The application process is opaque and generally confusing.
ICANN’s New gTLD Applicant Guidebook, the only real source of information and guidance that applicants have, still has some major flaws to it. Moreover, ICANN is running the application period as a black box, meaning it will not publish who has applied for which gTLDs until after the process has closed – and then it will not say when, or even if, it will hold a second application round. This has led to many brand owners to feel like they’ve got their backs against the wall, and that not applying for a new gTLD now could leave them behind, potentially for years. A few years can amount to a lifetime online.

Another point that must be considered is that whatever applicants include in their application becomes “hard-coded” into their Registry Agreement with ICANN later on. It will be a challenge for applicants to write their application in a way that affords them the flexibility to adapt their usage model for their new gTLD over time. Maintaining contract compliance with ICANN can be very demanding. But more than that, future contract negotiations can be very unpredictable, given that the Registry may be forced to open itself up to unfavorable public comments and even have to grapple to achieve consensus within ICANN.

If other brands use their gTLDs poorly, consumer confidence in your branded gTLD could suffer.
As we discussed in the benefits post, new gTLDs offer brands an opportunity to establish a new, branded space online. But if a high-profile brand uses their branded gTLD in a way that creates ill will among its Internet users, or if the gTLD gets hacked, then consumers could lose trust in all branded gTLDs.

While the ROI for certain brands may be unclear, it may not exist for others.
More likely than not, new gTLDs will have the biggest benefit for the most customer-oriented, business-to-consumer brands. Brands with high levels of recognition among consumers, including retail brands, consumer brands, media brands, auto brands, restaurant brands, travel and lodging brands, and financial services brands among others, will probably experience the highest ROI from new gTLDs, Because business-to-business brands are much less visible to the average consumer, they will likely have a harder time extracting value from a branded gTLD. It’s not an impossibility, but it will be a challenge.

Like our posts about the benefits, the risks discussed here and in yesterday’s post are only some of the potential risks associated with applying for a branded gTLD. Every brand will have to confront its own unique set of challenges.