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Ad Programs Drive Record Domain Name Growth

VeriSign is reporting the largest quarterly growth in new domain names in Internet history, 5.1 million, in its latest report, officials said Wednesday.

The 5.1 million new registrations in the third quarter is nearly a half-million more than the previous quarter's addition of 4.7 million, and puts the total number of domain names around the world at 66.3 million. In 2003, total domain name registrations were a little more than 60 million.

Much of the credit for the newfound growth in domain names in 2004, VeriSign officials said, can be laid at the feet of the pay-per-click (PPC) advertising industry. Other factors include the increased access and availability of the Internet and improvement in the global economy

"The Google AdSense program and other programs like that, that's spurring on the increased, rapid purchase of domain names in the U.S.," said Raynor Dahlquist, VeriSign name services group acting vice president.

Contextual advertising is a relatively new type of marketing, sparked by search companies' desire to gain more distribution for their listings and by publishers' ambitions to monetize their sites. In one version of contextual advertising, the search engine's technology scans Web pages for their subject matter and uses an algorithm to serve up relevant paid listings. In another version, publishers divide up their sites by content categories, and ads relevant to those categories are served. No matter how the ads are targeted, the pricing model is the same. If the surfer clicks on the ad, the Web site publisher is paid a percentage of what the advertiser bid for that click-through.

Google's Adsense automatically serves up ads using their algorithm, while Overture provides a similar service, called Content Match, which uses a combination of editors and algorithms. Kanoodle uses the content category method for its ContextTarget program.

VeriSign's report points to the popularity of the PPC market as described in a report by JupiterResearch (internetnews.com and JupiterResearch are both units of parent company Jupitermedia Corp.), which finds that paid search will grow faster than any other sector of online advertising, from $2.6 billion this year to $5.5 billion in 2009, with the average amount paid per click between $0.29 and $0.35.

The success of the PPC market has likewise increased demand in relevant-sounding domain extensions, VeriSign officials said. Domains are bought to capitalize on this trend, said Jill McNabb, a VeriSign senior marketing manager.

"It's proven to be quite valuable for advertising purposes," said Jill McNabb, a VeriSign senior marketing manager. "Either advertisers will be placed on such a site or they will come up high in the search results because of the [domain] name."

Jeff Pullen, executive vice president of operations at ValueClick, an online advertising firm out of Westlake Village, Calif., said the growth in domain names is a testament to the innovation and entrepreneurial spirit of online Web site owners in the advertising industry.

"I think that the growth in domain names is probably related to the ongoing evolution and creativity that's out there in the publisher world of looking for lots of different opportunities and different ways to add value and create a better pipeline to get consumers to advertisers," he said.

Other results from VeriSign's report include:

  • .com still maintains a dominant position in the domain industry, with 47 percent of the total domain names, followed by the German ccTLD, .de, at 12 percent;
  • Renewal rates for .com and .net domain extensions remained the same at a record-high 72 percent;
  • ccTLDs maintain their presence in the overall number of domain extensions, at 38 percent;

The "Domain Name Industry Brief" by the Mountain View, Calif.-based registry for .com and .net, tracks additions, deletions and renewal numbers for the top-level domain (TLD) names used by online owners around the world. They include the popular .com domain name extension to the 240 country code TLD (ccTLD) extensions like .uk and .de.