The Risk of Not Applying
Posted by Jennifer Wolfe on 22nd February 2012 in 360 Blog

The deadline to apply for a top level domain is fast approaching. If you are still on the fence or haven’t engaged your CEO or CFO in the process, now is a good time to consider a simple cost-benefit and risk analysis. And, I encourage you to engage the C-Suite if you have not already. We’ve found that as soon as they understand the risk-reward analysis, they want to apply.

So, let’s start with what we know. We know what it will cost to acquire a closed brand TLD that does not go to auction. Of course, if you don’t have clear trademark rights or you are applying for a generic term that is in demand, the auction cost is an unknown.

But for all others, the estimate, including advisory fees, is approximately $252,000 to acquire the top level domain. For large companies, that’s far less than a small advertising campaign and less than most capital improvements. The baseline operating expenses annually to maintain the closed top level domain is approximately $152,400. Of course, there would be other internal operating costs, but in terms of the cost of a capital asset, that’s relatively small in comparison to other equipment or technology. So, I can tell you with certainty what it costs to obtain a top level domain and maintain it, if it doesn’t go to auction. So, the risk for your company to apply and see what your competitors do is approximately $252,000. And, if your application does go to auction and you don’t want to continue, you can withdraw and get most of your money back. So, the risk really isn’t that high to make sure you are at least in the game.

What I can’t tell you is the cost to your business if you sit on the sidelines, assume this won’t succeed and then the entire internet changes and you are left behind. The cost to your business could be irreparable. It is highly probable that you won’t have another opportunity to obtain a top level domain for at least five years – which is a lifetime in the technology world. If competitors figure it out and you’re not even in the game – you can’t even compete. You’re out.

So, if your CEO comes to you in May after reading about what your competitors are doing and wants to know why you didn’t apply. Are you really going to answer – because we didn’t think it’s any different than .com? Prior to 1998, no one used email or even knew about .com. Do you really think nothing will change in this next phase of the internet? Can you afford to take that risk? If you’d like to know more about measuring risk and trying to predict trends in the next generation of the internet, stay tuned, we’ll be here. I look forward to talking with you next time.