The report, called the VeriSign Domain Name Industry Brief for the second quarter of 2005, said the total number of new domain names registered for the quarter was slightly more than 8.1 million.
"Growth was driven by price promotions, product bundling and the continued acceleration of using domain names to generate Pay-Per-Click (PPC) advertising revenue," said Raynor Dahlquist, vice president of VeriSign, in Mountain View, Calif., in an interview with Ziff-Davis Internet. "There are a number of factors contributing to growth."
The report said the total number of ".com" and ".net" domain names grew to 44.2 million by the end of the second quarter of 2005, representing a 7 percent increase since the first quarter of 2005, and a 30 percent increase since the same period last year. Whats more, 4.2 million new ".com" and ".net" domain names were registered, representing a 1 percent increase since the first quarter of 2005, and a 39 percent increase since the same period last year.
Perhaps the most telling facts of the report, however, are coming from the surveys first region-to-region comparison, said Jill McNabb, a senior marketing manager at VeriSign. "There is strong growth overseas in places like Sao Paulo, Seoul and Beijing," she said.
VeriSign is planning to add upwards of 14 new regional resolution servers to help speed Internet queries overseas and reduce latency that many users in the developing markets face, she said.
The ".com" suffix currently represents 47 percent of all registered domain names. Collectively, the country code Top Level Domain names (ccTLDs) , including Germanys ".de"; the United Kingdoms ".uk"; and Brazils ".br," account for 35 percent of all domain names, followed by ".net" at 7 percent. Chinas ".cn" ccTLD finally joined the ranks of other top 10 ccTLDs this quarter, displacing Denmarks ".dk". China experienced 23 percent growth in domain names, according to VeriSign.
International Internet companies are expanding in China, including search engine Yahoo, which this week announced an e-commerce and search deal there with Alibaba.com. "We have always had a long-term commitment to China and even more so to the development of its Internet industry," Jerry Yang, co-founder of Yahoo, noted.
For marketers, the report offered good news. The growth of queries and total users across the Internet has accelerated the growth of the online advertising space. Online advertising—in particular the pay-per-click advertising market—represents the main driver behind new domain name growth.
Online advertising revenue is forecasted to increase by 34 percent in 2005, and search engine marketing is forecasted to increase 33 percent in 2005, according to the IAB Internet Advertising Revenue Report for 2004.
These increases are occurring as online advertising gains share from traditional outlets, according to Forresters Consumer Techographics August 2004 North American Devices, Media, & Marketing Online Study.
Time spent online is now "about equal" to time spent watching television for most demographic age segments, the report said. Since people are spending more time online, analysts expect advertising dollars to follow user behavior. Currently, only 4 percent of advertising budgets are spent online versus approximately 25 percent spent on television advertising. Nonetheless, nearly 85 percent of advertisers plan to increase online advertising budgets in 2005.
"The continuing growth is a sign of the strong economy," said Dahlquist.
The VeriSign report said Europeans registered the highest number of domain names per registrant. German registrants are at the top of the list with an average of 2.5 domain names per registrant. The United States and Japan have the lowest number of domain names per registrant at 1.2 and 1.0, respectively. The higher registrations in Europe are attributable, in part, to strong use of Country Code Top Level Domain Names (ccTLDs) that serve not only their home country, but also the entire European region, according to VeriSign.