The Washington Post and Wall Street Journal just covered the parked domains problem. We highlighted Google in our title, but both Google’s Adsense and Yahoo’s syndicated advertising program are fueling the domain name speculation market, giving the speculators a powerful new way to earn rents on their .com property.

We think this activity (for example cellphoneplans.com or hotmial.com) is bad for consumers, cheapens the Internet experience, and doesn’t do credit to the web’s vast potential for connecting buyers and sellers. Posts at Google Blogoscoped and Threadwatch tend to agree. In reality, these parked domain sites are just a very basic collection of paid links that create an unfocused user experience and rack up millions (soon to be billions) of dollars of fees for the search engines and the domain speculators, all at advertiser expense.

So why do these sites exist? And why are they making millions of $’s? Because the advertising model at work on these sites is not transparent to the user. Don’t believe me? Then let me ask, do you use these sites? Considering you are reading a blog on Internet advertising, probably not. Why? Because you recognize that these sites are often irrelevant and that there are more efficient ways of locating the information you are seeking.

These parked domain sites are the Internet’s version of the cheesy commissioned salesperson that works at the local electronic store (Let’s call him Larry). If Larry told you that he directed you to a certain computer because it was more expensive and he stood to make a big commission when you buy it, you likely wouldn’t go back to see Larry again. Why? Two reasons:

1. Crappy Advice. Larry’s advice is designed to make him the most money. It has nothing to do with whether the product is the best option for you.
2. Unnecessary Cost. Consumers instinctively recognize that when a middleman like Larry makes a big paycheck without adding value, that paycheck is likely finding its way back to them in higher prices, lower customer service, or some other extra fee that they are paying to support Larry’s fat commission.

Isn’t that the same thing happening at these parked domain sites? Savvy Internet users recognize that the links served up on these sites aren’t necessarily the best or most helpful for them; they are set up to maximize the salesperson’s commission (in this case by racking up the highest click fees). And savvy users also recognize that every click they make on these sites is driving up advertising fees, often in a very inefficient manner, unjustly enriching the domain name speculator and adding unnecessary costs to the system.

The big problem is that most Internet users don’t realize they are dealing with Larry. They are duped into playing this click game because of a professional looking website header and the relative ease in which they can click on links to move on to a more targeted page (hopefully).

We have an easy fix to this problem; uncover Larry by adding transparency (like a Jellyfish) to this advertising. Transparency would expose this cheesy salesperson and lead to a better system ….

This entry was posted on Monday, May 1st, 2006 at 2:35 pm and is filed under Google AdSense, Click Fraud. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.