NetRegistry Annual Domain Report, Issue 1 - 8th February, 2007

• 60 percent growth in Australian business's internet usage
• Micro businesses in Australia out perform global trends
• Domain registrations in Australia grow 28 percent
• Charity/non profit organisations and IT registrations in decline
• Registrations within the marketing sector increased 82 percent

As one of Australia's leading domain name registrars, NetRegistry regularly monitors the trends developing in the industry. We recognised a gap in the reporting of key domain trends.

Although there are multiple documents reporting on the global sphere, they exclude the Australian domain industry. AusRegistry, the registry operator for .au second level domains, issues the sole domain report for Australia to auDA. In an effort to close this reporting void, the NetRegistry report consolidates current Sensis, Verisign, AusRegistry and NetRegistry data, providing an accurate cross-section of the domain market as well as discussing Australia's global position.

Executive Commentary

Larry Bloch, NetRegistry's CEO

The NetRegistry report quantifies the growth of small businesses in the online environment, across all business sizes, at 28 percent over the last year. Growth has been considerably stronger in the Marketing and Media segment and I believe this is indicative of the realisation that businesses online spending has mushroomed. These sectors have rushed to establish their presence in this now lucrative area.

From the traffic and internet usage data, we can also deduce that with improvements in speed and e-mail communication amongst SME's and their customers, electronic commerce is growing at 60 percent. This growth is continuing at a similar pace and businesses stand to gain much from establishing a solid ecommerce platform for sales, support and customer management.

The NetRegistry report strives to educate businesses, industry analysts and media channels on important developments in domain registrations. This report contains statistical information on total growth, domain market segment trends as well as growth in different sized businesses.

THE REPORT

Australian Domain Registrations

• Australia mirrors global growth of ccTLD's at 28 percent
• Australia domain registrations, 1.8% of the worldwide market

Overview

NetRegistry would like to acknowledge AusRegistry and auDA as the source of the following data. Their roles in the industry are as follows. auDA is the Australian domain name administrator and AusRegistry is the registry operator for .au second level domains. From this data we can evaluate the trends and deduce the growing confidence of businesses in the online marketplace.

Australian Data

The graph below exemplifies the steady incline of Australian domain name registrations. The .au Country Code Top Level Domain Name (ccTLD) and the following Second Level Domain Names .com.au, .net.au registrations continued to increase in 2006 at 28 percent growth rate over the previous year.

[Source: AusRegistry EOY Report, December 06]

Global Data

Overall domain name growth remained strong throughout the first three quarters of 2006 (based on United States fiscal calendar). The third quarter ended with a total of 112 million domain names in existence worldwide, across all of the Top Level Domain Names (TLDs). The Country Code Top Level Domain Names (ccTLDs) grew 28 percent during 2005 and 2006 with 8.8 million new registrations. To date, the five largest Top Level Domains are .com, the German ccTLD (.de), .net, the British ccTLD (.uk) and org.

[Source: Verisign, Domain Name Industry Brief, November 2006]

Conclusions

The domain name registration growth of Australia's ccTLD (.au) directly mirrored global trends of 28 percent growth. However this was only 1.8 percent of the global registrations of ccTLDs in a twelve-month period.

Strict regulations unquestionably restrict the number of Australian ccTLDs registrations. Regulations stipulate that businesses present proof of legitimate company or business use (ABN, ACN, BRN or trademark) upon registration of a .com.au domain name.

Industry Sector Growth and Trends

• Charity/Non-profit Organisations and IT sectors decline
• Marketing sector displayed 82 per cent growth in 2006

Overview

NetRegistry records customers demographic data during registrations. Over 38,750 customers provided demographic data during their registration to support this analysis.

Key Findings in Australia

Since 2003, there has been a strong increase in registrations, across all industries. This is indicative of small to medium enterprises growing online presence.

In 2006, both the Charity/Non-profit Organisation and IT sectors experienced a relative decline in domain name registrations, of 14 percent and 6 percent respectively compared with the number of domain names they registered in 2005. The IT sector includes consultants, services, software and telecommunications.

Meanwhile Domain Name registrations in the Marketing sector displayed the strongest increase (82 percent) in 2006. The Marketing sector includes public relations, advertising and design. Followed by Government registrations (63 percent), Media (40 percent) and Banking/Finance/Investment sector (39 percent); the Media sector consists of television, radio, print and online content.

Growth in Australian Registrations

This data is based on demographic information, gathered by NetRegistry, during domain registration. This data was extracted from a substantial sample, over 38, 750 domain registration buyers (2004-2006) specified their industry.

* Data based on calendar year

Conclusions

There has been a steady increase in registrations, across all Australian industry segments over the last two years.

The significant growth in the Marketing sectors' domain registrations throughout 2006 supports the findings of Audit Bureau of Verification Services (ABVS). Their latest report (August 2006) recorded $226 million total online expenditure for the second quarter of 2006. The market grew 59.4 percent over the past twelve months.

