The New Widespread Problem

It seems that my last post underestimated how widespread the problem of advertising on fake websites by large search engines is on the internet. Otherwise known as typosquatting, this activity involves people registering domain names that are similar to trademark names of legitimate companies. The hope is that these similar domain names will create a large amount of traffic to the site, thus attracting advertisers such as Google. As more people click on the ads, the search engine that provided the ads as well as the site owner receives revenue. These sites can become very profitable for the individual who creates them, sometimes generating more than a $1 million a year according to a Washington Post article. It seems Google is not the only participant in this practice as my last post may have made you believe.

Apparently Yahoo is participating in the same revenue generating scheme, prompting a number of business owners in New Jersey to file suit against the search engine yesterday. According to the article, "the suit accuses Yahoo of displaying ads through spyware and on parked domains that advertisers assumed would be placed next to the more valuable search results." The filers of the suit say that this is a class action case, and that anyone who has advertised on Yahoo in the past couple of years fits into the class.

I think it’s a little too early to start speculating about what’s going to happen in these cases. Instead of guessing how many businesses will end up filing suit or how many millions of dollars the settlement will end up being, I will speak about what I've come to realize since I first starting covering this topic on my blog. And that is that these major search engines have found numerous questionable ways to either make revenue or hush people who try to cut into those revenues. Take click fraud, a major problem for companies who advertise but a major extra revenue source for the search engines. Although Google and Yahoo may have to pay some cash in a settlement, that payout will only be a small fraction of the total increased revenues from click frauds. The same will end up being true with typosquatting. I think search engines found a way to put up more ads on the internet, thus being able to charge their clients more fees, and said lets do it until someone catches on. Now they are finally getting called out for this trick. And yes, they probably will settle this round of lawsuits with a cash payout, but it will again be far less than they took in. And as we speak I will bet they are pulling in revenues from at least five other questionable sources that no one has noticed yet. The search engines know eventually people will find out, but as long as they can keep finding new ways to charge for advertisements, they aren't going to care if they get caught doing one or two things wrong.

All I can say is that’s one hell of a way to do business.

- McG

Capitalizing off Typos

The topic of people registering domain names that are typos of trademarked companies has come up numerous times in class. I always assumed that people registering company or celebrity names were just looking to get paid off to make a quick buck, and many times they are, but it didn't occur to me that they are used as ad space. What's even more intriguing is a major player in this business: Google.

An article published by the Washington Post explains how Google is making millions off of filling unused websites with ads. Basically what happens is an individual will make a "fake" website of a real company. Then Google will fill the banner ads with companies that pay Google for advertising space. To be fair, Google bars websites using trademark infringement from using its ad networks, but this is a very subjective science. Google's trademark lawyer admits "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." So even though they don't promote people to make these fake websites, such as dearthlink.com instead of earthlink.com (check out the difference and notice the ads), they are bringing in revenue from this business. When CEO Eric Schmidt was asked how much revenue Google brings in from this type of advertising he stated, "It's a lot of money."

As a marketer, I think this is a clever way to bring in additional revenue for the company. We've all heard about these sites, and we've probably even accidentally visited one once or twice when we don't carefully type in a website. It seems like a good idea to put ads that the user might click on even though they were searching for a different purpose. Now whether it's a smart idea is a different story. Google is definitely playing with fire by participating in this, especially when they state that they do not promote sites that infringe on trademarks. This kind of double talk could end up costing them in the end. From the CEO's statement it’s clear that these websites are crucial to Google's revenue stream, but the company should be clearer about which websites they promote through advertisements.

- McG

No Tax Zone

As I complete my last month of courses here at UD I reflect back on all the good times. The drinking, the partying, the friends, and even occasionally learning. Now that all those good times are coming to a close, I must face the realities of joining the workforce. Whether I move back home or find a job elsewhere, one thing has become certain from living in Delaware for 4 years; there's no way I'm living in Delaware anymore. Not to hate on this state, but the best thing it has going for it is tax free shopping. Worry not, you say to me, you'll always have free shopping on the internet. If only that were true.

As this weeks article discusses, a number of states are planning to start taxing our beloved music downloads. I myself am not directly affected by this, being one of the few outcasts to still not own an iPod, but even I'll be purchasing one after graduation and will have to face this extra cost. The idea to start taxing downloads has been gaining momentum as revenues from these sales has grown at a rapid pace over the past several years. In 2005 digital music sales topped $1 billion according to a TMCnet article, thus making it an attractive source of tax revenue. This tax would be the first step towards widespread taxing of internet shopping. Although Congress passed the Internet Tax Memorium in 2004, local, state, and federal governments are attempting to find loopholes in the law to tap the vast revenue stream of ecommerce. You have to imagine that sooner or later the government is going to attempt to restructure the Tax Memorium, which must be renewed every 3 years, to allow some taxation. Theres an interesting article from the Heartland Institue that illistrates some threats to our tax free interent environment. As for my opinion, as I'm sure you'll all agree, free is better than not free. I'm obviously not going to be happy when the government finds another way to take money away from me, but I won't be surprised when it happens. Let me know what you think about the whole taxation thing and give me your guess as to when the internet becomes a taxable environment. My call is 2010. Heres to hoping I'm wrong.

