7 Feb
2017

The new gTLD application process: preparing for Round 2

Despite all the rumours and mutterings in and around the domain name community, there is still no news on when the Round 2 application window will begin. In order to understand why an organisation might decide to make a second-round application, it is worth examining why the existing applicants took the plunge back in 2011 and whether the same criteria exist today.

More companies than last year now see the internet as a profitable way of making sales, compared to traditional methods. Unsurprisingly, perhaps, it is the more e-commerce mature businesses, like the retail/wholesale companies, that are particularly impressed with the internet as a selling tool.

There are, of course, still obstacles to be overcome before the global digital revolution can really take off. These are more formidable barriers – security fears, particularly – than some e-commerce evangelists would like outsiders to believe. But when a massive 81% of respondents believe that electronic trading will revolutionize their dealings with customers – and 31% say that the internet has already increased total sales – it is clearly a revolution that is unstoppable. E-commerce companies that are lagging now only have a brief window before they fall irretrievably behind.

The above statement was taken from the concluding summary of a report written by KPMG Consulting on e-commerce. While it could well have been written in the past couple of years as an explanation of the current state of the domain name market, it actually dates back to 1999. Time and technology may have moved on, but it appears that the sentiment within the e-commerce market has not matured as much as organisations might have hoped. KPMG itself is among the 600-plus organisations that applied four years ago to run their own slice of the Internet in the form of a ‘.brand’.

Background

Although we are now four years into the domain name industry revolution, before looking towards the second phase, we must first explore the changing internet landscape created by the new generic top-level domain (gTLD) programme.

After years of debate and lobbying, the Internet Corporation for Assigned Names and Numbers (ICANN) agreed to an expansion of the internet name space at its public meeting in Singapore in June 2011. There had been a number of tests through the tactical launches of new gTLDs in preceding years (eg, ‘.EU’, ‘.Asia’ and ‘.mobi’), but nobody really knew how many applications would be made when the window opened for the programme at large. The UK-based tech industry website The Register (www.theregister.co.uk) suggested that there would be “as many as 500 applications, with a substantial portion being dotBrands” (‘.brands’ being defined as trademark holders that acquire their own domain name suffix). ICANN internally thought that between 100 and 200 brand holders would apply to join an exclusive club – one that offered the membership benefit of owning a piece of the Internet.

It was left up to domain name registrars and newly created consultancies to spread the message of this ‘once in a digital lifetime’ opportunity. Brand holders were divided into three camps: those that wanted to apply, those that sat on the fence and those that had no interest at all.

Some of the original enthusiasm evaporated when ICANN published the Application Guidebook – the set of rules drawn up by the ICANN community that would govern both the application procedure and the operating instructions. Many brand holders realised that they should simply stick to what they knew best rather than becoming a domain name registry. The application window opened in January 2011 but was far from straightforward, being shrouded in controversy, chaos and confusion before it finally closed three months later.

ICANN finally revealed the applicants in June 2011 in London, where it became clear that around 650 organisations had invested time, resources and money in making an application. They came from all four corners of the globe and from every conceivable business sector. Many were household names; a few were complete unknowns. But the excitement generated by the variety of applicants attracted envious looks from a number of brand holders that had shunned the opportunity to apply. Although the conversation in some boardrooms after the applications list was published was, ‘Why exactly did we apply and what do we intend to do with it now?’, many more asked ‘Why didn’t we apply?’. Seeing two or three competitors gain an unassailable medium-term digital advantage was enough to fuel heated debate across the boardroom table.

Although NetNames thought this was the ‘.BigBang’, the dawn of a new internet era, that was a mistake. Five years later, the fuse wire is just starting to smoke.

Some organisations have fallen along the way, deciding that managing a ‘.brand’ was not part of their digital strategy, or that they simply could not envisage the return on their investment. Hasbro withdrew ‘.transformers’; L’Oréal withdrew its main brand and a number of product-based applications; Heinz withheld its applications (including ‘.ketchup’); and, surprisingly, Hilton International withdrew ‘.hilton’. While all had their reasons, they had gone through the hardest parts of the process in making the decision to apply.

