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Getting New gTLDs’ Sales Drivers Right: Simulations Are Key

The new gTLDs won’t survive unless registries learn simulation techniques, the only way to understand how sales drivers interact.

Some of the new gTLDs have done dismally. Registry critics, including insiders, blame high registration prices, limited supply, and restrictions on usage, competition, and marketing messages. But these drivers connect with each other. You can’t talk about prices without talking about price-setting mechanisms and the number of registrations. That’s why simulations are crucial. Other techniques deal with one variable at a time. Simulations take into account all the driving factors simultaneously. They allow for evaluatingĀ a wide range of scenarios rather than providing just a yes or no answer.

Remember, it is not trivial to determine the combination that is best associated with any new innovation, especially in an industry that ignores (and probably is scared of) analytics. Failure results in overbidding, among other problems. Of course, some gTLDs really do lack a reason to exist, and the market does face inappropriate price setting mechanisms, lack of reliance on quantitative demand estimation techniques, and sales force related issues. But solutions to such interdependent decisions have been developed and refined over time. Let’s use them.

Another point: the new gTLDs are going to take market share from other gTLDs. The analyses let a registry know where that share will be coming from, at what price, and through which channels. Furthermore, the analyses can indicate how much of the volume is new and how much is simply cannibalizing the registry’s other gTLD offerings.

It is not too late for the current registries to run simulations, as they can take advantage of publicly and privately available new gTLDs data. It is going to be especially important for bidding on the expected second round of new gTLDs.

The failure to get the combination of sales drivers right will not only impact the individual registries’ bottom lines, but the entire industry.

By Alex Tajirian, CEO at DomainMart

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