Valuating Website Assets

The tangible value of a website stems almost entirely from its content, functionality, and design. These aspects of a site are what drives, engages, and converts visitors respectively. By investing in all of these areas, a property owner is building up the ability of the site to generate cash, and therefore building up the fundamental value of their asset as a whole. With quality then in mind, we are able to build a valuation framework for valuing exactly how much the actual assets of a property are worth, and what kind of value they create for a purchaser.

Content

A common saying in the web properties business is that “Content is King”. This saying stems from the fundamental assumption that organic search engine traffic, which has been indirectly generated by carefully engineered content, is the most cost effective mechanism for an asset to generate revenues. Through its consistency and ability to be quantified, organic traffic represents an extremely tangible aspect of fundamental valuation.

This in turn provides us with an outlet for determining the value of the content on our page itself, because of the way in which it directly contributes to the accumulation of organic traffic. Through the analysis of keyword values, the complexity of the content being created, and the sheer volume and velocity of the content being published, we are able to come up with a reliable valuation model for the content present on a website.

1. Valuing Different Kinds of Content

The trick to valuing content from a fundamental perspective is to first determine the cost of how much we would need to spend to actually accumulate the sheer volume and quality of the content that we are seeing both on and off page. In general, we can do this by looking at the costs associated with purchasing this content from professionals, and then comparing this cost to the value of the inbound links that are supporting the page rank.

Ideally, we want to be able to justify the value of the page rank through the cost of procuring the traffic. While there is then some room for discounting the costs in accordance to their ability to create long-term value, we still want to make sure that there is some accountability in the content’s ability to support the tangible value of the page’s PR.

In general, we can break content types down into a few key categories, all of which having reasonably distinct characteristics. While I’m not going to go into the nuances about what differentiates an article from a blog post, I will focus on what makes sales copy worth more than a review article, and why it is that these higher quality content types still need to be discounted due to their high risk.

When looking at this list, it suddenly becomes apparent how it is that the complexity of a piece of content is a major contributing factor to the cost of the content itself. Sales copy is notorious for this, due to its sophisticated styling. Alternatively, informational resources tend to be expensive due to the amount of research that the author will need to put into the piece. This is in comparison to a short-form content-type such as a blog comment or a post, which will generally be intellectually non-intensive, but required in high volume.

For example, hiring out a series of Twitter-tweets will generally require a particular level of supervision to ensure that the platform is properly being engaged. Once all the appropriate individuals have been re-tweeted, tagged, and referenced throughout a conversation, it is possible for a tweet campaign to reach as many words as an entire blog post, simply because of the way in which the campaign managed to engage its audience.

Understanding that the value of the content being produced will represent the fundamental cost-side value of the asset being measured, we need to then evaluate whether or not we will be able to perpetuate traffic (and therefore cash flows) with the information present. This is done by evaluating the value of the page rank, which is supported by inbound links and references.

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