gTLD Winners & Losers

As gTLD application results begin to emerge, companies are being labeled “winners” and “losers.”  Lots of people are asking, “Will they be a success or a failure?”  Beyond the registries themselves, there are individual domains in each registry that will be real home runs – some strings have more than others.  Some of those names offer very promising brand and marketing opportunities.  Others are a stretch.  But perhaps we are looking too closely.  Step back and see the forest from the trees.  The domain investor community looks at the idea of “success” for the new gTLD program all wrong.  If you evaluate it from a purely business, investment and ROI perspective, owning and operating a gTLD is almost a no-brainer (if you have the plan and resources to sustain it and operate it effectively and securely).  Let’s face it, you don’t need many domain registrations just to break even (20,000 – 30,000 registrations in your first year would pretty much get there depending on if your string was contested).  Just think that .CO has over 1.5 million registrations after just 3 years!   Between the big brands buying defensive registrations, domain investors picking up the balance of the strongest generic keywords & the general public buying what they see as useful, you’d have to really screw up not to get to your “tipping point” and make your registry a success!  Point is, this is not about replacing .com or which one will be more valuable, or if .com is going to be obsolete.  This is about return on investment.

Success for a new a gTLD registry doesn’t have to mean global adoption and trumping .com, or even recognition and acceptance among general consumers.  That is how domain investors gauge success from the sidelines, but if you are the owner of a registry and you have 50,000 registrations (which would be considered low) with recurring renewals between $8 – $30 per year, you are in pretty good shape and have a nice cash machine which is worth at least 5X – 10X what you paid for it; despite the fact that domainers would call that a flop!  In fact, there is an “aftermarket” now for gTLD’s and the starting price for ANY TLD is $1 million.  The worst one in the bunch would go for $1 million today, even before launch.  That’s a nice ROI on your $180,000 investment!  Many people were sleeping at the wheel and are now waking up and realizing that perhaps they evaluated this opportunity all wrong.

So now let’s look a bit closer, knowing that even the flops are probably going to be around for a while.  There are certain types of domain name under the new gTLD program which will indeed be winners, in some cases may even trump their .com equivalent – although I still find that highly unlikely in the near term.

The importance of exact match domains is well established for a variety of reasons we have discussed before.  New gTLDs will offer a whole new type of exact match domain: where part of the keyword is right of the dot. For example, the Montana Poultry Growers Coop currently uses Chicken.coop. Instead of only CarInsurance.com, there will be options like Car.Insurance. Think of the possibilities: Girls.Clothing, Design.Tattoo or Bombay.Singles… Many new options will arise.   How those strings are treated by Google is yet to be seen.  Will Google treat Car.Insurance the same way they treat CarInsurance.com?  This will impact the value, particularly the SEO value, significantly and it’s still a major variable.  However, with Google having so much skin in the game, you have to wonder what they have up their sleeve.

We encourage investors, startups and businesses who are considering a major domain acquisition or sale to talk to your domain broker about the new gTLDs.  There are a lot of variables to take into consideration when assessing the current and future value and impact of these new domains.

For marketers & major brands, some valuable domain names will emerge in this space. The best options will likely be negotiated during the landrush or sunrise period prior to the release of general availability and those deals will be made through brokers & dealers, like Media Options.  Don’t wait, because the best names will go fast to early mover companies and forward-looking investors.

Another type of domain which is going to be a real winner are domain hacks.  A “domain hack” is a domain name which uses the parts to the left and to the right of the dot to make up a word or brand. For example, there’s a search engine on Inter.net. Another example comes from the founder of WordPress, Matt Mullenweg, who built his blog on the Ma.tt domain name.

Currently, there are a handful of good domain hacks known by and commonly used by consumers, mostly in the tech community. Bit.ly and Instagr.am both rebranded after acquiring Bitly.com and Instagram.com, respectively. Microsoft owns Bi.ng as a preventative measure, redirecting visitors to Bing.com. Google has its own URL shortener built on the Goo.gl domain hack.  Perhaps those “hacks” will no longer be redirects in a few years and the brands would move their strategy toward the hack in the future?  Let’s not get ahead of ourselves just yet…

Domain hacks present various challenges including user adoption; in the case of ccTLD’s there are political problems, etc… With gTLDs becoming more mainstream, however, hacks will be more understandable, memorable & accepted by consumers. Many of these hacks are “edgy” and “catchy” and get people’s attention – and after all, that’s what marketing is all about.

If you are interested in participating in the adoption of these new TLD’s or acquiring a specific domain from one of the registries, begin the process ahead of time with a domain broker; they will keep the lines of communication open with all gTLD registries. These conversations lend insight into what each gTLD distributor may want from a premium domain name buyer (beyond the purchase price). For example, some may primarily be interested in the bottom line, buy it and be done with it. Other gTLDs may follow the strong branding example of .CO and insist on certain branding and advertising criteria or immediate use in order to acquire one of their premium domains. Your domain name broker can help guide your premium domain acquisition proposal from the get-go. A broker adds value to the process with insights that help you align your marketing, minimize legal expenses, set expectations on gTLD distributor terms and help you get your domain ASAP. If you start planning ahead now and work with a broker to make strategic decisions, you can have your ducks in a row when open season begins – it’s coming soon!

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