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New gTLDs' Success Drivers

Alex Tajirian

This post demonstrates that success factors differ across generic Top-Level Domains (gTLDs) depending on their implied signal/message. Success drivers can be grouped into four: community, location, generic keywords, and competitors to .com. I discuss their marketing implications.

For community gTLDs, their success, as measured by profits, depends on whether the registrants are nonprofit or for-profit organizations. The former's profits are driven by user satisfaction reflected in online reviews, user comments, and success stories. The more favorable the reviews, the greater the number of domain name registrations under the gTLD. On the other hand, consumer opinions have limited influence, as rebranding profits must first be estimated. Success depends on whether corporate gTLD rebranding adds value over the continued use of the corporation's original gTLD — the lower the switching cost to the new gTLD branding, the higher the profits. The estimation should take into account that the signal can benefit all stakeholders, not just consumers. The switching cost is driven by rebranding outlays, in addition to the possibility of losses due to customers' confusion about the target business' brand name. The more the added value to their customers, the more the customers would be willing to switch branding, with the gTLD owners able to charge higher prices for domain name registrations and accompanying services.

For location-signaling gTLDs, success depends on the size of the location/geographic market and the rate of its growth. Personal demand for the gTLD is unlikely because of high switching costs, especially of email, without much upside gain. Businesses will be the main customers, and they will make their choice according to profit analysis, not user opinion. One thing seems clear — the gain that a U.S. investment bank gets from .Zaire will be less than what a business in New York will get from .NYC. Big, lucrative markets will generate valuable gTLDs.

For generic keyword gTLDs, success depends on the number of businesses using the gTLD and on their profits. The larger the number of businesses generating additional branding profits, the larger the number of registrations under the gTLD. Marketing the gTLD to new businesses should focus on success stories and customer satisfaction reviews. But when it comes to rebranding, online opinions can influence the decision of businesses choosing among competing gTLD signals. Of course, businesses must first estimate the value of rebranding. Some of these generic gTLDs, ".BID" for example, face a chicken-and-egg predicament (technically known as management of multisided markets), whereby the company using the gTLD must be able to attract enough buyers and enough sellers at the same time. The larger the number of sellers, the larger the number of buyers. Thus, to attract critical mass, businesses using the gTLD might need to find niche markets where they possess unique competencies.

To compete with .com, you must concentrate on how to position the gTLD in the minds of customers. As noted in an earlier post, the gTLD must focus on doing good and playing the underdog. Opinion reviews and success stories are crucial.

What about innovation and use of technology? They come second. First companies have to concentrate on creating a unique profile for their offerings. BMW means excitement and adventure, Volvo means safety. Where innovation counts is in cutting costs and reducing risks, for businesses and consumers. Of course, a company's digital business model (see, Peter Weill and Stephanie L. Woerner, Optimizing Your Digital Business Model, MIT Sloan Management Review) should drive the use of technology.

When online reviews are especially important, businesses should monitor third-party websites, ensure that reviews on their own websites are genuine, and take measures to reduce potential biases.

By Alex Tajirian, CEO at DomainMart

Related topics: Domain Names, Top-Level Domains

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