Research | Strategy | Solutions

2013: THE YEAR OF THE ADDRESS BAR New gTLDs Set to Reshape Consumer Interaction with Brands
A FairWinds Study

December 2012

2013: The Year of the Address Bar

Domain names. The address bar. URLs. These are all items that few Internet users pay much attention to while navigating the Internet to their desired online destinations. In fact, the majority of Internet users are wholly unaware of the different paths they take to reach different types of websites and other content online or why they rely on and trust certain avenues over others. 2013 will be the year that Internet users wake up to the world of Internet addresses and start thinking more about what they put into their address bars. Why all the attention paid to something as seemingly simple as domain names? Starting next year, the top level of domain names, or the space to the right of the dot, will open up to vast new options beyond the existing .COM, .ORG, and others. Rather than a short list of simple suffixes, Internet users will now have a plethora of possibilities from which to choose. Brand owners, on the other hand, will find that their customers will initially be confused by the hundreds of new gTLDs that launch. Those brand owners will need to adapt their digital strategies to take into consideration the fact that their customers will be confused and will have increased difficulty finding them. With more options available to Internet users at the top level, brand owners will face new challenges to distinguish themselves from their competitors and to ensure that their customers can find them. But do consumers know that the Internet is about to change? How will they respond and adjust their online navigation habits to more choices at the top level? And most importantly, how can those entities seeking to reach consumers online, like brand owners, adapt their behavior and practices to account for and benefit from those responses? Some key assumptions for brand owners to consider: Internet users, by and large, know nothing about new gTLDs. Internet users will initially be confused by new gTLDs and may find it difficult to navigate to content or know which new addresses to trust in the immediate future. Brand owners that effectively define their new gTLDs and rise above this confusion will achieve success with their new gTLDs. Significant gains in terms of digital presence and online awareness of their brands await brand owners who provide consumers with simple education about new gTLDs.

This once-in-a-generation change to the Internet will thrust both brand owners and consumers alike into new and unfamiliar territory. The existing body of knowledge and research about Internet navigation behavior thus far does not account for these upcoming changes. This paper combines new market research with FairWinds Partners' expertise to explore initial conclusions about the dramatic changes that are about to impact the Internet.

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I. Background
The Internet and the way businesses, consumers, organizations, and others use it, are about to undergo the biggest change since the World Wide Web was first commercialized through the introduction of .COM. Starting in 2013, website addresses will no longer just end in a small set of extensions like .COM, .NET or .CO.UK. Instead, Internet users will have the option of visiting, say, Google.Search, instead of Google.com, or Dealers.BMW, as opposed to http://www.bmwusa.com/standard/content/dealer /default.aspx, to find dealers that sell the luxury cars. Though largely unbeknownst to the average Internet user, the process to expand the number of Web address extensions, known as generic top-level domain names or gTLDs, has been both lengthy and intriguing, putting Internet giants like Google and Amazon in competition with one another, raising questions about who has the right to what words online and highlighting global Internet governance issues, and single handedly putting a company named Donuts on the map. In January 2012, for the very first time, strategic companies, as well as organizations and other institutions, applied to own and operate a myriad of words and phrases in a variety of languages as gTLDs. And with hundreds of applicants submitting 1,930 applications for a total of 1,409 unique .WHATEVERs, new gTLDs will fundamentally change the way in which Internet users can navigate to content online and the way businesses interact with those users online.

A TOP-LEVEL DOMAIN is the string of characters that appears to the right of the "dot" in Internet addresses. There are two types of top-level domains: generic top-level domains (gTLDs) and countrycode top-level domains (ccTLDs). Until now, only 22 gTLDs have been in use, including .COM, .NET, and .ORG, as well as over 200 ccTLDs, which are specific to certain countries, including .JP for Japan, .MX for Mexico, and .FR for France.

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II. Internet Users, By and Large, Know Nothing About New gTLDs.
Consumer Awareness of New gTLDs: The Challenge
FairWinds Partners, in addition to conducting research into Internet user behavior and past gTLD launches, worked with InsightsNow, a leading market research firm, to survey 2,008 Internet users between the ages of 13 and 64 about their awareness of and attitudes toward new gTLDs.

74% of Internet users do not know about new gTLDs.

At present, very few members of the general public are aware of the fact that new gTLDs will become a functioning part of the Internet in 2013. Among the participants in FairWinds survey, nearly three-quarters (74%) were entirely unaware of the existence of the New gTLD Program, and only 4% could successfully name an anticipated new gTLD. Poor public awareness of new gTLDs is neither surprising nor abnormal in the past, gTLD launches have never been a major event that attracted much mainstream attention. More than two years after the .COM gTLD was introduced, there were only 100 total domain names registered in the gTLD1. As more and more people became connected to the Internet and began using the World Wide Web2, the number of domains registered in .COM and the frequency with which Internet users visited those domains swelled (see Figure 1a and Figure 1b). There are currently over 106 million domain names registered in .COM3.

Number of Domains Registered in .COM as compared to U.S. Internet Users, 1995 2012.

