Digital Asset Valuation

Ignoring the true worth of your digital assets when considering the value of your business is a mistake too many people make. Your business could have much more value tied up in digital property than you realise. Whenever you’re considering anything to do with your company’s financial attributes you should be taking your digital assets into account.

Digital assets include:

• Websites
• Branding
• Logos
• Domain Names
• And many more other forms of digital data

Digital and intangible assets have become a huge part of businesses. However, at times it can be difficult to accurately value these assets. Many people can find this process to be one of the most difficult parts of the buying and selling process.

The reason people can find this process difficult is simply because they’re not used to dealing with non physical property. In these times, digital assets are a really important part of any organisation.

The biggest mistakes in the process of accurate digital asset valuations are:

• Misunderstood or bad use of valuation techniques
• Gathering or using the wrong information for inclusion in the analysis
• Ignoring the bigger picture
• Completely ignoring the digital asset value of a business

At times, the separation of physical assets from businesses with intangible capital can cause complications in the valuation process. It’s essential that valuations are handled by those that understand how to derive properly calculated worth. This helps you to avoid capital loss of valuable digital accounts and sell or buy assets for their true value.

Here’s where we come in. Our experience in providing expert valuations of business’ digital assets allows us to accurately determine the true worth of a company’s intangible capital. This guarantees that you have a comprehensive and accurate understanding of your business’ true value.

Digital Asset Valuations NZ – DAV is a Business Unit of The Web Company NZ Limited. We focus on valuations of digital and internet related assets with specialist knowledge in calculation methodologies.

For over a decade DAV has carried out over a thousand projects for clients across a wide range of sectors. Our customer base includes banking, FMCG, pharmaceuticals, financial services, consumer goods, retail, fashion, not-for-profit and leisure. Over this time, we’ve built a specialist understanding of producing objective valuations and knowledge of a large range of intangible assets.

DAV is a business unit of The Web Company NZ Limited. We’re a Swiss Army knife when it comes to web services. We’ve been in business since 2004 and winning awards along the way. It’s the collected experience of our entire team that allows us to help you with any project you throw our way. We’ve had 100,000 plus hours of service provided to 1000 plus clients from 100 years of combined specialist knowledge.

We provide an extensive understanding of the underlying businesses value and the potential for value to grow. We work with the consideration that a company’s most valuable assets are often intangible.

Oftentimes these assets come in the form of a brand and brand assets. Digital valuation can provide an understanding of a brand’s equity and allows one to foresee opportunities of growth potential. This knowledge can help you make better-informed decisions in business and legal decisions.

We offer website valuations for a variety of reasons. Many of our clients request this assessment for the purposes of tax considerations, due diligence, dispute management and general business maintenance. Valuing a website is similar to valuing any other kind of business asset.

This process is usually determined using the following three methodologies:

• The Market Approach
• The Cost Approach
• The Income Approach

All three website valuation methodologies are generally considered, with the most relevant one for the circumstances used as the leading indicator of value. Calculating how much a website is worth requires specialist skills and an appreciation of what generates website value.

We consider all three methodologies, deciding on the one that’s most relevant to your particular circumstances. This gives us the opportunity to find an accurate, leading indicator of value.

Calculating a website’s value requires expertise and knowledge of what constitutes as financial worth in this investment. The following factors are usually used:

• The current revenue or contributions to business revenue
• Current profitability
• Current liabilities
• Current assets
• Risks involved with nominating yearly revenue
• The Industry’s value
• Keyword scope
• Unique keywords
• Is it a “long tail” or “short tail” keyword industry?
• The CPC range of keywords on pay-per-click in your sector
• Saturation of your industry
• Your Alexa rank
• Domain name value
• How brandable is your domain
• Type-in traffic
• Current traffic level of the site
• Current estimated value per unique user
• Current brand value of the site
• Current natural search traffic
• Potential for future search traffic
• Quality of the search traffic
• How well the site converts
• Costs involved in re-creating the site
• How loyal are your customers?
• Your revenue model or how the website assists the revenue model

There are also a few more industry specific considerations. These include:

• Content value (this include backlinks and other SEO factors)
• Future traffic projections and earning potential
• Subscription bases
• Lead generation predictions

An accurate domain name appraisal is a critical first step for sellers and buyers.

If you’re a buyer, ordering a domain appraisal can save you thousands of dollars. It should be done before an offer is made and you should always get advice on the future potential of the domain or domain pack.

If you’re selling a domain, an appraisal service can help you make a great sale. This way, you’re unlikely to charge too little or too much for the domain. Ensuring you receive an accurate value.

We’re experts in the domain industry and will provide you with the information needed to make an informed decision. We’re here to help if you are buying a domain or have premium web domains for sale. Domain names are assets and the value of your domain name or names should be utilised.

Our domain valuation includes the following:

• traffic analysis
• value of recent sales of similar domains
• Your domains marketability
• trademark and patent infringement analysis
• name length
• brand recognition
• organic traffic
• search engine traffic
• strength and positioning
• popularity
• grammatical advantage
• revenue generation
• value of development

We draw on all available approaches to brand valuation so that informed decisions are made. We look at your digital asset value on a number of different bases. With our method, we attempt to cover all possible facets of value for your business, to ensure you get an accurate assessment and achieve the best possible results for you.

