Why Your Online Presence Can Be More Than Just a Cost: It’s an Intangible Asset

Think about the tools you rely on to run your business, from your website to social media channels. Are you viewing them as just basic marketing tools, or are you recognising their true value as intangible assets that enhance your business's worth?

Many businesses focus on the immediate costs of maintaining an online presence, but in reality, it plays a crucial role in building long-term value. An engaged online audience becomes an integral part of your business operations, making it indispensable. When properly accounted for, it can significantly enhance the value of your business.

Understanding Intangible Assets in Business Valuation

Intangible assets are non-physical yet highly valuable components of your business. These include brand reputation, customer loyalty, intellectual property, and increasingly, the value of your online audience. While these assets might not be tangible, their impact on your business’s success is far-reaching.

For pharmacies, having a strong online presence—whether through an e-commerce website, social media, or a newsletter—is critical. It enhances customer engagement, builds trust, and ultimately contributes to revenue growth. This integration into your business’s framework is what makes an online audience valuable as an intangible asset.

The Case for Online Presence and Audience Value

Consider Health Store A, a healthcare retail business based in Auckland. Initially, the company was valued at $500,000, primarily due to its tangible assets like inventory, physical store locations, and steady sales. However, recognising a shift in consumer behaviour towards online shopping and digital engagement, the owners decided to enhance their digital footprint.

Over two years, Health Store A invested approximately $40,000 in establishing a robust online presence. This included launching an e-commerce platform for vitamins, supplements, and prescription refills, as well as building a strong email marketing system and social media engagement strategy.

Through targeted digital campaigns, the business grew its email subscriber list to around 5,000 customers, with an industry standard open rate of 22% and click-through rates of 2-3% (CTR) averaging 2-3%. These digital efforts not only increased traffic to the online store but also encouraged more in-store visits for product purchases and health consultations.

The key to Health Store A’s success was its ability to turn digital engagement into revenue. Around 12% of its email subscribers became repeat customers, contributing approximately 18% to the company’s annual revenue. This consistent digital interaction, combined with personalised offers and health advice through emails, significantly boosted customer loyalty and overall sales.

When the time came to sell the business, the well-established digital presence and engaged online audience were recognised as valuable intangible assets. Specifically, the email list and active online customer base contributed an additional $70,000 to $100,000 to the final valuation, bringing the total value of the business to between $570,000 and $600,000.

This example from the healthcare retail sector underscores how investing in digital assets like an online audience can directly enhance a business’s overall valuation, turning what might be considered marketing expenses into a long-term asset.

Ongoing Business Valuation: Beyond Buying and Selling

Even if you’re not planning to sell your business anytime soon, understanding the value of your online audience is essential for sound financial management. Knowing your business’s worth helps you make informed decisions regarding investments, expansions, and other strategic moves. It also offers a clearer picture of your financial health, which can be instrumental in securing financing or attracting investors.

By recognising the value of your online presence and the audience it helps you build as intangible assets, you gain a deeper understanding of their role in your business’s worth, enabling you to make more informed decisions about maintaining or expanding them.

The True Value of Digital Tools in Business

Whether you’re considering selling your business, acquiring one, or simply managing your current operations, it’s crucial to recognise the value that your online presence and digital engagement bring. They are not just operational necessities; they are integral components of your business’s intangible assets. These elements support daily operations, improve customer engagement, and ultimately contribute to your business’s overall value.