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When .BIZ launched in 2001, following a small-scale introduction of a handful of new gTLDs in 2000, there was little mainstream attention paid to the new suffix. Moreover, little was done to distinguish it from its popular predecessor, .COM. As a result, website owners had little incentive to register domain names in .BIZ over .COM, and now, .BIZ has just over 2 million domain names registered about 2% of amount of the domains registered in .COM (see Figure 1c). Additionally, as of 2010, 4.1% of .BIZ domains redirect to a site hosted at a same domain name in a different extension, compared to only 0.4% of .COM names that do so4. This lack of distinguishing factors between existing gTLDs not only explains the large gap between .COM and other subsequent gTLDs in terms of awareness, usage, and consumer adoption, but also sheds light on why Internet users today, even if they hear about the impending introduction of new gTLDs, have paid very little attention to it. The pervasiveness of .COM has created a degree of inertia among consumers thus far, they have had very little reason to shift to using other gTLDs. The relative obscurity of new gTLDs launched in the past 20 years, paired with the fact that which specific new gTLDs will launch next year is still being determined, has resulted in an extremely low level of awareness among the general public of new gTLDs and the New gTLD Program.

The obscurity of new gTLDs launched in the past, plus the fact that which specific new gTLDs will launch next year is still unknown, has resulted in extremely low awareness of new gTLDs and the New gTLD Program.

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III. Lack of Awareness of New gTLDs Will Drive Internet User Confusion.
44% of Internet users surveyed indicated that new gTLDs either probably or definitely would cause confusion (see Figure 2). After learning more specific details about how some new gTLDs would be used, this number dropped slightly to 33%. While this drop bodes well for future new gTLD owners, a solid third of all survey participants still felt strongly that new gTLDs would cause a significant amount of confusion among Internet users. Among those participants that reacted more favorably to the idea of new gTLDs, only 27% reported that new gTLDs either probably or definitely would not cause confusion among Internet users. Far and away, confusion topped the list of all the concerns that survey participants had about new gTLDs. This list included trust, security, legitimacy, confusion, ease, and memorability of new gTLDs. Confusion scored the lowest out of those who responded with positive answers and the highest out of those who responded with negative answers.

Mitigating this Confusion

Though they seem negative, however, the survey results indicate that this confusion among consumers with regard to new gTLDs can be mitigated, or even prevented, if new gTLD operators take the proper steps. Education about new gTLDs broadly, and about individual new gTLDs specifically, can allay fears of confusion among consumers, as evidenced by the 11% decrease in confusion among Internet users after receiving some basic education about specific new gTLDs.

Confusion drops by 11% after consumers receive limited education about new gTLDs.

New gTLD owners will need to devote efforts to educating consumers about new gTLDs. This is especially important for brand owners who applied for new gTLDs, because their new gTLD efforts may have the potential to seriously impact their brand image in the eyes of consumers. FairWinds Partners, LLC | Duplication & Redistribution Prohibited 6

IV. Brand Owners who Effectively Combat Confusion Will Likely Experience Success with New gTLDs.
With Focus Comes Success: The Opportunity
In contrast to many of the new gTLDs released in the past 20 years, many of what are known as legacy gTLDs, or those introduced at the same time as the Domain Name System itself, stand out as highly successful. This success is largely due to the legitimacy and trust that they have been able to build with consumers, both of which emerged from a clearly defined and well communicated focus of the role that those gTLDs play in the larger universe of domain names. Two excellent examples of this success are .EDU and .GOV, the first of which is used solely by post-secondary educational institutions, and the second of which is used solely to host content from the United States government and official federal, state, and local government entities. .EDU is widely recognized and trusted by Internet users as the authoritative location of education-related information, and .EDU domains are widely indexed in Googles search algorithm5. .GOV is also highly indexed by Google and also represents a clear and distinct community. Users know to visit to .GOV addresses for official U.S. government content. Both gTLDs have a clearly defined purpose from which their operators have not deviated; registrations in these gTLDs are restricted to specific entities. These purposes have remained clear and consistent, and as a result, Internet users know exactly what to expect when they navigate to websites whose addresses end in .GOV or .EDU. As such, they trust these namespaces. This trust has gone a long way in leading Internet users to adopt these gTLDs.

How Education Can Help Build Trust

The ability of education to build trust in new gTLDs is further evidenced by Internet users feedback. After exposure to specific gTLD scenarios, there was a clear movement of participants towards trusting new gTLDs, putting them in the majority over those who expressed concerns about them. Additionally, participants expressed that they were more likely to trust branded gTLDs, or gTLDs that are a brand name, than gTLDs that are generic words or FairWinds Partners, LLC | Duplication & Redistribution Prohibited 7

phrases. When presented with three scenarios involving different industries ecommerce, banking, and media participants indicated higher levels of trust and lower levels of confusion in the branded gTLDs, across all three industries. On average, 70% of participants replied that they would trust branded gTLDs, while only about half (51%) reported that they would trust generic-term gTLDs. Similarly, participants were 19% more likely to consider branded gTLDs to be legitimate, as compared to generic-term gTLDs (see Figure 3).

