If you read this week’s Digital Thoughts, which of course you did, you would have read about a small conference that very few in our industry attended. For those of us that did attend, such exclusivity won’t last long as this space should soon become a significant player in the world of online advertising. Its ascension is by no means guaranteed. This is a segment that has grown to its current size by deliberately staying below the radar of mainstream internet activity, one that in order to reach the next level must learn to embrace becoming a more visible aspect to online advertising. It’s a market that today takes only five minutes of time and fewer than ten dollars. It’s a space that exemplifies the saying, “It’s all in the name,” and it’s a space that quietly accounts for upwards of 15% of all paid search revenues. This space is direct navigation, and our goal today is to help paint a picture of the role it can play in the future while exposing some of the challenging models that could threaten its existence.
What makes the direct navigation space so exciting is that it deals with the heart of advertising. Some people looking for car insurance will search for Geico, but those who have yet to identify a brand with a subject will look for car insurance, or in this case type in carinsurance.com to a browser. Similarly, someone looking for golf courses might decide to type in golfcourses.com instead of going to a search engine and typing the same. The downside to this, and where direct navigation has in the past set itself up for failure, lies in the low hanging fruit, searches that cannibalize on other people’s brands. It’s this that many associate with direct navigation, and it’s why those not familiar with direct navigation probably have heard of it by its less flattering and quite accurate other name, typo-squatting.
Calling direct navigation typo-squatting is akin to calling all email, spam. People will unfortunately abuse just any segment, and the direct navigation is no different. With domains though, people have mistakenly assumed that if it is registered but has no content that the person is typo squatting. For a “real world” analogy I think of Baltimore, Maryland where I lived for three and a half years. For two of those years, I passed a piece of land on the water front that sat undeveloped. During the housing boom, that person partnered with a builder to create lots and homes and sell them, making them both a lot of money. Another example is Lake Las Vegas, now an impressive resort community but for many years nothing. It wouldn’t have made sense for him to do so before the demand was there. This is exactly how internet real estate works. Some owners have already built, but many have simply been collecting. They understand the property’s inherent value but have been waiting for the right time to develop.
One company, for example, has started doing this. They have proven the value of the internet real estate that makes up some of the direct navigation space. This company partners up with the owner of a name, creates a pseudo content site using affiliate offers (as opposed to search listings) and then use their connections to sell the name to a major brand. They have done this with quite a few names, their method of internet flipping yielding payouts in the seven figure range. Unfortunately, that strategy works for the sellers but not for the industry of direct navigation. The industry benefits not by selling the names to a specific brand but by creating greater user desire to search from the browser. This industry will see the greatest returns by not selling what could be the next Times Square but by creating it and then generating revenues off of the billboard space. That is the future of direct navigation.
More companies like the one mentioned above will start to exist, and rather than creating a page for sale, they will create a property for rent. They will bridge the gap between Madison Avenue and a 5th Avenue that has no Saks on it. The direct navigation industry holds incredible promise for marketers as it provides not just the most targeted users but a chance to communicate a message that paid search, in its few lines of text, simply can’t. A few direct navigation pioneers are proving that this model can exist, and hopefully a few more will step up and make it happen before the opportunists accidentally create the next Louisiana Purchase and allow another entity to profit off this industry’s potential.
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