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Top Online Challenges for Retailers: Cybersquatting and SEM Abuse

Last week, MarkMonitor hosted a webinar with Internet Retailer and our guest speaker from 1-800-FLOWERS.COM on the topic of How to Reduce Traffic Diversion & Other Cyber Abuse. During the webinar, we polled audience members to gauge what their top challenge is in managing their brands online. We learned that 60% of those polled felt that cybersquatting and Search Engine Marketing (SEM) abuse — two prevalent forms of traffic diversion — were their top concerns, more so than other types of cyber abuse.

While the results may incorporate some selection bias — it is very possible that our webinar attracted more brand owners that are concerned about traffic diversion — the fact that 60% of retailers consider traffic diversion to be their biggest online challenge was still eye-opening, but made sense. Retailers are particularly vulnerable to traffic diversion schemes, as their consumer-facing, household names drive considerable volumes of Web traffic.

It is also very clear that scammers are well aware of how customers find retailers online, and they leverage this to their advantage. According to the E-tailing Group Eigth Annual Merchant survey conducted in the first quarter of 2009, the top two ways customers arrive at retail web sites are through direct navigation and paid search ads:

Typing the URL of a retailer into a browser window: 27%
Paid search: 17%

Natural search: 13%
Email marketing: 12%
Other*: 31%

You probably see the correlation: the two biggest online challenges for retailers — namely, cybersquatting and SEM abuse — are directly related to the most common methods of how customers find retailers online — through direct navigation and paid search, respectively.

The retail sector spends much time and resources in driving traffic to their sites; the retail sector, in fact, spent $5 billion on Internet advertising in 2008, far more than any other industry. The sector accounted for 22% of all Internet ad spending, according to the Interactive Advertising Bureau (IAB) March 2009 Revenue Report. Approximately 45% of the $5 billion was spent on search advertising alone. To maximize the return on these investments, it only makes sense that retailers also focus on ensuring that traffic intended for them is not siphoned off by opportunists and competitors. 1-800-FLOWERS.COM offers practical advice on how to do just that in our recorded webinar.

*Other includes Web traffic generated via: catalogs and direct mail (10%), affiliate sites (4%), comparison shopping engines (3%), offline advertising (2%), other (10%) and unknown (2%).

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