Sunday, January 9, 2011

South Africa's Rising Star: .CO.ZA Domains

By Gavin Durni
To diversify your portfolio, keep .CO.ZA and South Africa on your radar by Gavin Durni :: Durni Companies, LLC

The South African domain extension, .CO.ZA, currently supports over 600,000+ domain registrations. On top of the surge in registrations, the .CO.ZA extension has also begun to pick up momentum in the domain market.

Both locally owned businesses and global corporations are seeing the benefits of expanding their brand in the South African region. Owning a local ccTLD (country code top level domain) is both a smart and efficient way to test the current and future investment opportunities for a given market. More specifically, some of the fundamental factors which have recently contributed to the overall investment growth in South African commerce include:

- A successful hosting of the 2010 FIFA World Cup
- Double digit percentage annual broadband penetration growth
- Over $1,000,000 reported .co.za aftermarket sales in 2010
- Annual registration cost of approx. $7 USD per domain name
- No restrictions regarding international entities registering domain names
- Strong and stable dispute resolution process (ADR)
- English being the primary language used
- No restrictions on one or two letter/number domain registrations

In terms of one-letter domain sales, O.co.za was recently sold to Overstock.com for $9,000 through Sedo while S.co.za sold for $8,500 a few months prior. These, among other sales such as Toys.co.za for $20,000 and Shirts.co.za for $8,000, have generated global interest. End users, both international and local alike, are realizing the tremendous value in high quality generic .CO.ZA domain names.

For example, a South African furniture company (ThisSideUp.co.za) purchased Furniture.co.za for $33,000 in 2010. Due to the high type-in traffic generated by this domain, along with its SEO potential, the buyer has a reasonable expectation that the domain will pay for itself within the first 12 months. They will save money in their online PPC budget and turn leads from targeted type-in traffic into sales.

Since my first registration of a CO.ZA domain in 2008, this is the first year that there has been a real spike in the aftermarket. With over $1,000,000 worth of documented .CO.ZA aftermarket sales in 2010 this is just the tip of the iceberg for what is to come in 2011! Even when the global economy may be in distress, there is no stopping a ccTLD with serious underpinning growth fundamentals behind it.

The fourth quarter of 2010 has shown the continued exponential growth and blooming of the PPC advertising market in South Africa, with both higher bids and higher local search volumes. In terms of parking, and thanks to double digit broadband growth, type-in traffic on .CO.ZA domain names has almost doubled during 2010 along with a steady CTR and increasing RPC.

Local businesses, both large and small, are realizing the potential to grow niche segments through internet marketing campaigns and PPC advertising. For instance, Walmart recently bid $4.6 Billion for South Africa’s Massmart. Just by keeping an eye on The Wall Street Journal and CNBC, investment into South Africa by large corporations and Wall Street seems to increase daily.

Due to this realization, and continued interest by end users, there is a consistent demand for category killers as well as highly targeted two- or even three-word combinations, specifically in the finance, insurance, gaming, and mobile sectors. To this effect, I have seen a recent flurry of offers, bids and interest on Finance.co.za, HomeLoans.co.za, Property.co.za, RealEstate.co.za, StudentLoans.co.za, SmartPhones.co.za and Gaming.co.za.

To diversify your domain portfolio, put .CO.ZA and South Africa on your radar screen, as this is one ccTLD with tremendous growth drivers, low holding costs, and room to invest with reasonable ROI expectations before it catches fire globally among domainers.