There are many ways that owners can figure out business valuation, but no matter how you go about it, marketing does play a role when determining what a business is worth.
Because marketing is the front of line when it comes to your public brand image, it can have a major influence on sales and overall business health. There are several components of marketing that may make a difference in valuation, including engagement, virality, and branding.
Branding
How the general public sees your business will have an influence on your business valuation. No matter how impartial someone pretends to be, the fact remains that they have a subconscious perception of your brand, which will determine your value to them personally. Brands that tend to have a lot of historical or substantial trust will be more likely to have a higher valuation.
For instance, a brand like Coca Cola, which frequently reminds its consumers through commercials and other mediums that it has been around for decades, will have higher historical brand trust and will be more valuable to investors and potential partners than a soda company who may have a high quality product but no historical trust to back it up.
Engagement
Companies that have high online and offline engagement with their target audience are much more likely to have a higher business valuation. This is because regular engagement equals a higher potential of success when launching new products and services, as well as securing continued growth for existing offerings. Loyal customers are going to buy every product a company releases because they like the brand itself. This translates into steady sales for every product that is released, thus increasing potential revenue and value.
Additionally, a high ROI for marketing campaigns due to great engagement will also influence a company’s value. If the majority of what a company does for marketing and advertising usually nets them a good ROI, then investors know that these types of promotion risks are more likely to give them a good return in profit.
Viral News
News about a company online (whether it is true or not), has a significant impact on company valuation. For instance, if a company wants to sell or go public but has a negative brand image due to coverage online and in the press, investors are not going to want to get involved.
Conversely, viral news can help a company sell their products and services fast, oftentimes with very little effort. This makes it easier to prove valuation to potential investors or partners.
To get the best possible valuation, companies should have an active part in how they are branded, their employee engagement, and what is spread about them online.
The master of this trifecta is Apple. They enjoy a cult following of fans, who buy all of their products as soon as they come out. They also focus their branding on a target audience who buy into the enjoyment of being ahead of their peers when it comes to technology. In attention, because of their market saturation, any Apple company developments are covered intensely by thousands of media facets, making it easy to spread news virally online, without much additional effort.
original photo credit: kevin dooley via photopin cc
Kelsey Jones
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