Although the .EU domain name is a hit for small businesses in the UK half of the firms that use it are confused over its meaning and the benefits that it can bring.

The newly launched .EU domain name has proved effective for small businesses that use it, whilst only half of Britain's SMEs understand its meaning, according to a study released today. The research, incorporating the answers of more than 2,600 European SMEs across UK, France and Germany, was commissioned by web hosting company 1&1 Internet, Europe's largest domain name registrar.

The Europe-wide study also found that French users enjoyed the greatest success with using their .EU domain names and French businesses in general had the best understanding of what .EU means. There were also interesting regional variations in UK companies' awareness of .EU. The study credits the .EU domain name to be a powerful weapon for any business.

1&1's 'EU Domain Survey' revealed that 68 per cent of the UK businesses using a .EU domain name registration believed it to be effective. Around half of users surveyed stated that the new domain had enhanced the image of their business. Some 43 per cent had seen increased accessibility to opportunities in Europe.

Over 77 per cent of UK business users would recommend a .EU domain name to another business. The majority of .EU users were in London and the South East (40 per cent), followed by the South West (13 per cent) and East Midlands (11 per cent). The same study revealed that French businesses had most success with .EU, with 72 per cent seeing an enhanced image, 75 per cent believing .EU domains to be effective and 88 per cent willing to recommend the solution.

Despite these overwhelming figures, a further survey of small businesses worryingly reveals that 51 per cent of British SMEs are confused over what a .EU domain name represents. Less than half correctly identified that a .EU domain shows that a website address originates from within the European Union which, of course, includes the UK.

The South West was the most confused over the meaning of the .EU suffix, with over 60 per cent responding incorrectly, followed by Yorkshire & Humber (56 per cent) and North East (55 per cent). Interestingly, Northern Ireland bucked the trend with two thirds of SMEs defining .EU correctly. German small businesses had a far better understanding of the meaning of .EU, with 73 per cent responding correctly.

Andreas Gauger, CEO 1&1 Internet, said 'Using a .EU domain name can deliver SMEs improved accessibility to Europe and enhance their image, yet many companies remain confused over what .EU represents. An astonishing number do not know that the domain .EU includes British businesses and are unaware of how much they could gain from flying the European flag'.

Furthermore, some 86 per cent of UK SMEs questioned believed that a .EU domain name could not enhance their company's profile and over 77 per cent did not plan to purchase one. The West Midlands most underestimated the .EU domain, with 90 per cent believing that it could not enhance their image.

Wales had the most disinterest towards .EU with 94 per cent not planning to purchase one, followed by Yorkshire & Humber and South West (both with 93 per cent). In the same survey, French businesses expressed the greatest belief in the concept of .EU, with some 50 per cent believing that a .EU domain would enhance their company's image.

Gauger added, 'It is concerning that the majority of British businesses appear misinformed about the potential benefits of a European web identity. Our research shows that British companies are missing a trick. With only a nominal investment, a .EU domain name can open new doors for any business'.