November 24, 2003

When VeriSign Inc last week launched its controversial Site Finder service, it not only panicked users who found their software no longer worked as intended, it also immediately secured VeriSign a significant portion of the web search market.

Numbers revealed yesterday show that in the space of seven days it has gone from being a domain name registration and resolution company to a search engine firm - one of the top ten web sites in the world in terms of numbers of users reached. Site Finder is all about capturing error traffic and trying to turn it into revenue by diverting users to sponsored search engine listings. Or, as VeriSign puts it: "To improve web navigation for internet users."

The domain verisign.com has now become the 10th most-visited site on the web, in terms of the number of unique visitors, compared to an average of 262nd over the last three months, according to surfing trends watcher Alexa Internet Inc. Alexa reports that 65% of that traffic is going to the subdomain sitefinder.verisign.com, which is where people are now redirected when they misspell a .com or .net domain when typing it in their web browser.

VeriSign, said yesterday that Site Finder has been visited 65 million times in the first week of operation, by an average of more than five million users a day. For comparison, Nielsen//NetRatings reports Amazon.com has about 6.8 million unique users per week. In capturing all this traffic, VeriSign has also trodden on the toes of web media heavyweights Microsoft Corp and America Online Inc (both of which, incidentally, partner with VeriSign for its security expertise).

Microsoft's Internet Explorer browser previously captured error traffic and diverted it to MSN Search, and AOL reportedly did the same in its software. VeriSign's introduction of Site Finder to the domain name system means neither of these work in .com now. An MSN spokesperson said: "VeriSign's decision to redirect traffic from misspelled queries does not significantly impact MSN Search because the amount of traffic driven to our site through mistyped internet queries is minimal."

AOL spokespeople did not return a call for comment, but the company is reportedly investigating its options. It's feasible that AOL or any other ISP could hack its own DNS services to get around VeriSign's "wildcard" system. So how much is the service worth to VeriSign? The figure of $150m has been used by Go Daddy Software Inc, citing VeriSign as the source, but a VeriSign spokesperson said the company, in the last week of the quarter, has not publicly revealed its expectations.

Estimates above $100m seem to originate from Paxfire Inc, a startup that hopes to offer a similar service with other domain operators. Based on Site Finder as it stands today, it seems that pulling in that kind of revenue would be a tough, if achievable, task. The company is using Overture Services Inc, soon to be a part of Yahoo! Inc, as its search partner (Overture confirmed this, but VeriSign will not discuss which company or companies it is using).

VeriSign said yesterday that the Site Finder page has been visited 65 million times, and that the search panel page has been used 11 million times in the seven days since the system went live. If VeriSign's sole source of revenue was its cut of paid clicks from Overture's sponsored listings, it would have to convert all 11 million searches into revenue events in order to even get close to $150m a year.

(Overture's average fee per click is $0.40, and its average payout to the affiliate, in this case VeriSign, is 64%, or $0.256 per click. So 11 million clicks a week would create revenue of just over $2.8m a week, or $146.4m a year.) Overture's affiliates, which typically present searchers with three to five sponsored results above a larger number of algorithmically generated results, generally do not reveal how many search queries they convert into paid clicks, but it is not 100%.

VeriSign's implementation is more cynical than the norm. Rather than give the user the choice of algorithmic or sponsored results, it presents 15 revenue-generating sponsored results, with algorithmic results appearing only halfway down the second page. All this said, it would be rather hard for VeriSign to grow Site Finder revenue in future - assuming of course the service is not forced off the air by a combination of legal action, government intervention, technical problems, and sheer bad karma.

Barring a sudden outbreak of illiteracy among internet users, the company would only be able to grow its user base in step with the overall growth of internet population and usage. The way VeriSign captures use doesn't invite deliberate repeat use. Given relatively fixed user numbers, showing investors pleasing growth would likely require squeezing more revenue from advertising. Given the text ad overkill already on the site, graphics or (heaven forbid) pop-up ads would likely be the order of the day.

Story by Kevin Murphy
Source: CRB Online.com

        

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