What Is A Brand TLD, And Do You Need One?

10 minutes reading

Brand TLDs have become quite popular in the past 3 years, with many Fortune 500 companies establishing their own TOP-Level Domains. Usually, when one of the world’s most profitable and well-known brands goes for a marketing solution, the smaller businesses follow. But not this time. Less than 0.00006% of all websites on the internet use brand TLDs. This shows that there are some significant downsides to switching to the brand TLD.

On the other hand, if Fortune 500 companies are doing it, some lucrative benefits are definitely within the picture.

So, are brand TLDs worth your time? Should you switch to a brand TLD? What are the benefits and downsides? We will answer all of these questions today.

Before we get started, however, let’s address the elephant in the room. We assume you know how your users reach your website, what a TLD is, what a DNS is, and how they work. If by any chance you are not familiar with the terms, we urge you to learn more about what a domain TLD is and how your users reach your website. This will help you immensely in understanding the benefits and downsides of the Brand TLD.

Now that we have this out of the way let’s talk about Brand TLDs.

What Is A Brand TLD?

Brand TLDs operate exactly like the ones you are used to. In other words, when it comes to functionality, it doesn’t really matter if you are going to use .com, .net, .us, or .bmw, .apple, and .google. However, when it comes to marketing, a brand TLD is definitely a goldmine.

But marketing is only part of what you will gain with such extensions. Never before have brands had access to the proprietary space at the root of the DNS, which opens countless opportunities, from innovations to security and website control.

But why was this never an option before?

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Well, the Internet Corporation for Assigned Names and Numbers (ICANN) is behind this expansion. ICANN is the de facto governing body of the internet. In 2008, the organization undertook a program to expand the existing TLDs significantly.

The program was initiated in 2011. ICANN began accepting new TLD applications from organizations and individuals worldwide. To ensure that not just anyone can offer a TLD and not be able to support the needed infrastructure behind it, ICANN charged a steep application fee—$185,000.

By 2012, the Internet governing body had announced nearly 2000 TLD applications. Over 34% of these were brand TLD applications.

In 2016, after several rounds of application approval, 978 TLDs received the stamp of approval and were rolled out.

Since many brands voiced their concerns about the unfair advantage of their competitors who managed to get a brand TLD, ICANN promised to arrange new TLD expansion “windows” every few years. This way, companies can plan ahead and allocate resources from their budgets to create their brand TLDs.

Why Do Big Brands Go For Brand TLDs

635 brands registered their TLDs during the first expansion period. Naturally, all of them are industry behemoths that can afford to operate their own Top-Level Domain infrastructure. Among the more popular are Bloomberg, Apple, Canon, and BMW.

The biggest brand TLD users are in the technology sector, with 24% of the reserved suffixes. The banking and financial industries are following closely, accounting for about 22%. Third on the list are the retailers who have acquired 99 brand TLDs.

But why are all these brands eager to spend so much to get their own TLD? Well, there are several outstanding benefits to having this type of web extension.

Better brand recognition and credibility

It’s easy to imagine that a brand TLD will work wonders for your brand recognition and credibility. On the one hand, your brand will be the suffix for every second-level domain. So, for example, if you offer insurance and your website spells home.bestinsurancesever, it’s pretty obvious who offers home insurance.

Of course, you will receive a much higher user trust as an added bonus. Owning a TLD gives you the power to control who gets a second-level domain. In other words, only those with something in common with your business can own a domain. In this regard, when someone enters “drive.bmw”, they have no doubt who will offer them services.

Naturally, this brand recognition and credibility will lead to higher conversion and lower bounce rates.

Enhances SEO efforts

The brand TLD doesn’t lead to better SEO scores per se. However, brand recognition, lower bounce rates, and higher conversion rates are closely related to Google’s ranking. Moreover, with a brand TLD, you can make much more meaningful backlinks, as every single domain registered in your TLD will be considered a separate domain. For instance, you can backlink to your homepage or a specific product page from dozens of websites, all within the same industry. This will give you a massive boost.

