Internet Domain Names – FAQ | IFRS

Internet domain names

In a Business Combinations, this is a intangible asset and is therefore recognised separately from goodwill, provided that its fair values can be measured reliably. This marketing-related intangible asset meets the definition of an intangible asset because it arises from contractual or other legal rights.

An Internet domain name is a unique alphanumeric name that is used to identify a particular numeric Internet address. Registration of a domain name creates an association between that name and a designated computer on the Internet for the period of the registration. Those registrations are renewable. A registered domain name acquired in a business combination is an intangible asset that meets the contractual-legal criterion.

What Makes a Domain Name Valuable?

Regardless of your reasons for wanting to find out, estimating the value of a domain doesn’t have to be too difficult. However, it will require you to understand what makes a domain desirable in the first place.

Of course, it’s significant to note that as with most evaluations of this nature, this is not an exact science. A domain will always be worth what people are willing to pay for it, and the bottom line is that sometimes the theory may not line up with the practical reality. By calculating the estimated worth, however, you’re providing yourself with a handy baseline — so you don’t end up selling a valuable domain for pennies.

With that in mind, let’s look at some of the features generally considered important when it comes to domain names. These include:

  • The Top-Level Domain. A domain’s TLD can be a big part of what makes it desirable. For example, .com remains the most popular option (as it’s recognizable and common), so many buyers will gravitate towards it. However, newer alternatives can also become trendy (and valuable). Value of Internet domain names
  • Popularity and traffic. If the domain name is currently used for a specific website, the level of traffic that site receives can become a vital factor in calculating the domain’s worth. The reason for this is pretty straightforward. If the domain comes with an existing audience attached, the buyer can leverage that traffic for their site right away. If the domain has been active for a while, this can also help its Search Engine Optimization (SEO) for the new owner, which may make it even more appealing.
  • Keywords. Including the right keywords in your domain name is another crucial aspect of SEO. According to a study by Higher Visibility, in most industries, a majority of sites include high-quality keywords in their domains. For example, the top-rated website for the search engine query “hotel” is www.hotels.com. As such, if your domain contains a desirable keyword, this could increase its value.
  • Brandability. While a domain’s brandability can be very difficult to define, it’s also an important consideration many site owners make when choosing a name. Many of the most visited websites in the world have clear, memorable, and unique domains, such as twitter.com, youtube.com, and facebook.com. If your domain is similarly catchy and attention-grabbing, it may make buyers take special notice.
  • Spelling. This may seem obvious, but making sure your domain is spelled correctly can be critical. After all, few buyers will be swayed to use something that looks sloppy and unprofessional. At the same time, using unexpected spelling can sometimes be a benefit, as it could make the domain more brandable. For example, fiverr.com and tumblr.com have taken technically incorrect spellings and used them to create memorable, lasting brands.  Value of Internet domain names
  • Length. A general rule of thumb is that the shorter a domain is, the more people will pay for it. This isn’t always the case – brevity alone isn’t going to make an otherwise cumbersome domain like zz0xy2c.org more appealing to potential buyers. However, a concise domain is often considered rarer and therefore more valuable. This is due to shorter domains being more memorable, easier to share, and more marketable.

Value of Internet domain names

Leave a comment