Will Generic TLDs Change Businesses?

TLD

Following the recent launch of new generic top level domains (TLDs), we could see a fresh rush from businesses registering domain names. As many organisations will be only too aware, domain portfolios are a very important element of brand protection in today’s Internet age. With thousands if not millions of pounds being spent on brand building, businesses need to ensure that they are managing and protecting their domain portfolio.

After all, they can spend lots of money on branding only for them to miss a domain renewal or fail to obtain a certain domain, leaving them vulnerable to cybersquatting. This can potentially cost a great deal in lost sales and damage to reputation. With even greater choice over domain names now available, what will be the impact on businesses in general?

According to ICANN, the organisation which coordinates the Internet’s naming system, “the possible expansion in the last portion of an Internet address from its current 21 generic names to an infinite number of new ones could mark one of the biggest changes in the history of the Internet.”

ICANN’s own predictions tell an important story about the hefty costs trademark owners will face due to an influx of 400 generic TLDs being planned, including: .ECO, .SPORT, .FOOD, .NYC, .HOTEL and .MUSIC. The organisation estimates that TLDs could cost each brand owner about $500,000 (£316,000), with a total cost of $746 million (£472 million) to brands worldwide.

One of the big questions that businesses should be asking themselves when mulling over TLDs is: what impact will they have on how products and services are marketed on the Internet? At one extreme it might mean that we see a part ‘closure’ of the Internet, as people avoid going to search engines to look up websites.

Brands will encourage consumers to go directly to their websites by marketing a specific domain name. For example, if Nike were to buy the ‘.trainer’ domain and promote this in its marketing materials, customers may buy into the unique name and neglect other brands as the domain directly links to their desired product, which makes it easy for them to remember.

However, this could also prove to be a headache for brand protection. Businesses will again be faced with having to increase the number of ‘defensive’ registrations they have to make, so they might lose some traffic in the short-term.

Equally, with so many domain names out there, many customers might not remember which is which and as such abandon the process altogether and return to the search engine. As a result, the likes of Nike’s .trainer may be forgotten and poses the question as to whether TLDs really hold any value. In this case, customer behaviour could well dictate the future for TLDs.

However, we should also consider the fact that many customers already go to specific businesses directly or use dedicated applications on smartphones or laptops. This rise in customers using mobile applications for purchasing could create a great opportunity for mobile operators to partner with firms and direct customers to those specific brands.

Once again, this combination may mean customers will rely on search engines and price comparison sites less, which will have a significant impact on current SEO strategies.

How these domain name changes will affect businesses is yet to be seen. During this transition stage, organisations would do well to assess the value of domain names to their particular brand and to build a relevant strategy around it.

It’s likely that the Nikes, Coca Colas and Apples of the world will snap up the expensive domain names relating to their products, whilst smaller brands must think about whether they want to fight for a slice of the market. Domain names are undoubtedly important but only time will tell whether they will make or break a brand’s strategies this year.

Andreas Edler is Managing Director UK at Hostway, in addition to Director of European Systems Operations and Engineering. Andreas has vast experience in multi-vendor ISP, webhosting and e-commerce, with IT operations and projects as technical lead as well as operations and business management.

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