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While there is no conclusive evidence on how brand TLDs affect your SEO, some empirical evidence suggests that brand TLDs perform better than most generic extensions. On the other hand, geographical TLDs will always outrank brand TLDs in specific countries when using the same keyword for the second-level domain. For example, cars.it will always outrank cars.bmw in Italy.

Still, you might have noticed that brand TLDs offer one truly outstanding opportunity. You can pick and choose any keyword as a domain name. That’s something no longer available in most TLDs, especially.com

Catchier second-level domains

You may remember from one of our previous articles that business.com is the second most expensive domain ever sold. The price of this address reached 350 million dollars. Though not so astronomically expensive, all TLDs already have the keyword business reserved. So, imagine the extraordinary advantage you will have by simply having a website that gets the business’s single keyword inside. For example, business.yourbrand.

With a brand TLD, your options are limitless. You can create a website for all of your products and use the product’s name precisely. For example, instead of TV.sony.com or sonytv.com, you can simply use TV.sony. This will enhance user experience and will make your brand much more recognizable.

The best part, of course, is having control over who has a domain on your TLD. This advantage naturally allows for much greater security and brand rights guarding.

Better protection

When customers purchase online, they always have a distant fear that they might have gotten to the wrong address. A single letter can get people on a scammer’s website, where they can think they are buying the right product but ultimately get counterfeit merchandise with zero quality. Indeed, you are not responsible for someone else’s typos. Regardless, the fallout will inevitably tarnish your reputation.

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Moreover, typos are not the only way scammers can take advantage of your brand’s name. For example, consider if you offer a new line of t-shirts and you want to get some organic traffic for your t-shirts.brand.com website. However, a malicious competitor creates a t-shirts.barnd.com website and starts bidding on your brand’s name on Google. Despite having the sponsored sign, their t-shirt will always appear first, and many would fall for the trap of purchasing from them. On the other hand, if your customers know your website ends on .brand, they are far less likely to fall for the .barnd.com scam. Moreover, it would be far too expensive for the scammers to register their own brand TLD.

That’s why 99 of the biggest retail brands already have a brand TLD. It gives them a peace of mind that their customers will always get on the right website, regardless of how fresh their product is on the market.

Much better data gathering

Finally, as the world diverges from third-party cookies and predominantly uses first and zero-party cookies, having a brand TLD allows you to gather much more information from all domains under your TLD. In other words, you can tap on statistics on your partner’s websites that have registered on your brand TLD.

Now, you might wonder why anyone would register on a different brand’s TLD. The answer is association. If you are allowed on a brand TLD, you instantly receive credibility and authority due to your association with the industry leader. It’s a symbiotic arrangement where smaller businesses that mainly operate to satisfy the big brand’s needs can tap into their authority and recognition and drive some additional business on the side.

On the other hand, the big brand will get some additional information on the smaller brand’s customers, their preferences, and behavior.

As you can imagine, this is an information goldmine.

But even if you don’t have third-party websites on your TLD and only have your own, you can still have a much clearer picture of your customers’ behavior, preferences, and stats.

What Are The Downsides Of Brand TLDs

Naturally, brand TLDs are not all good. There are some downsides that you should consider before jumping on the bandwagon.

Potential confusion and traffic loss

Depending on your target audience, you may not adequately communicate your domain change. Naturally, you will keep your old domain for some time, but regardless, if your audience is predominantly made up of not-too-tech-savvy middle-aged people, they may find it difficult to understand.

Moreover, many of those who don’t visit your website often will instinctively search for your old website out of habit. This may continue even after you have announced your new online address.

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As you can imagine, this will stir up some confusion among your customers. The worst thing, however, is that when you introduce a new website, it takes time for Google to register and start ranking it. So, for the first six months or so, you will need help finding you through the search engines. This will inevitably hit your organic traffic, and you may even lose some customers who don’t have the patience or will to find you.

This is enough to draw your business back a notch. So, you must consider a strategy to redirect your customers or simply account for the lost business during the transition phase.