Seconds away, round one

The first of the new gTLDs to launch in late 2013 were generic names such as ‘.bike’, ‘.guru’ and ‘.pics’, as well as ‘.shabaka’ – the Arabic internationalised domain name which roughly translates as ‘network’. But few of them set digital and marketing department pulses racing. The first ‘.brand’ to launch was little known to the world outside Australia. Monash University, based on the outskirts of Melbourne, made internet history when its ‘.monash’ TLD went live in January 2014. The fact that the university had managed to progress its application and get ready for launch before some of the world’s biggest brands summed up the ICANN spirit of the new gTLD programme – offering a level playing field not just to organisations with big resources, but also those with the desire to be part of a new Internet.

In what appeared to be a full circle, the original hero of this tale, KPMG, brashly announced that it would completely rebrand its online presence under its new ‘.KPMG’ gTLD – but more than three years later, the rebrand is still awaited.

So why are brand applicants such as KMPG still not prepared to move forward with the transition of their new digital branding? Some will simply have deprioritised the project, happy to persevere with their existing domain name strategy and concerned that they may lose search ranking by switching.

Google (and consequently most other search engines of note) has been relatively tight-lipped on the subject of the new TLDs and how they affect search and page rankings. Interested observers on both sides of the digital divide have tried to prove the case for and against adopting a ‘.brand’. There have been some notable successes, including ‘.axa’, which adopted its ‘.brand’ alongside its existing TLDs, using it for its investor relations pages (www.annualreport.axa); while both Barclays (www.home.barclays) and BNP Paribas (www.mabanque.paribas) have flown the flag for the financial services industry. Other pioneers include Canon (www.global.canon) and CERN (www.arts.cern). In fact, in the case of BNP Paribas, its online banking domain name is one of the most visited new gTLD domain names since the programme began, according to Alexa Rankings.

Other brands have now started to launch, happy that there is enough evidence that search rankings will not be affected. Some organisations – such as Shell, Sony and Omega – have chosen to develop marketing websites using their ‘.brands’ rather than a full digital makeover – essentially testing the water before they fully commit at some point in the future.

However, if one of the major opportunities of applying for a new ‘.brand’ was to gain a first-mover advantage, it seems that, so far, few want to make that bold move. Any organisation that did not apply during the first round and is now considering an application should do so only with clear usage scenarios in mind, in order to avoid some of the pitfalls and delays that have affected first-round applicants.

Ready for Round 2?

Despite all the rumours and mutterings in and around the domain name community, there is still no news on when the Round 2 application window will begin. Chatter between ICANN and the relevant stakeholder groups has intensified in recent months, but there has been no formal word. In order to understand why an organisation might decide to make a second-round application, it is worth examining why the existing applicants took the plunge back in 2011 and whether the same criteria exist today.

A number of brand holders saw the new gTLD programme as an opportunity to innovate, gaining a competitive advantage in the biggest global market. The concepts behind the ‘.brands’ being launched by Fox (www.nic.fox) and Netflix (www.nic.netflix) have been a taster of what could be done with a ‘.brand’ – both tick the boxes of innovation and security for the organisation, using the domain name to protect intellectual property from infringers.

Others saw the opportunity to build strong digital messaging. Few brands represent the digital age better than Apple. It could have applied for multiple TLDs, as Google did, but instead is building a strong story around the ‘.apple’ TLD. Its stores can have geographic domain names (www.london.apple or www.paris.apple), while its individual product lines can have own their own digital branding (www.ipad.apple or www.macbook.apple) and its services can be easily found online (www.support.apple or www.geniusbar.apple).

Two of the major concerns that brand holders still have is keeping their customers safe and their reputation intact. Providing a safe environment for customers, ensuring that web traffic is not diverted and, ultimately, that online revenues are maximised are core objectives for any successful online brand. The operation of a ‘.brand’ gTLD can ensure that organisations eliminate some of the most common IP infringements. It takes mere seconds to register an infringing domain name and, more often than not, damage to reputation, web traffic and revenues can be inflicted before the brand is even made aware of the rogue domain.

