Are .Brand Applications Being Scared off by Financial CQ’s? Published in CircleID, February 28, 2013 by CFO of Architelos Norbert Grey

There has been an upsurge in brands withdrawing their applications. The timing undoubtedly is due to the deadline of 70% refund of the $185k application fee. But why are so many of the withdrawals .brand/closed generics?

Having been involved in drafting of financial projections for over 50 applications and having answered a number of financial Clarification Questions, I believe that the major reason why there is an acceleration in .brands, especially closed ones, is that they are receiving a large number of financial Clarifying Questions (CQs) and are deciding to cut their losses. In my opinion there are two main reasons for these types of gTLDs receiving an inordinate proportion of financial CQs.

In general, .brand applications were defensive in nature, hastily prepared and involved a lot more “cut and paste” in answering the questions of the application.

Many of the financial Clarification Questions received by brands seem to be geared towards open rather than closed systems. The applicants did not effectively consider how to write their answers to comply with the ICANN evaluation criteria.

It is very likely that .brand/closed generics are receiving a relative large amount of financial CQs and are deciding to opt out because:

  • They may be defensive registrations from the legal department with little or no business/financial or marketing participation
  • They have failed to identify a real and tangible business value
  • Risk they were mitigating against, just was not worth the trouble
  • They cannot figure out sufficient answers to CQs or do not have the confidence that they can put forward a reasonable business use case to answer the financial CQ.

The number of applicant withdraws reached 22 during the week and I think it’s a shame to see such global brands depart the gTLD round, especially if the reason is due to the difficulty of answering CQs. ICANN was always clear, either answer the questions per the AGB criteria in your initial application, or you will get clarifying questions. Pay me now, or pay me later.

One concern is that for several brand applicants, the awareness of the new gTLD application never got out of the legal/trademark protection department. If the legal departments are making the call to abandon without fully exploring the future opportunities with the marketing department, they have done their brands a disservice. The .brand applications can provide clear financial answers that meet guidebook criteria. It will require additional speculative investment to secure undeveloped internet real estate, as well as urgent engagement with the marketing and branding functions to fully realize the risks and or potential benefits of your own TLD.

I hope that other brand applicants fully consider the long-game before pushing the trigger on a hasty “withdraw” button.

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