• by Alexa Raad , March 19, 2012

CMOs are struggling to connect with their customers. A recent BCG survey found that 77 percent of CMOs were not sure how to reach customers. So it’s not surprising that many CMOs are equally unsure how to use new top-level domains (TLDs) to better reach, sell or retain their customers.

Having launched a new TLD (.MOBI) and managed a major one (.ORG) as CEO of the Public Interest Registry, I appreciate the formidable challenges associated with achieving success in the domain name system (DNS).

Deregulation to Impact Business Models

Today, that industry is changing rapidly. The introduction of the new TLD program will accelerate that change, but it’s not just the new names. Industry deregulation will dissolve traditional barriers between wholesale and retail channels, and lucrative new business models will attract new players.

Success was once measured in simple terms -- namely, how many domain names did you sell? But that metric won’t apply for many new TLDs. When launching a branded TLD, a company instead will aim to enhance the security of transactions within their TLD or increase the sell-through of other services. The domain name -- which will be given away -- will be a convenient “wrapper” around a bundle of services, where the revenue will lie.

What’s Your Digital Strategy?

The question CMOs must ask is: “What possibilities would a TLD offer?”

With little time remaining in the TLD application period, a CMO who has not evaluated the possibilities a new TLD might offer is already behind the curve. It may be that a TLD is not a business imperative. That’s fine -- but the decision shouldn’t be left to chance. A process should be in place to evaluate the opportunity.

CMOs must clearly articulate their online marketing and communication strategies and evaluate the risks and rewards.

• Why would you apply for a generic top-level domain (gTLD}? Is it first-mover advantage? Enabling a new line of revenue or a new way to communicate? To provide greater security for your transactions or to realize cost efficiencies? Or are you simply hedging against an uncertain future?                   
• Would you not apply for a gTLD but instead selectively register second-level domain names on other new gTLDs?
• Would you not apply but block competitors from applying, for example, and object to any other entity that applies for a name that describes your market customer or product category?
• Or…do nothing at all?

If you apply for a new TLD, a good name alone is not enough -- even if that name is a well-known brand. You must offer users something they could not get before on your existing website, especially as search and mobile apps minimize the value of a domain name. A good name is no substitute for a differentiated service or benefit you provide.

Oh, by the way, many applications (email, spam filtering or even form fill) may not recognize new TLDs for some time. So be prepared to run parallel sites and platforms over the short- to mid-term.

Quirky DNS

Finally, the domain name industry is a unique business, and it’s likely that if you decide to own a TLD, you’ll need to understand the ICANN rules and the DNS idiosyncrasies that present a whole new set of questions:

• What’s the basis for the financial business case, cost displacement or revenue generation?
• What will it cost to set up and operate a TLD effectively?
• What are the sensitivities of the financial model?
• What are the potential risks and how costly would it be to mitigate?
• Who would be your partners be in developing and operating a TLD registry?
• Which back-end registry providers, front-end marketing/sales channels, abuse and security experts do you need to help you succeed?

DNS Doesn’t Offer Mulligans 

Depending on your approach, “do-overs” in this business are nearly impossible. The contract to operate a TLD requires a 10-year commitment, so abandoning it quickly or changing plans dramatically is not an easy option.

For those planning to launch a generic-word TLD, the launch is critical. It’s hard to recover from a poor start. You’ll need a process and criteria in place for selling domain names during the “Sunrise” and “Land Rush” periods and be able to manage the objection process from brands and others protecting trademark names.

Brands have more leeway here because the success of the TLD is not dependent on the number of domain name sales. But even brands will need to plan the launch carefully to avoid missteps that could damage the name.

There may be little left to decide if a TLD makes sense, but CMOs still can make the most of that time. Informed decision-making is the only viable option.