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A happy ending: Top Level Domains

By The Drum | Administrator

July 3, 2008 | 5 min read

News Analysis

Last week, the internet governing body ICANN announced changes to the top level domain system that could have profound implications for the online sector.

Perhaps predictably, in the wake of the move much of the media’s interest was focused on the possibility of a .xxx domain for pornography sites. Undoubtedly the prospect of seeing the creation of a separate marketplace for such material will please many mainstream brands, but for the marketing industry the news could have far-reaching ramifications.

In a nutshell, the new policy opens up the internet so that from 2009, anyone can buy a top level domain (TLD) such as .card, .hotel or .airline. A move that took much of the industry by surprise, it has prompted a rash of speculation that marketers could be facing a fresh new attack on the integrity of their brands.

While predictions are difficult to make at this early stage, we do not expect to see a sudden surge of cyber-squatting cases. Buying a TLD will be very different to securing a standard domain name, and is unlikely to prove attractive to the casual opportunist.

Every top level domain will cost a minimum of $100,000, a strategy conceived to prevent a registration free-for-all. ICANN is deliberately keeping demand low by strictly limiting purchases to companies and entrepreneurs, a policy designed to recoup the cost of necessary changes to the internet’s infrastructure.

While a repeat of the first internet land-grab is not expected, the change will undoubtedly attract a great deal of interest from online marketers.

Generic domains

What’s so attractive about the prospect of top level domains is that once you purchase one, you can then sell an infinite array of web addresses that fit within it. If an entrepreneur bought .shoes, they could then sell www.mens.shoes, www.big.shoes, www.elevator.shoes or any number of useful online locations.

With such obvious potential, the demand for generic domains is likely to be enormous, so snapping up .creditcard, .jobs or .loans isn’t likely to be straightforward. All the hotel groups will be competing for the .hotel domain, for example, and in such cases competed domains will enter into an auction system for sale to the highest bidder.

If you have a particular niche for which the competition may either be minimal or too slow off the mark, now is the time to start working out how you’re going to raise the minimum £50,123 to buy that .niche domain. You will also need to formulate a plan for making it pay, because consumers are not going to automatically change their surfing and shopping habits on the day of the change.

Even if your business is not in the running to compete for one of the new top level domains, it’s still something that agencies and brands need to be thinking about. You might not be able to raise the resources to buy .marketing, but how are you going to respond when someone else does?

We are certainly facing interesting times, and a lot of strategy decisions are going to have to be taken before the new policy comes into effect. If you’re marketing a Scottish hotel, for example, are you going to have to maintain domains on both .hotel and .scotland?

What will you do if the owner of your target domain doesn’t allow you to buy space on it? Are there alternatives, and how confident are you that the domain will justify your investment?

For these and a hundred other questions, businesses are going to have to start figuring out some answers.

In the longer term, some of the new TLDs could also lead to a shift in the search marketing landscape.

Untested waters

Google has patent applications which note that some domains are hard to get links from – like .gov – and that therefore links from them could be worth more. For example: If someone sets up .globaldigital and only sells domains (at a large cost) to digital marketing agencies that have to pass thorough testing procedures, then when the search engine notices that the TLD’s sites tend to be high quality it should, in theory, add that new domain to its list of “respected” domains.

In many respects, the ICANN announcement leaves us in untested waters. It is possible that domains like .shop or .deals might improve click through rates in adverts, and while Google doesn’t allow superlatives in PPC ads, what happens if someone has a domain on .best?

As ever, the devil will be in the detail, and the facts will become clearer when applications for the new domains open in April 2009. But businesses cannot afford to sit on their hands in the meantime.

If you’re going to bid for a domain, the time to be planning it is now. We expect an explosion of feverish activity around this issue as the major players prepare their response, and as ever early-mover status should yield dividends to those that get their strategy right.

Keep an eye on this one. It’s not going to go away, and if the roll-out proceeds as predicted there is barely a business in Britain that will be unaffected by it.

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