domain name registrar GoDaddy.com. As a whole, the Internet has 54 million active .com and .net addresses, according to VeriSign.
Jackson said he has bought 6,600 domains and uses several ad services to earn revenue on them. "I know quite a few guys making over a million dollars a year from advertising on their domains," he said. "It's like a 24-hour money-printing machine."
David Steele, an intellectual-property lawyer at Christie, Parker & Hale and a professor at Loyola Law School in Los Angeles, said the practice amounts to someone making money off someone else's trademark without permission.
"Trademark law is designed to protect consumers so they can quickly identify what they want and get it," Steele said. "If everyone has to spend a whole bunch of time wading through all this look-alike crap online, then the value for Internet consumers is going to be seriously reduced."
John Meyers, general manager of Yahoo!'s ad service for parked domains, said Yahoo! is strict about weeding out addresses that violate its guidelines, which prohibit celebrity names, typos of trademarks and references to illegal activity.
Yahoo! developed a software filter to identify domain names in its network that violate those rules so they can be removed.
But Hagan, Google's trademark lawyer, said software formulas aren't smart enough to identify trademark infringements.
"It's subjective when you look at domain names to decide how many letters off does it have to be to form a trademark or conjure up that trademark," she said.
Google won't disclose how much it is earning from ads on these types of sites, but Chief Executive Eric Schmidt said last week, "It's a lot of money."
The company also doesn't break out how much it earns from ads on its own sites compared with partner sites, which include rival search engines such as Ask.com, thousands of news sites and blogs, and millions of vacant domains.
Wall Street analysts, however, estimate slightly less than half of Google's $6 billion in revenue last year came from ads shown on partner sites.
The Washington Post found hundreds of active Web sites showing Google ads at addresses that appear to be misspelled variations of well-known company names, known as "typo-domains." Their owners are known as "typosquatters."
The Post generated roughly 100 random misspellings of "www.earthlink.net" and found 38 sites using variations of the Earthlink name "parked" at a Google-owned service called Oingo.com. All 38, which includes "dearthlink.net" and "rearthlink.net," serve Google ads.
Likewise, nearly a dozen sites with variations of "Verizon Wireless" were showing Google ads, with some linked to the company's official VerizonWireless.com. That suggests Verizon Wireless may be paying Google for ads on typosquatter-owned sites.
Verizon Wireless spokesman John Johnson said the company has a successful track record of getting such sites shut down and takes "a particularly dim view of typosquatters."
"Do we think any traffic is good traffic as long as it ends up at our site? Clearly many of these sites are siphoning off traffic by tricking people ... This is never a good thing for our trademark or our company," he said.
Washington Post staff writer Yuki Noguchi contributed to this report.
Copyright © 2006 The Seattle Times Company