Error In Your Favor

This company claims to deliver free money to ISPs. But its service has seen only limited adoption.

by Gerry Blackwell [June 27, 2008]

Free money! That's what Barefruit, a London, UK-based company with a "comprehensive solution to error traffic" claims to be able to deliver to ISPs.

It's an admittedly small amount of revenue per user—a few dollars a year—but with thousands or millions of subscribers, it adds up to more than chump change. And it goes straight to the bottom line: no capital outlay, no risk.

And even if you don't need the extra revenue (ha-ha), the company claims its solution also delivers an improved user experience.

So how does this work?

Barefruit has figured out a way to generate advertising revenue from error traffic. Error traffic is what happens when your subscribers misspell a URL or key in a URL correctly but the site is offline for whatever reason.

Without the Barefruit solution, in this situation they see a standard HTTP error message, usually the dreaded '404 Error: File not Found.'

"Everybody who uses the Net will have experienced this message," says Barefruit founder and chief executive Dave Roberts. "And it's particularly unhelpful."

Make sure there's an opt out
Not everyone agrees with this. DNS errors are an important function of the internet. They let applications know that a website does not exist. That's why, when EarthLink started doing this, users on the BroadbandReports EarthLink forum called the ISP names (like "bastards!") and eventually EarthLink responded by offering an opt out.

Allowing users to opt out is key. In 2007, VeriSign's SiteFinder service caused an uproar. Users were particularly upset that they could not opt out of it. BroadbandReports pointed out at the time that the SiteFinder service would break some anti-spam systems (those using reverse DNS) and would also disrupt legitimate e-mail.

It may be true that many users will not object to this, but every ISP that implements it must inform all users and must allow users to opt out (and opt in is always superior to opt out, as many articles including this one note).

The business model
Barefruit's business is predicated on two observations. "We've done a fair amount of research on this," Roberts says. "When users experience [404] errors, they often think that their ISP is at fault. And the second thing that happens is they give up in frustration."

The giving up in frustration part is the key to generating advertising revenue. In some cases, perhaps many, the user was trying to find a product to buy. When they abandon their search, that sale may be lost forever. Barefruit's pitch to advertisers is that it can recover some of those probably lost sales.

"There's no question money is being left on the table," Roberts says. "It's the same thing as in the real world. If you go down to Oxford Street [a major shopping street in London] and see people walking out with their purchases, ask yourself, 'Would they have bought that item if they had not bought it right then?' Probably not."

Barefruit has developed technology that uses a variety of techniques to "derive relevance" from the user's mistaken input and from the previous page viewed.

Based on what the relevance engine thinks the user was looking for, it presents search engine results from a Barefruit ad search partner such as Yahoo, some of which are sponsored links.

The page the user sees is branded with the ISP's messaging and includes everything the standard HTTP error message does—a better explanation of the error and the option to backtrack—plus the search results.

If the user clicks on one of the sponsored search results, Barefruit and the ISP earn revenue.

In some cases, the page may also include a Google-like 'Did you mean?' query followed by a link—if the user was obviously looking for a major brand but simply mistyped the URL.

Barefruit has figured out a way to "monetize" this traffic as well—although a little differently. If the user follows the link in the 'Did you mean' query, and spends money at the site, Barefruit and its ISP partner get a small percentage of the sale.

The company has worked out deals of this kind directly with some major brands and through its relationships with ad search engines in other cases. It also delivers free 'Did-you-means' for some charities and government departments.

Barefruit is both playing on and leveraging the ISP's sometimes undervalued but crucial role in the Internet economy.

As Roberts notes, "The ISPs are providing the path into the Internet for users, but they're usually not able to share in the ad revenue that's being generated from that."

Barefruit helps shift the balance in the ISP's favor, putting them in a position of being able to deliver traffic to ad search companies that they would otherwise not get. It's a "powerful" position, Roberts says.

"ISPs, at least the large ones, expect to get the lion's share of the revenue [generated by ad search engines from Barefruit traffic]."

How much revenue?

If Barefruit is only intercepting DNS errors, which is the easiest to implement, it amounts to about $3 per broadband user per year, Roberts says. If it's also intercepting HTTP errors, it grows to $5 to $6 per user. That's gross revenue.

"Five to six dollars might not sound like much," Roberts says. "But in most regions, you'll find several ISPs with more than two million users each. If you have two million users, that's a lot of money—a lot of bottom-line revenue."

Go to page two: It's not just about the money >