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VeriSign: illiterate ramblings

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VeriSign's [VRSN] controversial Site Finder service, launched last week, has helped VeriSign become one of the top ten websites in terms of user numbers. However, industry estimates of how much revenue it could generate from this service seem to be overly optimistic - unless VeriSign is planning to make some modifications.

Millions of Internet users are now redirected to VeriSign's Site Finder when they misspell a .com or .net domain when typing it into their web browser. The service is all about capturing error traffic and trying to turn it into revenue by diverting users to sponsored search engine listings.

So how much is the service worth to VeriSign? Estimates of $100-150 million have been circulating. But based on Site Finder as it stands today, it seems that pulling in that kind of revenue would be a tough, if achievable, task.

VeriSign is using Overture Services [OVER] as its search partner. VeriSign said 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 to even get close to $150 million 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 $2.8 million a week, or $146.4 million a year. Overture's affiliates generally do not reveal how many search queries they convert into paid clicks, but it is not 100%.

Furthermore, 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. Given relatively fixed user numbers, showing investors pleasing growth would likely require squeezing more revenue from advertising. Given the high number of sponsored results already on the site, graphics or even pop-up ads would likely be the order of the day.

Source: Computerwire/Datamonitor

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