Making Sense of Your Digital Investments
I think the problem most companies have, whether they are large or small is that it’s very difficult to measure that asset value of a digital investment. Sometimes it’s almost like taking a leap faith in that you believe it will pay off and its the right thing to do.
I don’t think that companies have to do this anymore. There are ways to put value on digital assets and I think putting some value behind all of this will help companies better understand their investment.
Tangible assets are more clear-cut. It’s definitely possible to assign a real value to them. Here are some examples:
Your domain name has value. In most cases, your domain name might only be worth a small amount but it could be a premium domain worth a real value. The more you build your brand in tandem with your domain name, the more valuable your domain could become.
In some cases, you may have real servers or digital infrastructure powering your software or websites. This has real tangible value. More and more companies are moving to the cloud so this is not usually the case but is still worth noting.
This isn’t always the easiest to quantify but images, videos, and other media assets do have value. I would put a conservative value on images, videos, and other content based on what you paid for them. It should probably be slightly less than what you paid, as typically the value might decrease as time goes on and the quality of new digital assets improves.
Written content has value. Blog posts, product content, landing pages, etc are valuable. They are the cornerstone of SEO. I would roughly estimate how much time it takes to write a quality post and pay that person for that time, and gauge the value that way. However, older content may lose value over time.
Social following has massive tangible value. If you have a following of 100,000 that has real value. The engagement of the following matters. I would look at the cost to pay to reach your following via paid ads and calculate that way. Let’s say it costs x per month to reach your following. Your following can be reached for free so you could argue its worth at least 12x per year.
People buy email lists. A quality email list has value. Estimate how much someone might pay for a high-quality email list in your niche. It could be worth thousands if not tens of thousands.
Leads / Sales:
If your site generates x leads per month that close to x business that has value. You can also determine this easily if you have an eCommerce site that generates x business per year.
Intangible assets are often times the most valuable assets but they are harder to quantify. How much is a brand worth? How much is a logo worth? How much is a first-page ranking worth? These are all hard questions to answer without heavy bias.
Design & Branding:
Design and branding are probably some of the most subjective things and hardest to quantify. Ironically, they also can have massive value. I would try and take an objective view just to be conservative. How much would it cost to pay someone to create a nice style guide, website design, or other designs you have. It might be a few thousand, or it could be hundreds of thousands. At least you know there is a floor value there that would be hard to replicate with less money.
Software / Code Base:
This is also incredibly hard to quantify, but it’s definitely possible to put a real value on it. How long would it take to pay in-house software engineers to build this code base or software? A year, two years, two months? What salary would they need? How good is the code, and how new is the software? An old codebase is probably worth far less. I think most companies underestimate how much it would cost to do this, which is why most companies are fay behind when it comes to digital. This is a massive investment that should not be under-appreciated or undervalued.
Good engineers are expensive and managing projects are hard. This should be one of your largest digital assets.
SEO / Analytics:
Having all your data tracked via Google Analytics or even more advanced tools can be extremely valuable. This has value and setting it up takes time.
SEO also has a lot of value too. With SEO you can simply look at how much traffic you are getting and how much it would cost to pay for ads for that traffic. It might not be an exact match because not all SEO traffic is good business oriented traffic but it still has brand value. There is certainly a value to SEO traffic.
Setting up good development operations takes some upfront investment. There is value to this and having it in place is important. I would definitely assign some value to dev ops and a good dev ops process. Maybe not a huge value but it has some value.
Paid Campaigns Setup:
Setting up high-quality paid advertising campaigns take a lot of time. If you have some high-quality campaigns setup that are profitable, this is extremely valuable. Having this setup is certainly worth something, at the very least a few days worth of a marketing manager, if not much more because of all the valuable tweaks you made.
Marketing Automation Setup:
Setting up marketing automation can take months or even years. The setup here is valuable and is not something that can easily be replicated if its complex and has many different steps. I would certainly assign some value here based on the cost to set this up.
Setting up platforms and integrating them successfully takes a lot of time. This can have a huge technical manpower cost and high value in terms of hours saved through integrations. I would calculate both the cost to set up your integrations and the time saved via the integrations. Integrations can have a huge business impact in terms of reducing man hours and making your company far more efficient.
Every company is in some form of technical debt. So if you have a lot of very old digital assets, you may have to eventually spend a lot of money to upgrade. Technical debt should be factored into your digital assets, however, I don’t think its fair to say because you have technical debt your digital assets are worthless. I would compare your technical debt with competitors. This is hard to do because you don’t know their inner-workings but you may be able to gauge how old their systems are or find some useful info about them. If they have much older systems your technical debt might not be so problematic because they have a much bigger hole to get out of.