Applying those Lessons to New gTLDs

The responses of Internet users surveyed uphold the lessons that .GOV and .EDU have taught: having a clearly defined purpose for how a gTLD will be used can increase the likelihood that consumers will trust that gTLD. Knowing how gTLDs will be used and the content they can expect to find when they navigate to domain names in those gTLDs makes Internet users more likely to actually navigate to those domain names in those gTLDs, because they know them to be trustworthy.

70% of Internet users say they will trust branded gTLDs.

Brand owners that applied for new gTLDs and plan to own and operate all domain names internally, as opposed to selling them to outside parties, are in an ideal position to emulate the success of .GOV and .EDU. Typically, major brand owners have already established a level of trust with consumers through their brand equity, which they can then leverage to create trust in their new gTLDs and drive high rates of consumer adoption and acceptance of these gTLDs. In that sense, .BRAND gTLDs and generic-term gTLDs operated by established brands may stand a greater chance of achieving success than other gTLDs. However, it is not enough for brand owners to simply sit back and rely on their brand equity to make their new gTLDs successful. Rather, all brand owners will have to adjust aspects of their digital strategies and employ marketing and communications tactics to effectively rise above the confusion that new gTLDs will inevitably create. This will mean developing ways to educate consumers about their new gTLDs and spreading those messages to the consumers they seek to engage with via their gTLDs. Because of the low level of awareness about new gTLDs, this task will pose challenges for brand owners and marketers.

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V. Brand Owners Interaction with Consumers Online Will Never Be the Same.
What Does All this Mean?
The sheer magnitude of the New gTLD Program over 1,900 applications for over 1,400 gTLDs along with the caliber of gTLD applicants, including global corporations and world-renowned organizations, makes it the biggest change to the Internet since the introduction of .COM and the advent of ecommerce. One of the consequences of this forthcoming change will be that all brand owners, both new gTLD applicants and nonapplicants, will need to clearly define and communicate their online presence to consumers in order to differentiate themselves and to reach and engage with those consumers. Because of the challenges brand owners will face in educating consumers about their new gTLDs and driving engagement, new gTLDs will significantly influence the way brand owners communicate with consumers online. This principle does not just apply to brand owners who applied for their own new gTLDs; all brand owners will have to confront and adapt to the changing online landscape. Even brand owners that did not apply for their own new gTLDs may see advantages in registering domain names in certain other new gTLDs that are introduced over the coming years.

The Facts: Upwards of 1,000 new gTLDs are going to become part of the Internet beginning in 2013. The vast majority of consumers have no idea what gTLDs are, or that they are coming. This lack of awareness will cause confusion. New gTLD owners that mitigate consumer confusion and build trust in their new gTLDs will succeed in engaging consumers via those gTLDs. This is especially important for brand owners.

Consumers responses to new gTLDs show that brand owners are now facing a tremendous new opportunity to reach their customers in creative and innovative ways. Evidence suggests that, with simple education, brand owners who leverage their existing brand equity in communicating with consumers about new gTLDs will be able to turn their new gTLDs into a successful and meaningful part of their digital strategy and online presence.

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About FairWinds Partners

FairWinds Partners helps clients optimize and protect their online presence and ultimately their bottom line by developing and implementing domain name strategies tailored to each brand's opportunities and challenges. FairWinds solutions increase website traffic, grow revenues, and improve online customer experiences. Through its research-based approach, FairWinds has enabled businesses across industries to optimize and improve the management of their domain name programs, dramatically increase traffic and revenue to online sites, significantly reduce the impact of cybersquatting by providing cost effective recovery services, establish a brand presence on key social media platforms, and more.

FairWinds gTLD Services

FairWinds offers a unique set of services, known as FairWinds' Top Level Solutions, which fully integrate new gTLDs into companies existing domain name programs and digital strategies, regardless of whether they applied for new gTLDs, in order to optimize their online presence in the newly expanded domain name space. FairWinds provides brand owners with the support, expertise, and tools to develop effective new gTLD strategies that can successfully transition them from gTLD evaluation to the launch of their new gTLD assets. For brand owners that did not apply for new gTLDs, FairWinds delivers naming and domain registration strategies for new gTLDs that maximize their ability to reach Internet users while simultaneously protecting their brands and trademarks in the newly expanded space.

References:
1. 2. 3. 4. 100 Oldest .COM Domains: http://www.iwhois.com/oldest/ Pew Internet & American Life Project: http://www.pewinternet.org/Static-Pages/Trend-Data-(Adults)/InternetAdoption.aspx ICANN Registration Numbers per gTLD: https://charts.icann.org/public/index-registry-monthly.html Tristan Halvorson, Janos Szurdi, Gregor Maier, Mark Felegyhazi, Christian Kreibich, Nicholas Weaver, Kirill Levchenko, Vern Paxon. The BIZ Top-Level Domain: Ten Years Later: http://pam2012.ftw.at/papers/PAM2012paper25.pdf Countries & Top Level Domains - Pages indexed by Google: http://wstats.net/global-index-info/countries

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