- McG

On a Happy Note

I have come to the realization that I have done a good deal of bitching on this blog since I have created it. For one reason or another I have focused on putting a negative spin on most of the articles I've reported on. So in that light, I have decided to dedicate this post to praising an internet marketing tool. For those of you who have read my past posts, you will know that I am somewhat skeptical of companies' marketing campaigns online (i.e. bulk mail and the likes). Despite my sourness towards pop up ads and multiple banners, I realize how important these are to driving revenues of many online sites.

This week's article describes the newest form of advertising, the e-commercial. This type of technology provides rich streaming video/audio content that captures internet users attention. One company, ewebmercials.com is offering this service to any website for a very low fee. This enables virtually anyone to compete on the internet, enabling a company to advertise for very cheap but have a professional look and effective message. The article states that a study done by the Wharton School of Business found that adding streaming media increases the time visitors spend at a website, and in turn can boost profits by as much as 83%. That is no small figure, especially for a company that is just trying to survive.

I think it's pretty obvious that an interactive website is much more entertaining than a plain informational text site. If this service is available for a reasonable price I think it's silly for companies not to utilize this resource. The only caution I would give is to not go overboard. Its one thing to have an interactive video box somewhere on the screen, but totally another to have each click of the mouse activate a new media stream. Like anything else, this tool is effective only up to a certain point. After that it just starts to irritate users and prompts them to leave the site. Any feedback on my positive blog would be appreciated. Take it easy people.

- McG

Internet Slow Lane?

Today's article

In the spirit of capitalism, or perhaps more appropriately in the spirit of greed, telecommunications and cable companies are attempting to start accepting additional fees from web businesses to get preferential treatment for their downloads. Basically, companies pay the service provider to give certain data packets priority over others when it comes to download, in effect making these paid for downloads much quicker than others. Forgive me if I sounded like I was bashing capitalism a moment ago, but I have to jump ship on this idea.

The whole idea of the internet is free flow of information. Data packets flow through the first available network and succeed in providing quick delivery of information. To essentially put up crossing guards across certain networks and halt some data while letting other data that has a higher priority move along the network first seems like a troubling idea. If this were allowed I can see a day when smaller companies who don’t have the funds to pay for this priority get left in the dust. Worse still, competing companies to the service providers could purposely not be given priority, thus giving the service provider an unfair advantage, as was mentioned in the article. I'm all for gaining competitive advantage, but lets do it on a level playing field. I see this as both a legal and an ethical issue. How a telecom provider could legally be allowed to have an unfair advantage is beyond me, and this type of behavior also goes against basic business ethics. Or perhaps I'm just being paranoid. Let me know what you guys think.

- McG

Marketing Yourself on the Internet

Think about any job interview that you've ever been on. You take time to make sure your clothes are well pressed, your hair is straight and do everything else to make yourself look good. When you’re talking to your potential employer you sit up straight and project yourself to give off the perception of confidence. On your way out you probably give your interviewer a firm handshake and a polite smile in hopes that you give one final good impression. I think you'll agree that what I've just described is a great way to market yourself in an interview. What most people don't realize is that increasingly these days this is not enough to ensure you obtain the position you are applying for. Everyone needs to realize, especially those of us who are about to enter the 9-5 world, that how you market yourself online is equally important. I know you are thinking to yourself, "How exactly am I marketing myself on the internet?" That is the topic of today's article.

The article tells several tales of people writing or putting up pictures that have later come back to bite them in the ass. One woman who happened to be a flight attendant decided to take suggestive photos of herself and post them on her “Queen of the Sky” blog. Even though she never mentioned what company she worked for, Delta Airlines fired her when they learned about the pictures. Although I think that might not have been the best idea, how many of us have posted pictures that we probably wouldn't want potential employers to see? What’s even worse is that someone else could’ve put up a pic of you that you aren't proud of, but once it’s out there its for the world to see. Basically anything you have posted on your facebook page or even on this blog could be found with little trouble.

That brings me back to how you are marketing yourself on the internet. Think of yourself as the product, and all the things you do - the pics, quotes, stories, everything - are different internet marketing tools. I'm not suggesting that you make a new facebook account with a picture of you in a suit and a tie and list your favorite activities as working diligently and getting along well in team settings. All I'm saying is be careful. I think self internet marketing can only hurt someone in our situation. Companies want their employees to be productive and loyal, so you better believe when they find out through one of your posts that you've been taking 3 hour lunches everyday, you are probably gonna get canned. Just be careful and be aware that employers really are Googling names to see what they can find out about people. One good test is to Google yourself and see what you find. Even if nothing does come up, know that it's pretty easy to get a facebook account and view all your drunken pictures from spring break.

Take the wise words of Josh Santangelo, a web developer who used to post about his acid trips and all night raves, something that still come back to haunt him - there is no such thing as an eraser on the internet.

