Re: appraising your web site

From: jae kim <jae_at_kagan.com>
Date: Mon, 9 Aug 1999 14:20:02 -0500 (CDT)

CHAD WOLD WROTE:
>>Is there a software program or an Internet business that
>>will help me in putting a instant value on a web site?

TO WHICH ROB FRANKEL REPLIED:
> Man, I get this question about ten times a day. Currently,
> I'm working with about five sites, all of which have serious
> registered user bases. Those are the easiest to value, since
> there's an established range of figures for customer
> acquisition.
>
> If you figure that acquisition cost at $80 to $100 per
> customer, average it to $100 and a site with 100,000
> verified users could be worth the $10 million they want.

umm...i think you left out a big step in the equation.
essentially, what you have done is summed up the amount
spent on marketing--thats a big difference from VALUING a
property.

yes, some businesses are bought and sold on customer
acquisition costs, but they tend to be in commoditized
businesses. for example, small mom & pop (no pun intended)
ISPs in rapidly consolidating markets are bought and sold
for 1x marketing costs because the buyer can make a strong
case that eventually, with enough advertising, the seller's
subscribers will be his anyways.

here are a few thoughts i have on the subject:

rule 1: there are no rules. there are yardsticks and
methodologies, but there is no right or wrong way.

rule 2: everything's negotiable, if you want to value
yourself on the high end, be ready to defend it to the
death.

rule 3: what makes sense using one methodology, might not in
another.

value per user, page view, subscriber, customer are just
starting points. you need to figure out other comps, such
as various multiples across your findings to figure out if
the value of your company should be higher or lower than the
average.

WARNING SHAMELESS PLUG AHEAD: if anyone is interested, i
will be happy to email them a copy of our Internet
Advertising newsletter as a sample (annual subscriptions are
$895). I recently did a valuation estimate on the Alta
Vista deal about a week before the final price was
announced. i was low by $20 mil., i said $2.57 bil, and it
was $2.77 bil...oh well, live and learn.

= )

also, i was thrilled by the number of companies that wanted
to participate in our advertising network survey...but
was...lets say...extremely "underwhelmed" by the number of
completed surveys that were returned.

i think i went a little too deep with my info request, but i
would like to try again with a more toned down effort.

perhaps after looking at the sample report some potential
participants will be a little more comfortable?

anyways, thanks for the attention. please feel free to
email or call me. i always love to learn about new
companies and try to add a little value where i can.

--
Jae Kim
Analyst
Paul Kagan Associates, Inc.
126 Clock Tower Place
Carmel, CA 93923

jae_at_kagan.com
http://www.pkbaseline.com

P) 831-624-1536 x 335
F) 831-624-3105

...to know and not to act,
is not to know...

========================================================================
------------------------------------------------------------------------
        This week's Online Advertising Discussion List sponsors:
                   Acceleration, AdFlight, and Flycast

 ###100% GUARANTEED### Pay-Per-Click and Pay-Per-Download Advertising
      All of your money back if you are not completely satisfied!
-->> http://www.clicksales.com/ and http://www.downloadsales.com/ <<--

                                        ---

AdFlight (formerly Immerce) - The Internet Advertising Exchange: Your
high choice, low price source for Internet ads! WEEKLY AUCTIONS,
DAILY DEALS! Go now to http://www.adflight.com/default.asp?source=oad

                                        ---

   AT FLYCAST WE'RE PASSIONATE ABOUT RESULTS. Not just branding. Not
just click-through -- results. Take the next step. Get the maximum number
of responses at the lowest possible CPM. Visit http://www.flycast.com/oa1.
 
------------------------------------------------------------------------
========================================================================


Received on Mon Aug 09 1999 - 14:49:49 CDT