[Source: Australian Interactive Media Industry Association, Media Release 7th August 2006]

2006 saw a decline in registrations within the IT industry. The sector previously dominated registrations, in 2004, unsurprisingly signifying the industry as early adopters of the technology, which has since subsided.

Employee Breakdown of Registrations

• Micro businesses dominate the business mix in Australia

Overview

NetRegistry records the number of employees in customers' businesses during registrations. This information was gathered from over 59, 000 Australian businesses, representing a meaningful sample.

Australian Profile of Employee Breakdown

There has been a steady and significant increase in domain name registration by micro businesses (1-5 employees). With a 21 percent increase on top of consistently strong results, more and more micro businesses are strengthening their online presence.

Domain registrations of small businesses with 6 to 29 employees are consistently growing at a rate of 28 percent. After a slight slump in 2005, businesses with 30 to 99 employees saw a 64 percent increase in registrations in 2006.

This data contrasts significantly with international employee segment results, where 30 percent of domain registrations are attributed to consumers. A consumer in this instance refers to personal or non-business related websites. [August 2006 Verisign Register Profile Study] Under auDA regulations consumers are not permitted to register com.au domain names, unless they have registered an ABN.

Conclusions

The dominance of micro businesses (1 to 5 employees) in the Australian market is reflective of the Australian business segmentation, recorded by ABS. The latest ABSBR Counts of Businesses report (June 2004) by Australian Bureau of Statistics recorded 90 percent of employing businesses had between 0 and 19 employees. Only 9 percent contained 20 to 199 employees and 1 percent had 200 plus employees.

[Source: Australian Bureau of Statistics Business Register, Counts of Businesses ABS Cat. No. 8161.0.55.001, June 2004]

Take up of domain names in Australia is almost entirely weighted towards businesses. Consumers are not attracted to the id.au domain name created for consumers and there is evidentially untapped demand for com.au domains from the consumer audience.

Traffic and Internet Usage

• 60 percent growth in small to medium enterprise's internet usage
• Greater access speeds and increased uptake of broadband

Overview

To deduce the current trends of Australian businesses internet usage, NetRegistry divided the traffic through our data centre by the number of live business sites and email accounts we host. This information can be juxtaposed with Australian Bureau of Statistics' businesses internet speed report.

Key Findings in Australia

During the last 12 months, data traffic (through NetRegistry's Data Centre) has grown a staggering 100 percent. This significant traffic increase stems from businesses conducting more online activity. This trend is supported by the Sensis e-Business Report (July 2006), which noted the percentage of SMEs taking orders online has increased from 41 percent in 2005 to 47 percent in 2006.

This graph illustrates 60 percent growth in Australian business's internet usage, in receipt of email communication and visitors to their website.

Conclusions

These findings are reflective of faster internet connections, an increased number of users and considerable growth of the relevance of electronic communications and email for businesses. If availability, speed and convenience continue to improve, business usage will reflect this rise, as will a predicted increase of spam.

In comparison to internet connection data, gathered by Australian Bureau of Statistics, these results show that significantly more businesses are accessing the internet. Online activity is now largely consumed by other companies conducting research across other business's sites, resulting in increased traffic. The business community have also adopted email communication as a valuable, convenient and effective business tool. This increase is supported by recent Australian Bureau of Statistics findings in the Internet Activity Report of Australian Businesses (released in June 2006) which gathered information from a range of ISPs in Australia. They reported that 63 percent of businesses use broadband access whilst 37 percent of businesses use dial up. Broadband is defined as an 'always on' internet connection with an access speed equal or greater than 256Kbps.

[Source: Internet Activity, Australia. Australian Business Statistics, ABS Cat. No. 8153.0, June 2006.]

Non dial-up subscribers increased from almost 1.7 million at the end of March 2005 to over 3.1 million at the end of June 2006, an 82 percent increase over a fifteen month period.

[Source: Internet Activity, Australia. Australian Business Statistics, ABS Cat. No. 8153.0, June 2006.]

External Sources

• AusRegistry EOY Report, Dec 06
• Verisign, Domain Name Industry Brief, November 2006
• Australian Interactive Media Industry Association, Media Release 7th August 2006
• Australian Bureau of Statistics Business Register, Counts of Businesses ABS Cat. No. 8161.0.55.001, June 2004
• Internet Activity, Australia. Australian Business Statistics, ABS Cat. No. 8153.0, June 2006

More Information

Please send all comments or questions regarding this report to pr@netregistry.com.au

About NetRegistry

NetRegistry has been serving over one hundred and fifty thousand Australian businesses since 1997. Since this time, it has become one of Australia's largest and most prominent specialist domain name, web hosting, email, online marketing and eCommerce service providers. NetRegistry specialises in delivering quality, affordable solutions to clients who have chosen to take their business online. Ensuring customers receive the highest level of technical performance and customer service.

For more information about NetRegistry, visit our web site at www.netregistry.com.au