This article will give you an answer to the question of when the website of a company is a hidden asset, when it is an asset only on paper, and in which cases a website can gain or lose in value. It also looks at the key characteristics of a strong web domain and how to maintain or improve its value.
It is common knowledge that websites are either expensed each year or added to assets. If the first variant is the case, the more time that passes, the less value a website has (according to the books). If it is put in the assets, it increases the value of a company (again - in the books).
Behind the Name
In actual fact, it’s not the website per se, but the website plus its domain name that can be a real hidden asset.
There is a widespread opinion that the value of a domain name depends on its uniqueness or some other features. This is true only for the well-cared-for domain names that have already been brought up to a certain level. Initially, a domain name costs peanuts by itself, and the prices are about the same. Of course, they depend on domain zones and word combination, some of which are more expensive than others, but the difference is not that significant compared to what one can make out of a domain name.
Therefore, at first, a domain name can be considered a zero value asset. However, it can become valuable with the help of web design and proper care.
The website should:
- Be built on the usability principles (ergonomic or easy and intuitive in usage)
- Have an up to date design and be technologically advanced
- Be properly launched
- Have SEO optimization
- Regularly be checked for backlinks from websites with a bad reputation
- Be constantly maintained.
Good maintenance implies placing 100% unique content. If a company copies texts from other websites, Google immediately notes it and lowers the ranking of the website. The only way to achieve good results is to avoid plagiarism in both wording and topics, as the search engines can differentiate original writing from copy. The same applies to images. The code of the website should be SEO optimized, as well.
If these rules are followed, the website will rise in the rankings. As a result, Google and other search engines will be sending more visitors to it. Since the website offers original content, users will be eager to share it on their pages, which would in turn increase the number of visits. In the end, the website traffic grows, bringing more and more future customers to the company.
At the same time websites are used to becoming obsolete and in need of at least “refreshment” in terms of design and technology (if not completely redesigned and developed from scratch again) on average once every five years. If neither of these is done, the true value of the website (if there ever was any) vanishes.
A domain name by itself does not have any special value, but it can gain trust through a good website, which requires constant care. The longer the website is taken care of, the more trust its domain name gains and thus gains in value. Trust boosts traffic, which in turn increases the value of a domain name.
Here is an example to illustrate this connection.
Company A has a very good website that has long been pointed to a specific domain name. Due to the right maintenance, the domain name has a high trust score. But the company buys a new domain name and transfers its website, as good as it is, to a new domain name. The result - the website loses almost all its traffic because domaine name is new and does not have any trust.
Company B has also a very good website but for a certain reason decides to delete all old content but keep the existing domain name. As a result its website also suffer decrease. But if the old links are well managed, it will not lose all its positions. It will lose only some traffic if the new website is of high quality, respects all the aboverules, and places quality new content based on the SEO principles.
Influence of branding and trademark
As a brand name becomes more known, some traffic is generated when people are searching for the particular company name or specific (if unique) service or a product. The more known the brand, the more traffic and thus trust it receives over time, under the condition that the website is user friendly.
At the same time it is easy for a company to lose its domain name, if it did not register a trademark with the same name. In the case when organisation A bought a domain name, and organisation B registered a trademark with the same name even several years after that, organisation A will be obliged to transfer its domain name to organisation B. So all the work which organisation A may invest in its domain will be in vain and organisation B will hugely profit from it.
So, a new website by itself is not an asset. To find out if it is an asset, a lot of factors should be taken into consideration:
What to look at:
- Trust score of the domaine name
- Quantity of visitors
- Bounce rate
- Blacklisting / backlinks on bad domains
- Trademark registration
There are automatic services for some of these parameters. They can not provide a whole picture but give a strong indication. Here are some examples of the services:
At the same time, these automatic instruments can only give an approximate idea of how valuable the website of a company is. To know for sure there are different ways, one of which is to look at how many leads and conversions the website generates, calculate the percentage of closed deals and their value.
The Loupe can also make an assessment for you, contact us at firstname.lastname@example.org for more information.