Should Your Company Jump on the Dot-Brand Bandwagon?
What if you build it, and they don't come?
By summer, new top-level domains -- the letters to the right of the dot in a web address -- will likely be approved for release. In fact, companies will soon be able to apply for TLDs representing their brand (e.g., .Canon) or a generic term (.shop), run the registry that controls them, and then sell domain names using the extensions.
Until now, our main windows to the online world have been websites with human-recognizable names. But with the increased use of mobile devices and "apps," as well as companies like Facebook becoming gatekeepers to specific consumers, the question is how, if at all, will new TLDs change the landscape?
Cyber real estate is like all other real estate: It's all about location. In the online world, a good location is measured by the traffic it generates.
Cheaptickets.com is a great name, but mobile devices and Apple are starting to challenge TLDs' supremacy. With apps on phones and the iPad, you don't see a domain name, meaning it's more difficult to leverage your website as a bonding tool with potential customers.
And then there is Facebook. The social-network behemoth is claiming greater control over consumers. How many major brands have subjugated their name in advertising with "Find us at www.facebook.com/brand"? In a speech last month, a Facebook executive asserted that company websites may become a thing of the past and provided statistics: Starbucks, in one month, had 1.8 million website visitors vs. 21.1 million likes on Facebook. It was 270,000 visitors vs. 20.5 million likes for Coca-Cola. For Oreo, 290,000 vs. 10.1 million.
While many companies have Facebook sites, they are still trying to quantify the value of social media, and they are not abandoning their corporate websites. Yet, with consumers willingly paying for apps, in part because they deliver content customized for a mobile device, the Gartner Group predicts that , within four years, 50% of online sales will be via a social presence and mobile apps.
So while the goals for web-based businesses are clear -- expand reach, build brand loyalty, capture sales -- the "how" is not. Choices have multiplied. What's more valuable in driving sales: 2011models.toyota, Toyota.cars, Toyota.com, facebook.com/Toyota, the Google adword for "2011 Toyota Models" or the Toyota app on iTunes or Android? Answers aren't easy to come by .
The new TLD program has a short window to consider the options: Do nothing, defend against others or apply yourself. Once the application guidelines are published, the application period may be as short as four months -- not much time to decide if a new TLD makes sense.
Some have already signaled their intention to apply. The American Bankers Association and the Financial Services Roundtable's BITS announced last month that they are partnering with VeriSign to help them "prepare the financial-services industry for potential new financial … TLDs." The .bank business case will very likely include evaluating the additional security provisions and specific financial functionality a new TLD might offer.
The room for error in launching a new TLD is small. If it doesn't catch on, how do you extricate yourself from it? Benchmark studies of TLD launches found that more than half of the launches studied missed their projections by an average of 83%, often because they didn't accurately calculate atypical pricing and costs of the domain-name industry. And there's the added risk that a wrong move -- including doing nothing -- may damage or dilute the brand.
While some pundits claim the end of the web is nigh, the history of information technology is replete with wrong predictions. It was IBM Chairman Thomas Watson who famously said, "There is a world market for maybe five computers."
But uncertainty shouldn't mean indifference. The domain-name expansion is expected to move quickly, with new TLDs awarded by the first of next year. Smart brands, enterprises and entrepreneurs are already weighing their online options. The winners are likely to be the innovators who understand them and the nascent, and sometimes fickle, customer needs.