Why Distinguish Between Defensive
and Offensive Domain Names?
Alex
Tajirian
September 26, 2009
Offensive domain-name registrations
require strategic corporate decisions. Second, they
require different strategic and tactical remedies when
third parties register desired names. Thus, different
organizational approaches are necessary to manage domain
name risks and rewards. The essay identifies the strategic
differences and remedies for the two types of domain
names, and outlines the implications for internal work-flow
organizational structures.
Offensive domain names are supposed
to create value; defensive names are supposed to reduce
value destruction and profit transfers away from legitimate
brand owners. With different roles and different value
propositions, the two categories call for different
analytics.
Offensive domain names create shareholder
value by:
- Acting as barriers to entry and
thus, creating competitive edge through the use of superlatives and generics.
- Reducing irritation of visitors
(as when a brand-owned typo domain steers users to
the right site even if they typed the brand name wrong).
- Signaling brand, location, and type of business with top-level
domains (TLDs), including ccTLDs and the new
proposed ICANN TLDs.
- Allowing for product positioning
and differentiation.
Thus, decisions about these functions
are strategic rather than tactical. For defensive domain
names that have already been registered, an alternative
to acquiring them is forming strategic
cooperative brand networks. This approach has defensive
and offensive elements. Value destruction by sites that
illegitimately use brand names in their domains is halted,
while value is created through improved user experience
with typo domains. To discourage consumers from shopping
at cybersquatting sites, brand owners can create their
own explicit fake sites to warn buyers about potential
legal action due to purchases of counterfeit merchandise.
(See "Reducing
Cybersquatting, Phishing”) The logic of creating
fake sites is that "If you cannot beat them, join them."
This strategy also increases entry barriers.
For strategic offensive domain names,
acquire those whose profits exceed acquisition cost.
The implications for internal corporate
domain-name management structures are different. With
defensive domain names, there is no need for the marketing
department's input. They require only the management
(not the strategic decision) of brand networks and the
setting up of fake sites. Offensive domain names, on
the other hand, give rise to strategic considerations.
That is especially the case with regard to mergers and
acquisitions, but it also applies to decisions like
whether to adopt a brand network and whether to set
up fake sites. Thus, management involvement should be
no lower than the strategic marketing department level.
Such involvement underscores the importance of more
systematic and vigorous risk and reward management.
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