You probably noticed that GoDaddy is promoting new gTLDs pretty aggressively and you probably also noticed that in the past, they’ve shown somewhat of an affinity towards alternative TLDs.
A good example would be the two superbowl ads everyone saw not so long after dot co went live: one was the GoDaddy ad we were all used to and one was an ad that had pitching dot co as its main goal.
Which leads us to the question as well as to the obvious answer.
First, the question: why?
Now, the answer: profit margins.
As you can see, the problem isn’t all that complicated.
When selling a dot com, for the most part, their profit margins aren’t huge and they pay most of what they charge to Verisign (in fact, they often lose money on their initial sale and only start making money once you renew). Sure, they make up for it through volume but still, what business wouldn’t like bigger profit margins?
With new gTLDs, this changes.
Think about it.
As of a certain point, lots of new gTLDs will be competing against one another and it’s in their best interest to have as much visibility on GoDaddy as possible.
The result should be obvious: GoDaddy will be in a great position to negotiate deals which generate very high profit margins.
In other words, let’s assume person A buys a dot com and that person B buys a new gTLD. GoDaddy will probably make considerably more from person B’s purchase than from person A’s purchase because of the higher profit margins new gTLDs have on a per-domain basis.
So, will they focus on new gTLDs exclusively in the future?
They know what they’re doing, they know how to split test, so it’s all a matter of crunching some numbers: if enough people buy new gTLDs to make giving them this extra exposure worthwhile, they’ll do it. If not, they’ll stop doing it (because if the conversion rates would be low, then even very high margins on a per-domain basis would not be enough to justify giving new gTLDs more exposure given the lack of volume as of a certain point).
Time will tell.
The message I’m trying to get across is simple: if you were wondering why GoDaddy is giving new gTLDs so much exposure, start by thinking about profit margins and you’ll understand why.
At the end of the day, it’s business 101.
Maybe it will be worth it for them, maybe not.
Again, time will tell.
I’m simply explaining that from a business perspective, at least testing an approach that results in higher profit margins makes perfect sense. That’s precisely what they’re doing and what they’ll be doing until they have enough information to figure out whether or not it’s worth it.