The impending changes to the Internet may impede the charted courses that brand owners have set for the coming year. Navigating this new landscape alone or with biased partners could leave brands adrift, or worse, with dollars spent looking out for someone else’s best interests in 2009. As a result, companies need to employ a targeted strategy to properly protect and promote their brands online. With scores of new TLDs slated for launch next year, objective and expert domain name advice is more important than ever before.
In addition to figuring out domain strategies that are right for their business, brand owners need to understand how the strategy they choose today will affect the decisions they have to make tomorrow.
It is impossible to accurately predict the success of any new TLD without first examining its likely impact and the value it will deliver to the Internet community. For example, although there are already 21 active generic top-level domains (such as dot-ORG or dot-INFO), Internet users still overwhelmingly prefer to use the dot-COM extension. Contrary to what many insiders will say, the success of a TLD is not based on the number of domain registrations that it can produce, but rather on the number of Internet users that actually type the new TLD into browser address bars. Over the past 8 years, we have seen virtually all dot-COM gTLD challengers fail to achieve that kind of success.
While it is difficult to predict what the Internet will look like in 5 or 10 years, it is conceivable that the concept of new TLDs could take off. If these new extensions do find success, it may be because of the underlying threat that brand owners who do not follow suit will be left behind. The fear of leaving brands inadequately protected could prompt many companies to defensively register a significant number of domains. The domain space expansion involves the registration of TLDs as well as domains, which may force brand owners to consider registering generic TLDs such as “dot-SOFTWARE” or “dot-BOOKS” in addition to their brand-specific TLDs. Since generic TLDs can be applied for by both domain industry insiders and major corporations, brand owners will have to develop contingency plans in case a competitor registers a key generic TLD and sets their own rules for its operation, which could create an anticompetitive environment.
To project the potential cost of the expansion for brand owners, we use the estimated average cost of $500 per domain name during a sunrise period. If a brand owner defensively registers just 1 name in each of the expected 300 new TLDs in 2009, the costs could add up to $150,000. That is per brand. Brand owners who have more than one “crown jewel” and are forced into registering defensively in all extensions could face much greater expenditures.
These estimates do not include the registration of company TLDs, which are a separate expense. Brand owners who apply for their own TLD will likely spend between $100k and $500k just to apply. This does not account for the infrastructure investments that are required to demonstrate that an applicant can actually operate a registry or the additional costs that may be incurred for highly sought after generic TLDs, which are likely to go to auction. In summary, this means that companies could need as much as $1M in additional budget allocations for their domain name programs in 2009. This is not to mention the price tag associated with the additional legwork and marketing expenditures required to ingrain the new TLD in the minds of Internet users.
If the volume of domain sales is high, ICANN will view the introduction of the new TLDs as a success and continue to release more -- perpetuating this cycle, further complicating enforcement for brand owners, and likely preventing the adoption of other TLDs by users because of the resulting confusion.
While there are certainly pros and cons to this pending change, it is critical to consider the implications of the new TLDs and begin planning for them this year, even before the formal rules have been released by ICANN. No matter what happens, brand owners must be prepared for all eventualities with strategically sound plans developed through expert analysis and advice.
In response to the recent domain namespace policy change that favors registrars and registries, FairWinds encourages our readers to consider signing up for FairWinds Advisory services, since objective and proactive advice will enable brand owners to greet the uncertainties of the 2009 Internet landscape with confidence. According to one of our clients at Bacardi, “FairWinds understands both our brand and digital strategies. By taking the time to research what is constantly changing in our business and industry, their strategic, proactive recommendations help us to stay one step ahead of cybersquatters.”
Brand owners will be forced to make difficult choices in 2009. With significant investments ahead, and little assurance that they will pay off, companies should seek impartial counsel to help rationalize the changing domain landscape ahead.
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