New gTLD Success and Inevitable Realities

There has been an interesting debate raging over the likelihood of new gTLD success and consumer demand.  One opinion asserts that all new Top Level Domains will fail.  While we all hope that the considerable time, effort and frustration has been wisely invested and all the new gTLDs will be successful, it is unfortunately, unrealistic.  Some TLDs will do very well, some will break-even and others will struggle and eventually fail.  Each gTLD is a new business and is prone to the same failure rates as any other new business:  25% fail in year 1; 37% in year 2 and 45% in year 3.  Businesses fail for a multitude of reasons, with almost half failing due to incompetence and a third failing due to unrealistic demand expectations i.e. volume and being under capitalized.  While the ICANN application process was intensive, there were no clarifying questions on justifying your success rate and the ‘Dummies Guide to New gTLD Success’ has yet to be published.

What is your gTLDs Secret Sauce?

Most applicants within a contention set often wonder whether the value of a TLD has the same value to each applicant.  The auction value is the financial benefit your Company receives from the TLD over a period of time.  The revenue .APP provides to Amazon will be different from Google which will be again, different from Donuts.  Companies with a secret sauce will likely have a competitive advantage because it drives volume which is critical to a new gTLD success rate. Volume projections need to be meticulously developed and based upon tomorrow’s reality.  For example, .photo projections need to reflect competition from all TLDs along with TLDs within the same vertical space for example, .cam, .webcam, .photography, .photos, etc.   Volume is cash and cash is king.  It’s a cliché but too many companies fall short of their volume projections without understanding the implications.

Too many times have I had to surprise a CEO with my analysis that they will be out of cash in a few short months. In one case, the much-anticipated Christmas ‘bonuses’ were severance cheques and the usual Christmas cards replaced with pink slips.  Comparing results to your plan is critical to ensure your business not only survives but prospers.  For new businesses meeting projections is critical so they need to be diligently monitored with a predetermined plan in place if they fall short of expectations.  The simple phrase “We will achieve X by Y or we will [action]” is one of the tools I use to ensure everyone on the team understands the importance of company goals and understand the implications.  Guard your secret sauce but apply it generously to attain the desired results.  If the sauce needs more zing, add spices.

Marketing ROI

New gTLD success will be dependent upon a management team’s commitment to their marketing plan.  Marketing requires constant attention, nurturing, idea generation, tools and of course, cash.  Many TLD applications were ‘light’ on their projected marketing costs.  Be realistic but also be smart on how your marketing dollars are going to be used.  Ensure the plan is clear on what is going to be done, the expected quantified outcome, and that it is attainable.  Calculate the return on investment.  Without a positive ROI, marketing should not be occurring.  I’ve seen the outcome of the ‘Go BIG or Go Home’ campaigns whereby a million dollars is spent in a few months and the Shareholders send the CEO home.

Become a New gTLD Success

Failure rates, crucial volumes and marketing costs are not meant to be pessimistic but motivational to help ensure a new gTLD success including your company’s by ensuring it has all of the right elements.  Implementing reporting systems and plans, if actual results vary beyond a predetermined range, is crucial to survival.  Help ensure your new gTLDs success with the following:

• Clear objectives that go beyond ‘sell a lot of domains’
• Experienced and talented management team with periodic reviews, checks and balances
• A business plan that addresses marketing, financing, sales plans and volumes along with the associated financial projections
• Sufficient funding and a trigger point where Management agrees it’s time to seek additional funding at a predetermined point

With the launch of the first TLDs, it’s time of excitement but it’s also time to ensure your business and financial plans are aligned with success. Ensure your plans are designed around today’s realities with a substantive plan on how to maximize the value of your secret sauce and become a member in the new gTLD success club.

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