Tim Schumacher, CEO of global domain name marketplace Sedo, discusses the dangers of building an online brand on rented ground.

Most businesses would agree that a domain name is a key asset in maintaining a brand's online presence.
The billboard test is a good indicator of this: look at any billboard and you will most likely see the company's or the product's domain name.

In recent times however, there's been a shift in how companies advertise their digital brand, with many choosing to promote their Facebook or Twitter address, their iPhone application or even a search at a search engine like Google.
While it's smart - and very "web 2.0" - to use all of the above channels as additional means of advertising and customer interaction, it's imprudent to use them as a primary means of navigation.


It can result in loss of brand control and in all four examples - Facebook, Twitter, Google and the iPhone - businesses put their entire fate into the control of third parties. Three things can then happen:


1) Third parties can kick any business or entire industries out, with or without reason. Consider Apple's adult ban on its App store - while the pros and cons of the act itself can be debated, it certainly shows how an entire industry is at the mercy of a giant.


2) Third parties can go out of business and there is no regulative environment in place. While this may seem unlikely, Yahoo terminated Geocities in 2009 - after having bought it for a whopping $2.87 billion in 1999.


3) But here's the most real threat: third parties can and will maximise profits once they have a grip on a brands online presence.


If a company has a million Facebook or Twitter followers, how well will the brand be positioned to negotiate if the social network suddenly starts charging hefty fees?


What if Apple suddenly wants a slice of all transactions from happy iPhone users?


What if suddenly a brand falls down Google's organic search ranking and the search engine has to be offered a large fee to remain top of the paid listings instead?


Building a brand solely through channels like Facebook, Twitter, Google or iPhone Apps, is like building a house on rented ground, with the landlord in complete control.


In this sense, you might one day hear "thanks for building that beautiful villa, but now your rent will increase from $1 to $100,000 per year".


The domain name system on the other hand can avoid all of these pitfalls, with many prices regulated to prevent domain name registries charging prices just to maximize their own profits.


Far from disappearing from a company's branding, domain names should continue to be embraced in digital marketing strategy and used as a hub for all traffic received to maximize engagement online.


Article provided by: Luisa Fernanda Villa y Battenberg, Regional Manager – Latin America

Author: Tim Schumacher, CEO & Sedo Founder

Punta 2011

"The most daring Domainer event in history"

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