gTLD Auction Value

With the ICANN  gTLD prioritization draw plan now in motion, new TLD applicants are now turning their focus on contention set auctions.  The questions are similar:  “How much should I pay for my string in the auction?“, “How much is it worth to my business?“, “What do you think my competitors are going to pay for it in the gTLD auction?” 

While we all like definitive answers, sometimes it’s just not possible.  gTLD auction values are unfortunately, part of this category.  The value of the string is dependent upon the applicant’s value obtained by possessing a particular string.  That value, driven by revenue and associated expenses, is dependent upon a number of factors including the synergies created between existing businesses and new products and services.  Let’s look at a few examples.

• Existing Business with a new gTLD:  The value of a string that is directly associated with a company’s existing products and services is likely going to have more value to that company.  For example, .search will have more value to Google as they have an extensive business built around their search engine.

• New Business with new gTLD:  The gTLD auction value of a new business with a new string who is in contention with a similar applicant.  While on the surface, it might appear as though both applicants would have a similar auction value; this may not be the case.  For example, one applicant may have a unique marketing relationship that will drive their volume with minimal costs.  Thus, the value of the string will be more valuable to the company as they have increased sales and less marketing costs.

• New Products or Services:  An existing business that expands their product offerings to include a TLD or other service will again assign a higher value to the string when compared to an applicant who does not.  The obvious example is providing a hosting service for new domain owners or an existing business that allows its customers to buy a domain name i.e. accountants could register .CPA.

While the above are only a few factors to consider while revisiting your business model, they provide a starting point on assessing your gTLD auction value.  Additionally, they also provide some insight on your competitors business model.  At the end of the day, each TLD is a business with stakeholders who want to ensure that their investment receive benefits within a reasonable time frame.  Your gTLD auction value needs to feed into your business model to ensure that this is indeed the case.