A slight misspelling of a brand name is often not immediately visible to the human eye. A brand that can confidently say “If it doesn’t end in ‘.brand’ then it isn’t us” has a significant competitive advantage – especially in a financial services environment.

Unsurprisingly, some of the brand holders that are keen to join the ‘.brand’ club have been putting pressure on ICANN to give an indication of when they will have another opportunity to apply for their own ‘.brand’. At the last ICANN meeting in Helsinki, the topic was raised in a number of open meetings.

It is not that the domain name community at large is not ready; on the contrary, ICANN has already set up a number of working groups to examine which aspects would need changing for a second round. The issues seem to be related to the sins of our fathers: delays in creating a more robust mechanism to handle issues such as contention, prioritisation and usage.

There have even been comments that the second round could be restricted to geographic TLDs only, based on the success of TLDs such as ‘.NYC’, ‘.Berlin’ and ‘.London’. If that is the case, that next window could come sooner than we think – although the recent explosion in registration growth of gTLDs (‘.top’, ‘.win’, ‘.red’), especially through the Chinese registrar market, would suggest that ignoring the generic terms in a second round would not be in anyone’s interest.

At the time of writing, only a small number of organisations have launched a ‘.brand’. To start talking about a second-round application window now, with so many first-wave applications still on the drawing board, is premature. However, that should not stop organisations from starting to prepare. The key to any second-round applicant hitting the ground running is to ensure that it has usage scenarios in place long before the application window even opens. Taking on the responsibility of running a new gTLD registry should not be taken lightly and all relevant stakeholders must understand the time, costs and infrastructure that are required not only to meet the stringent criteria laid down by ICANN, but also to develop a new digital strategy.

Comment

Innovation is the key to growth on the Internet today. Owning a ‘.brand’ will enable organisations to develop new engagement models with clients, as well as to make the Internet a safer place for their customers. For instance, offering every client a bespoke URL – whether for security purposes or simple vanity – would allow a ‘.brand’ to develop community-based applications using the domain name as the digital key. The history of the Internet teaches that tomorrow’s growth businesses, disrupters and viral applications have short incubation periods – in a decade, Facebook has gone from being used by a handful of US students to a social media giant used by 20% of the world. Rather than waiting for the second-round window to open, prospective applicants should now be thinking about how to rewrite the digital marketing playbook.

The decisions on whether to apply for a ‘.brand’ will be made based not necessarily on the success of the first round, but rather on standard business decision-making factors, including return on investment, budget availability, usage strategies and brand-protection strategies. A potential applicant must answer a number of core questions before it puts pen to paper:

  • How will the ‘.brand’ be used in a way that will benefit staff, stakeholders, shareholders and, ultimately, customers? How can a business measure success once it has been launched?
  • Is the objective in applying for a ‘.brand’ to create a defensive position within its market or will this give a competitive advantage?
  • Who should be involved in the project internally? Should this be driven by marketing, intellectual property, legal or technical? Who are the key stakeholders managing the project?

NetNames Group

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London E14 5LQ

United Kingdom

Tel +44 20 7015 9200

Web www.netnames.com

Stuart Fuller
Director of commercial operations

[email protected]

Stuart Fuller is director of commercial operations at NetNames, part of Corporation Service Company – the leading global provider of corporate domain management and online brand protection services. Mr Fuller specialises in the issues affecting brands online, especially concerning the impact of the new generic top-level domain programme. He focuses on the rise of online threats and domain management.

Mr Fuller recently published a white paper, “The False Nine – the threats facing the sports industry from IP infringement”, and is a member of the International Trademark Association Unreal Working Group. He is also responsible for directing NetNames’ commercial operations across all geographies and corporate brands. He co-leads NetNames’ global communications strategy and plays an active role in product development.