- McG

Trouble Brewing

Hello all and welcome to my March Madness addition of legal and ethical issues in internet marketing. I call it such not because it actually has anything to do with March Madness, I just think it's madness that I am missing like 4 different games at the moment to post this blog. Therefore I shall get straight to the point. I see troubled waters ahead for search engines like Google and Yahoo. There is a threat to their most basic revenue stream and I don't think they are taking it seriously. I'm talking about click fraud. Those of you who have been reading other people's blogs lately know the gist of it, but for those who don't here’s basically what happens. Companies pay search engines like Google to put up sponsored links to the company website whenever a user types in a specified keyword. You usually see these links on the right hand side of your browser, but they can be anywhere on the page. Every time a person clicks on the link, a fee is charged to the company. These fees can be quite pricey, more than $1 per click. The problem occurs when someone repeatedly clicks on the link with no intention of buying anything. This click frauding is becoming more and more of a concern companies paying for these sponsored links.

In this weeks article, Radiator.com hired an auditing firm to go through their sponsored links charges to find out what percentage could be attributed to click fraud. They found that nearly 35% of Google's referrals and 17% of Yahoo's were illegitimate searches. I found that number to be astonishing. This means that over half of the advertising dollars spent by Radiator.com were caused by click frauds. When I first heard about this problem in someone else’s blog a couple weeks ago, I didn't think much of it. After the news came out about Google settling a $90 million lawsuit in Arkansas I figured I should at least pay attention. But after reading this article it's pretty plain to see that something is seriously wrong. I'm not saying we are going to see a halt to sponsored links or payment for this service, but I do see changes in the wind. Search engines are going to be hard pressed to justify charging over a dollar for each hit on a link when statistics say only half these hits are real people. Also, with multiple lawsuits pending, don't be surprised to see more settlements by large search engines. What’s your take on the whole thing? Send some feedback my way.


Investor tip of the day: If Google does have to keep settling lawsuits, or even worse start losing lawsuits, these payouts will obviously affect their bottom line. Regardless, I don't see them being able to continue to pull in additional revenue, thus stagnating earnings.

Recommendation: Hold /Sell

- McG

Marketing Movies on the Web

As I read this article, I figured it was news about a movie that was coming out later this year. Turns out the article is a year and a half old but I think what takes place in the article would still happen today. Therefore I deem it relevant to blog about. The article discusses a website that is meant to promote the movie Godsend, a drama about a couple who tries to clone their son after he tragically dies. Instead of giving information about the movie, Godsends website promotes a fertility clinic run by Dr. Richard Wells. There is all kinds of information on the cloning process, background on Dr. Wells, news about the "Godsend Institute" and various other information. The makers of the film claim this is the next generation of internet marketing for films. They say that for years "movie promotion on the Internet has grown increasingly bland," according to the article. I'm sure we all remember The Blair Witch Project, which was one of the first movies to harness the power of internet marketing. Many people logged onto the movie site and read about the Blair Witch and became convinced that the whole story was real. That led many to go see the film which grossed over $140 million. The makers of Godsend hoped to create the same type of feeling.

Not everyone was so excited by the website. Many people who oppose cloning started campaigning to have the site shut down because they thought the Godsend Institute was real. Others claimed that the site is very insensitive because people who have actually lost a loved one might be trying to find a way to bring them back through cloning and the site is just giving them false hope. Lions Gate said “Almost everyone who goes to the site thinks it’s real, but by the time they leave, most have figured its fiction. Some even applaud it.”

People have to step back for a second and think. That kind of cloning isn't even possible yet, and even if it was it's not legal in this country. Plus, people have to realize that when you clone a 10 year old child you don't get a replica 10 year old, you get a new fetus and eventually a new baby with the exact same DNA, but not the same kid. Even so, I think the makers of the film may have taken their internet marketing a bit far. Although I must say that I would have probably clicked on the website and checked things out which is what the filmmakers want, I wouldn’t have realized that it had anything to do with a movie. I understand they are going for shock value, but without a tie in to the movie on the website, it doesn't seem all that effective to me. Even though Blair Witch was supposed to be about real events, everyone knew they were going to see a movie. With the Godsend Institute website you are just fooling innocent people. Very stupid innocent people.

- McG

Marketing to Hackers

I ran across this article on CNN's website. As you may have heard, Apple has started using Intel processors in its computers. To make everything work properly, they had to come up with a new operating system, called OS X. One of the biggest problems with making a new operating system is that every nerdy ass hacker out there with nothing better to do tries to break through the code so they can screw with the system. In an attempt to stop these losers, Apple decided to make a warning deep inside the software in the form of a poem.

I will say it was an interesting way to get their message across to these hackers. Its basically preventative marketing, where they can get this message out but it will only be seen by the people they are trying to stop. But I mean seriously, have you read the poem? How crappy was it?

I'd like to take a moment to point out all the ways this poem sucked. First of all, let’s talk rhyme scheme. ABBCBDEFG? Either rhyme the damn thing or don't. Next, the line "Really, that's way uncool," reminded me of 1992 so much that I turned on the TV to see if Saved by the Bell was on. I guess I'm just upset at the lack of effort these software writers put into writing this poem. I mean if you are gonna go through that trouble at least make it funny or clever, or better yet, make a program that gives the hackers a virus when they read the poem. And that ladies and gentleman, is all I feel like bsing for the day.

- McG