Branding Strategy: The TLD Dimension
November 28, 2005
The Internet’s Domain Name System (DNS) has added a new dimension
to the branding strategy for a company. The traditional focus
of branding strategy - whether corporate, house of brands, or
mixed branding – is only one dimension. The new dimension is the
top-level domain (TLD).
The impact of the DNS on branding not
only affects branding online presence, but all brand name uses
in visual and audio media. An advertiser has to decide whether to use “.com” or a relevant ccTLD on billboards, company stationary, and videos. Thus, the
strategic implications of the Internet go beyond the traditional
debate as to whether the Internet has made branding more or less
important. Regardless of the answer to the traditional debate,
companies need to consider the impact of the TLD brand dimension
in their branding strategy.
Below I develop a model to assist in
determining the best TLD branding strategy by focusing on the
two main branding drivers.
Background: Branding, the Internet, and
Because brand names convey information
about a product, successful branding increases value by increasing
sales, profit margins (through price premium over generics), the
likelihood of new viable product introductions (through brand
and line extensions), and bargaining power over distributors.
According to Holt, et al., global brands signal quality, a global myth, and social responsibility.
These three effects account for about 64% of the variation in
brand preferences worldwide. They also find that the global dimension
is more powerful in some countries than others with the smallest
impact on U.S. consumers.
To develop a useful predictive model,
we start with a few assumptions to focus attention on the important
decision drivers, and then consider the impact of relaxing them.
Thus, I first consider the scenario when the company owns both
the “.com” and the relevant country ccTLD versions of the brand
name. For example, a company with BrandName that operates, say,
in Great Britain, and owns BrandName.co.uk and BrandName.com.
The two important drivers for the decision
are the global strength of the brand and the second is the importance
that a consumer attaches to the company’s local presence. For
the former driver, I consider two scenarios: WEAK and STRONG,
while for the L driver, the possible scenarios are YES and NO.
This leads to a simple matrix of four branding scenarios.
Brand Strength (GBS)
of Local Presence (L)
With a weak GBS and unimportant L, the
company wants to signal global presence. Thus, “.com” branding
is optimal, as it signals a global brand in the traditional sense,
in that it signals established global Internet presence. The “.com” brand is perceived as the lingua franca of domain names.
When GBS is strong, but L is unimportant, both options are attractive.
However, there are tradeoffs. For one, using the ccTLD can yield
an advantage in overcoming the possibility of consumer ethnocentrism,
a well-established bias among many consumers in favor of homegrown
products. On the other hand, using the “.com” can have an advantage
in reducing cost of coordinating operational functionality of
the two websites associated with the two TLDs, as there are economies
of scale in using a single global website. One solution to the
cost issue is for the company to adopt ccTLD branding, but forward
the ccTLD traffic to the appropriate page on the “.com” website
which has a minimal cost . However, the main drawback of such
a tactic is that with forwarding of ccTLD, the company may be
less likely to get a favorable ranking for the ccTLD name in organic
search engine results. Nevertheless, inappropriate
local branding can backfire as trust erodes.
When local presence is important, using
ccTLD is a superior strategy. Even with a strong global brand,
the company wants to underscore its local presence.
For a new corporate name selection process,
when local presence is important, companies should first search
for available domain names under the relevant ccTLD in stead of
Thus, “.com” is no longer the lingua
franca for global customers when strategic TLD branding is taken
When a company does not own the recommended
TLD brand prescribed by our model, it should consider acquiring
it. The maximum price that should be paid is the domain name’s
incremental value contribution to the acquiring company, not the
absolute value of benefits. Some companies outside the U.S. have adopted “.info” as a substitute
for “.com” branding. The strategic appeal of alternative TLDs
increases as its use increases.