I read with interest the piece by the Chairman of the Association of National Advertisers (ANA), Garry Elliot, in Advertising Age, which was partly prompted by my commentary in the same publication describing why new generic Top-Level Domains (gTLDs) could be an opportunity for some brands.

He says: “From all I’ve seen, no matter how one tries to justify ICANN’s process or the benefits it speculates will occur, it is simply impossible to defend the economics of the ICANN proposal. That is the Achilles’ heel of this entire exercise. To paraphrase an old saying, ‘It’s the economics, stupid.’”

Leaving the issue of potential benefits or costs to brands for now, I take issue with the process the ANA is employing. First of all, “ICANN’s process” is based on a multi-stakeholder model, which means various stakeholders and interested parties, often with diametrically opposed views, meet, discuss, join working groups, debate and finally hammer out a compromise, with ICANN’s board acting when consensus is achieved. The “process” for determining if, when and how new gTLDs could be rolled out, has taken almost six years. It has involved the trademark community, the business constituency, existing gTLD registries and governments, including the active participation of the US government, among others. So if in fact the ANA finds the outcome unsavory, where was the ANA’s voice during all the discussions and debates? ANA did submit five specific proposals to ICANN on December 15, 2008, according to a letter [PDF] dated August 11, 2011, by Rod Beckstrom, CEO of ICANN.

The letter quotes the ANA:

“Although ANA would have preferred ICANN to have decided against introducing the gTLD proposal, we urge, at a minimum, that ICANN move cautiously and consider points carefully before embarking on this potentially seismic shift in domain availability.”

So as far back as 2008 ANA knew ICANN was working on new gTLDs and instead of railing against it, they submitted five proposals for improving the new gTLD application process. Beckstrom, in that same letter, acknowledges:

“All of these comments were considered, responded to, and, as is clear from the above, largely accepted. This is indicative of the process (that this letter merely scratches the surface in describing) that was followed with all stakeholder comment to arrive at a balanced outcome.”

So now we have established that ANA knew about the program at least as far back as 2008, and that they corresponded with ICANN, submitting proposals to the process. Since 2008, there has been no participation by the ANA. So, why the three-year absence? Either they were happy with the process and outcome, or they abandoned it. Either way, it is far too late for them to complain in the face of an existing multi-stakeholder consensus.

The second issue I have with his article is its unsupported claims. Mr. Elliot says:

“Even with the protections offered under the program, the costs are staggering. The protections offered are like putting a Band-Aid on a severed limb.”

Where are the references to studies by ANA or others that quantify “staggering”? Although he does not cite any studies, there are some; however they have been criticized by peers. For example, Ben Edelman of Harvard’s Berkman Center for the Internet & Society studied registrations in .cc. .tv and .ws as a potential indicator of registrations in unrestricted (new) gTLDs. He concluded:

”...this research suggests that new unrestricted gTLDs are likely to include significant defensive registrations as well as significant speculative registrations”

But he did not quantify the cost to brand owners. Economist Dr. Milton Mueller of Syracuse University, however, criticizes both the methodology and the conclusion. He writes:

“The implicit conclusion is that if web content providers ‘see little need’ for additional TLDs, then ICANN shouldn’t permit them. But that’s a non sequitur: there is no reason at all for ICANN to decide what providers of web content need or don’t need. Web content providers can make this decision for themselves by patronizing or failing to patronize new TLD services.”

As for the “hundreds of thousands of dollars” Mr. Elliot claims companies will need to spend to protect their trademarks, I ask, to protect them from what? How many are there? If for example, eBay is worried that a speculator will apply for .ebay, they can rest assured the ICANN rules will not allow it. The speculator will lose his money. No cost to eBay. The other concern expressed is that brand owners will need to apply at the second level in new TLDs to protect their brand, i.e., ebay.cats, ebay.movie, or ebay.gay. Aside from the fact that these registrations hardly make any sense for the brand owner, Mr. Elliot cites no study to support his claim that brand owners will behave in this way.

Paul Stahura, founder of the registrar eNom, researched the issue in 2009. His study looked at same name registrations in seven established gTLDs (com/net/org/info/biz/us/mobi). If the same name is registered in various gTLDs, it is a sound heuristic rule that some of them will be defensive registrations by brand owners. He found only 194,325 domain names were registered across all seven of the most popular gTLDs. Therefore, some but not all of the registrations could be assumed to be defensive registrations by brand owners. Keep in mind at that there were more than 100 million domain names in these seven gTLDs. So the registrations represented less than 0.2% of the total registrations. His conclusions are:

“The vast majority of trademark holders are not registering their trademarks in all the current generic TLDs, let alone all the TLDs. Therefore, we do not expect them, in general, to register their trademarks in new gTLDs.”

Assuming an average cost per domain name of $8 a year, he estimates the entire trademark community was spending about $48,000 per year per TLD or about $336,000 per year worldwide on these seven gTLDs. So let’s assume the Fortune 500 brands as the universe of brand owners, then the cost per brand owner would be $672 per year.

The conclusion I draw from the various analyses is that brand owners do not register their names in all gTLDs and are unlikely to change their pattern with new and un-established gTLDs. Rather, they make a registration decision based on cost/need/risk/benefits.

The industry is deregulating, and that by definition means change and greater choice. Consumers have proven over and over again in other cases of deregulation that they make the decision as to what should succeed or not, and they do not need a central authority to preemptively make that decision for them. (And by the way, that is not ICANN’s role.)

The ANA’s voice and resources would have been better spent actively participating and providing/citing facts and studies behind their positions. Given the facts now, their voice and resources are best utilized educating their members on understanding the new gTLDs, how they ought to approach a decision, and to explore if and how new gTLDs can enable innovation to their advertising and business models.

The clock is ticking.