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Advertisers have given Verisign a free gift worth billions of dollars over the past 10 years.
Sports Stadiums provide a great analogy…
What do office supplies have to do with basketball? What does oil have to do with football?
Yet, Staples will pay the Lakers $116 million dollars and Lucas Oil will pay the Indianapolis Colts about the same (over 20 years) to associate their company names with these stadiums. These companies understand the value of an audience; the value of millions of eyeballs… and they gladly pay to have their brand viewed by millions of people even though those eyeballs are mostly interested in the sports.
Yet those same advertisers don’t consider the billions of dollars in aggregate cumulative advertising value that they are giving away for free… to Verisign when they advertise their dot.com domain names year after year after year on television, radio, billboards, and magazines… all around the world.
I’ve been trying to make the point on the value of new TLDs to advertisers for a long time and I think I can demonstrate it better by using the analogy of “sports stadium naming rights”. When you consider the amount of money spent on stadium naming rights it’s easy to see that smart brands consider it a successful strategy. In its simplest form, naming rights can be defined as the privilege of associating a sponsor’s name with a building, project, or event by including the sponsor’s name in the title of the item being named (see: Valuing Naming Rights). Millions are spent on naming rights and are generally just a part of large brand ad budgets.
So here is the comparison: Although the ways and means are different it’s accurate to say that… sports teams attract attention… and large advertisers attract attention.
And a huge amount of valuable exposure inures to any TLD (.com / .net / .org / .whatever) that is attached to a large advertiser’s brand. Dot.com (Verisign) has been the primary recipient of that benefit… without question… for free… for at least ten years. If you wanted to take this analogy further, brands might even suggest that Verisign pay them to advertise .com as part of their brand name. Even with the benefits of a short URL, I’m actually a bit surprised at the reported amount ($350K) that Overstock paid for o.co. They could likely, easily acquire their own TLD next year for a bargain price of $185K. There is no doubt that the dot.co registry wants famous brands to use their TLD and that they are benefiting greatly by Overstock’s advertising dollars (The .co management team is one of the smartest and best in the domain name business).
All in all, considering the amounts that large brands spend on advertising every year, wouldn’t they just be better off using their own TLD? If brands used and advertised their own TLDs, all of their ad dollars would inure to their own brands, and the need to protect a brand across every possible TLD in existence would also be reduced. This is especially true since there are now so many legal and procedural processes in place to protect brands online anyway.
And with the barrier to entry that new TLDs provide (a cost of $185K) there is a clear and obvious long-term benefit to brands acquiring their own new TLDs.
Finally, consider Paul Stahura’s CircleID article in 2009. Paul’s study showed that “the vast majority of trademark holders are not registering their trademarks in all the current generic TLDs, let alone all the TLDs.” There is good reason for this. It doesn’t necessarily pay to register your famous brand in anything else except for the most used (most advertised) TLDs. The only TLDs that are “typed in” by end users with regularity are .com and .org, and a few of the most significant ccTLDs like .us, and .de; country codes of the largest commercial economies of the world. This is because they are the only ones that are widely advertised. People know about them and use them, so brands need to be protected under them.
But the need to register a brand under every possible new TLD will be greatly diminished in a world of dot.brands. I wish that the ANA and other trade groups would begin sharing the opportunities rather than telling their members that the sky is falling. It will be too late very soon.
To learn more about this topic, dowload a copy of my free white paper on how brands can use new TLDs to stop cyber-squatters.
Disclaimer: Yes, I work for a registry and have an interest in new TLDs, but I wouldn’t be promoting them if I didn’t think they were a fantastic idea for big brands.
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(1) Are you saying that all these advertisers at sports arenas and F1 cars are stupid?
(2) In your statement
you are missing the importance of TLD signaling that can explain the limited selection of TLDs under which brand owners have registered.
Hi Alex,
Thanks for your comments…
1.) I never said nor did I mean to indicate that advertisers are stupid. Please let’s not make this confabulation personal. In fact these are some of the smartest and most successful advertisers in the world.
My point is that when they advertise a dot.com address they are giving away part of their ad dollar to what I call “the dot.COM brand”. That’s what my white paper is about. Brands pay for a dot.com domain and then on top of their annual fee, they give the dot.com portion millions of dollars in free public exposure (this exposure on the brand’s dime). I think this has been overlooked by advertisers since about 1997.
2.) You bring up a great point about TLD signaling. I didn’t go into that aspect very much and it is important. I recognize that the most used gTLDs and many ccTLDs will remain important to brands for an indeterminate amount of time; didn’t mean to discount that.
But some brands and their advisers are suggesting that they will have to register their names across all new TLDs. I used Paul’s study to point out that this hasn’t been true in the past and is likely to become less necessary in a dot.brand world where consumers and end users around the world become more familiar with the new TLD paradigm.
It was the largest of advertisers that made dot.com as popular as it is today. They trained today’s Internet consumers on dot.com and if they embrace new TLDs, they will train tomorrow’s Internet consumers on their own brands. For these kinds of advertisers, that is a bargain (IMHO) at $185k & annual fees. In fact it is a huge opportunity that many are maligning at this most critical juncture in time.
Dot.com will remain as important as ever and likely remain the de facto standard for most businesses, but the largest advertisers with the largest stakes in their brands, will now have a tool to concentrate and focus their ad dollars more intensively, on their own brands (and thus reduce the power of domains registered under other TLDs in the hands of cyber-squatters).
My focus was to point out that there is more value for many (not all) large brands in new TLDs than might be being recognized right now. I didn’t mean for this to be an exhaustive article on the use of domain names or advertising strategy.
Hi Joe,
Nice to see you on CircleID. Very interesting perspective. You make an excellent point regarding the value proposition of DOT-BRAND TLDs. I also believe the same value proposition exists for DOT-CITY TLDs. Other companies also share this perspective including Minds + Machines and Affilias. Just out of curiosity, is CentralNIC targeting the DOT-CITY TLD space? I’m assuming the answer is yes since CentralNIC is supporting DOT-LA.
Thanks for the note. We’ve answered several RFPs for .city TLDs. We’re certainly interested and capable of helping them.
Joe,
Has CentralNIC considered the idea of using stock ticker symbols as a DOT-BRAND TLD name for publicly-held companies?
Centralnic’s role is that of an advisor and/or technical partner/provider. So we can help companies that choose stock ticker symbols as TLDs. We’ve had discussions with some companies about the idea; it wouldn’t be appropriate for me to reveal any of those discussions here though.
The question of what string to apply for is an important one, requiring some deep, strategic thinking, especially when one considers new TLD’s costs and long-term ramifications.
Using a stock ticker symbol may have the benefit of being short and concise. But a company should also consider their target market. End users may recognize a brand’s name better than its ticker symbol.
A question like this may better be posed to a guy like Naseem Javed (http://www.circleid.com/members/773), who helps brands decide on names.
Perhaps companies with sufficient resources may pursue both paths, i.e. their company name and stock ticker symbol as TLDs. I agree with your perspective that this type of effort requires extensive strategic analysis given the long-term impact. Regarding Naseem Javed, his name came to mind when I posted this idea. Would be nice to get his thoughts on this concept.