We carry out in depth analysis into:

Quality

Quality is an important attribute of all good brands. High-quality brands will always achieve more profit than those that are not trusted.

Positioning

Positioning is where your brand stands in the market. This is closely related to the quality of your business and how it has established itself.

Repositioning

Repositioning is any attempt from your business to remarket or change its image.

Communications

This involves a consideration of the communication between the brand and the customers during the potential handover process.

First-Mover Advantage

This is the advantage of the first brand to enter a particular industry.

Long-Term Perspective

A consideration of the long-term vision of the brand, its potential and how it can grow in the future.

Internal Marketing

Internal marketing considers the culture of the brand internally. It refers to customer service and particularly productivity.

Brand valuations can be used in a number of way to the advantage of a company. The information generated can ensure business owners make better-understood choices in operation, legal-matters, sales, disputes and purchases.

Your digital assets are a major part of your business. Treat them like you would any other resource and get them accurately valued. Call DAV today for a quality-assured, expert digital asset valuation service.

Q. What are Some Things to Consider When Buying or Selling a Website?

• revenue
• profits
• earnings per click
• costs per click
• site overhead
• search rankings
• stability of search rankings
• legitimacy of search rankings
• size of the site
• unique content
• current and future revenue potential
• loyalty of user base
• lifetime value of visitors
• affiliate relationships
• content relationships
• Yahoo link domain
• link harvester unique linking domains
• .edu and .gov links
• resource value

Q. What are Some Factors in Website Valuing?

When you know which factors change a buyer’s perception of value you are better placed to make a sale.

So what do buyers look for?

• a mature domain that has never expired
• mature links
• the longer the site’s history of traffic, earnings, links, and the data to prove it, the better
• many backlinks from many different domains
• the trust consumers have in your brand
• first mover advantage
• the site’s search engine position
• resilience to competition
• flexibility
• quality databases
• reliable , engaged customer base
• low expenses
• high traffic
• relevant traffic
• quality content
• functionality
• a steady income
• multiple opportunities
• potential to grow
• further SEO considerations

Point Methods for Scoring Domain Names

1. Marketability
   How many parts make up the domain? (A part is a word, a hyphen, or a number).
   Example.com has only 1 part, the word “example”.
   exampleforyou.com has 3 parts, the parts “example”, “for”, and “you”.
   example-foryou.com has 4 parts. “Example”, “for”, and “you”.
   1example.com has 2 parts, the parts “1”, and “example”.
   aExample.com has 2 parts, the parts “a”, and “example”.
   1 part award = 100 points
   2 parts award = 10 points
   3 parts award = 2 points
   4 parts award = 1 point
   5 parts or more award = 0 points
2. Phone Test
   How does your domain sound when you say it on the phone? Do you have to indicate a hyphen? Do you need to spell out a number? Are any of the words intentionally misspelt?
   If you answer yes to any of these questions, divide your score by 2.
   If your answers are no, multiply your score by 5.
3. Name Length
   If the domain name is 8 characters or less, times your current score by 6.
   If the domain is less than 16 characters, multiply your score by 3.
   If your name is less than 20 characters, double the score.
   If 2 parts and the name is less than 11 characters, times by 4.
   If 2 parts and the name is less than 17 characters, multiply the current score by 3.
   If 2 parts and the name is less than 20 characters, double the score.
   If 3 parts and the name is less than 12 characters, double the score.
4. Brand Recognition
   Do people know what the site through the meaning of the name?If your domain name has Brand Recognition then multiple current score by 3.
5. Development Value
   How much work was put into developing the site?
   Just a landing page? Double your score. If you’ve built more than a landing page, multiply the current score by 3.
   Has your domain ever hosted a website that has been extremely popular? Such as receiving 1000+ visitors a day? Multiply the current score by 25.
6. .co.nz Value
   If .co.nz extension multiply current score by 3. If it has a different country extension multiply current score by 2.
7. Site Traffic Nature
   • 10-39 natural type-ins times your score by 4
   • 40-100 natural type-ins times your score by 8
   • 100+ natural type-ins multiply your current score by 25.
     Natural type-in are unique IP addresses without referrers.
8. Site Traffic by Search Engines
   • 10-39 Unique IP addresses, double your score.
   • 40-500 Unique IPs times the score by 3.
   • 500+ Unique IPs times the score by 4.
9. Industry Strength and Positioning
   How saturated is your industry? Does your domain do what it states it will?
   • Generically to your industry? Multiply your score by 7.
   • Your domain is specific to a unique service? Triple your score.
10. Search Engine Popularity
    How do the keywords in your domain rank in Search Engines?
    • “High”, multiply your current score by 7.
    • “Okay”, double the score.
    • “Not well”, your score remains the same.
11. Grammatical Value
    If your domain name reads well phonetically or conversationally you can double your score.
12. Revenue Generating
    Multiply your yearly income from your domain by 2.5 and place this value on your
13. Comparable Sales Value
    Check to see how other domains have sold at this price. How is their score? Does your domain compare?
    Marketing analysis allows you to come up with a fair estimate of what your domain may be worth.
    These percentile figures will show you how much your domain is worth.
    Total score:
    Lowest = $50 (40 percentile)
    Low score = $50-$99 (30 percentile)
    Mid score = $200-$600 (25 percentile)
    High score = $900-$2000 (3 percentile)
    Extreme score = $2000+ (2 percentile)