Direct
Navigation Hubris?
Alex
Tajirian
September 06, 2006
Abstract
The study presents empirical evidence that direct navigation
does not generate additional returns over other forms of Internet
navigation either to marketers or to owners of parked domain names.
What Is Direct Navigation?
Although there is no generally accepted definition, direct
navigation is an information retrieval method that is initiated
by type-ins and bookmarks, thus, bypassing search engines. Type-ins
retrieve information on a topic when a searcher inputs a keyword
into a browser’s search box followed by .com.
The Alleged Significance of Direct Navigation
Marketing and domain name parking monetization companies
claim that advertisers’ return on investment (ROI) from direct navigation
is higher than from other forms of Internet traffic.
Empirical Tests
It makes intuitive sense that when someone reaches a website through
a personal bookmark, one expects more ad-clicks per visit from these
bookmarks than from other forms of navigation to the same website.
Thus, the more interesting investigation with regard to direct navigation
is whether type-ins generate higher returns, other things equal.
We perform two separate tests for the significance
of type-ins. The first is based on whether the volume of type-ins
is a statistically significant factor impacting the value of the
“.com” domain name that comprises the keyword. The second test is
based on whether type-ins increase the monetization revenue of parked
domain names, holding other factors constant.
The first text is based on our appraisal model.[1]The
test results suggest that the type-in factor is irrelevant in predicting
the value of a domain name.
As for the second test, we use Total Revenue (TR)
of a parked domain name, as measured by the PPC rate for the keyword
multiplied by its click volume. We use both Google and Overture
data in a tree-structure regression of TR on the rest of the explanatory
variables used in our appraisal model. The proxy used for type-ins
is the ratio of search volume of the keyword domain name (i.e.,
when the “.com” is included as part of the search keyword) to total
keyword-only search volume. The search volume data is obtained from
Overture. Thus, a large ratio represents greater type-in traffic.
Once again, we find no significant contribution of type-ins.
Concluding Remark
-
The study does not demonstrate the irrelevance
of direct navigation. Rather it shows that there are other factors
that are more important in determining the revenue associated
with direct navigation.
-
The proxies TR (for a domain name’s monetization
revenue) and the type-ins ratio include measurement error. However,
the presence of measurement error underscore the need for robust
statistical estimation techniques to determine the significant
factors influencing revenue and their explanatory power, as
well as in appraisals.
-
Understanding revenue drivers leads to better
monetization optimization.
|
