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Market Flatlines After ICANN Introduces New gTLDs

Patrick Myles

The choices for consumers and business in Europe to get themselves online have never been so great. Social media, apps and blogsites all have made a lasting impression, and we are now in an increasingly crowded market with the addition of hundreds of new gTLDs. So how has all this affected growth and market shares among domain names in Europe?

As seen in the chart, annual growth among European ccTLDs has been sliding for many years — until recently. In 2015 and 2016, just as many of the new gTLDs were being delegated, ccTLD growth rates began to stabilise, and downward trends flattened off to a median rate of 3.4% per year. Although it is unclear if this growth stabilisation will continue, it's certainly a positive sign for European ccTLDs who now are competing for attention with hundreds of new gTLDs.

Drivers of stabilisation

Buyer behaviour is notoriously difficult to assess to any fine detail, however based on market averages in registrations, we can get a sense of the different dynamics of activity. For example, in 2015 we observed that there was a noticeable reduction in churn ratios (domains that were deleted or did not renew). At the same time, new add ratios (new domain sales) remained stable compared to previously declining rates. This meant that the gap between new adds and churn, on average, widened helping to push up domain retention rates1 and of course slow down the decline in long-term growth trends.

In 2016, domain registration activity was generally higher. Medians in new add ratios were up but so were churns. Overall the gap between the two remained relatively stable, however, as deletes increased at a slightly higher rate than new adds, the median retention rate felt a small negative pressure.

A ccTLD is a brand

Ten years ago, a ccTLD had relatively limited competition. There were only a few other relevant TLDs to choose from; internet usage was not as high and social media did not have the reach it does today. Many ccTLD registries did not spend much time in marketing, so simple volume discounts and other pricing incentives were the most common options to drive sales.

Although the effects of new gTLDs have not been felt greatly in Europe (at least in terms of volume/market share), they still have the potential to develop and start chipping into new domain sales, so complacency is not an option.

In today's competitive TLD market, a new business has plenty of choices and might choose to integrate a new gTLD in its' strategy, however it's perhaps less likely for an existing business that has held and used its local ccTLD for many years to quickly switch to a new gTLD — the cost benefit is probably a hard sell.

None the less, ensuring awareness of the ccTLD brand is also now more important than ever. Market buyer behaviour in many sectors often tells us that familiarity is an important aspect in decision making — with that, ccTLDs have a good starting point however, and should continue to capitalise on their unique position as country identifiers as well as their reputations as trusted and secure options for its citizens.

For more information on latest trends in ccTLD registrations see latest CENTR DomainWire Global TLD Report.

1 Retention rate is a standardised methodology used in CENTR across the European ccTLD market. It is an indication of renewals and is calculated as the difference between total domains at two points in time minus the new domains registered between those points.

By Patrick Myles

Related topics: Domain Names, ICANN, Top-Level Domains

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