Higher costs

Moreover, a brand TLD is much more costly. True, all your second domains will be free (or will cost as much as the hosting), but a domain name is around $35 a year. So you won’t save that much on this end.

On the other hand, simply applying for a new brand TLD costs hundreds of thousands. In 2011, the application fee was 185,000 dollars. Today, it might be double or even triple.

Furthermore, if you get the brand TLD, you must pay an additional 25,000 in quarterly fees.

Moreover, you will need to invest in top-notch servers and their cyber security. These are several-million-dollar investments.

But most importantly, you will need to hire an entire team or even a new company to take care of everything regarding the TLD. This is not something you can do as a freelancer.

Indeed, a brand TLD will be far more costly than a regular website. Some conservative estimates suggest a brand TLD costs over 2 million dollars for the first 2 years alone.

Steep learning curve

Speaking of taking care of your own brand, TLD, the learning curve is insanely steep. This is way too complicated to explain in several sentences. It usually takes years for people to grasp and learn the entire process in detail and be ready to address any and all issues. Thus, most companies owning a brand TLD either hire an entirely new team to take care of this aspect of their business or a third-party operator to ensure the infrastructure is well-equipped, maintained, and protected from all threats.

As you can imagine, this is another significant string on the budget. So, if you are thinking of a brand TLD, you should account for these expenses.

Not much time for planning

Indeed, owning a brand TLD requires rigorous planning and budgeting, as there are way too many unexpected expenses that can appear out of nowhere. That’s why ICANN takes years to open its windows of opportunity. This way, interested brands can allocate the needed resources and make plans for operating their own TLD.

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Unfortunately, the last such opportunity was more than a decade ago, so ICANN will most likely soon open a new window. Domain Name Wire claims ICANN is planning a second round of TLD expansions in early 2026, so you don’t have much time to prepare if you want to reserve a web extension in your brand’s name. This is definitely a big plan, as rushing into such a commitment can prove unwise, considering the high costs of owning a brand TLD.

Rebranding is no longer possible

Finally, if you jump on the bandwagon, the option of rebranding is closed. At least if you are not interested in suffering a massive additional loss. That’s why established brands with decades of history currently hold all brand TLDs. These brands won’t change their name anytime soon.

So, if your brand is still only domestic and not yet a global brand, getting a brand TLD is probably not the best idea.

Imagine you are buying a TLD, and you decide to go global. However, your brand name is offensive or has a different, not-too-flattering meaning in your targeted country’s language. This actually happens more often than you think. For example, the Disney animated movie Moana had to be renamed in Italy to Vaiana. Unfortunately for the Disney executives, the Polynesian Disney princess shared a name with Moana Pozzi, a well-known adult actress in Italy. So, imagine how many parents would take their children to see Moana.

The main point here is not to rush into reserving a brand TLD. Before you make this life-long commitment, make sure you’ve tapped into the markets you desire and that your brand will remain with the same name forever.

Do You Need A Brand TLD

The answer is most likely a resounding “No.” In most cases, Brand TLDs are vanity projects that big brands do to ensure no one taps into their success. True, brand TLDs grant you significant advantages over your competitors. It establishes you as an industry leader, ensures your brand recognition and credibility, and ultimately leads to much better conversion rates and revenues. Still, that’s hardly the most cost-efficient way to get there.

A brand TLD should only be considered if you are a multi-billion dollar conglomerate trying to protect your intellectual property from cheap imitators. Furthermore, you need to be sure you have already tapped into all the markets you would be interested in globally and have at least 2-3 decades of history.

Finally, you must be sure you can actually spend 2-3 million dollars in the next 2 years on this vanity project while maintaining your financial security and growth.

If you don’t meet these criteria, your best bet is to get a well-rounded, ultra-fast, and rigorously secured hosting provider like HostArmada. Our cloud-based technology allows us to offer our client’s users lightning-fast speed, top-notch security, and 99.9% uptime. These factors are far more important to your success than a brand TLD. So, check out our plans, choose the one that will best fit your needs, and settle on a suitable domain name with a regular TLD. That’s all you need to ensure your business will grow strong.