Part 8 – Content Asset
A content asset is business tool which can be monetized either by attracting or retaining customers. It is the bedrock of content marketing. Content assets do not include advertisements made for the sole purpose of temporary promoting a product or service. Temporary promotions do not capture value so cannot be classified as assets.
Forms of content asset
Content asset could take many forms such as, white papers, webinars, case studies, demos, blog articles, videos, podcast, etc.
When building your content assets, you need to understand that not every visitor who comes to your site is in the same phase of the buying process. Some customers might need your site to define their problem, some come searching for alternatives, some are ready to buy and lastly some come to justify their purchase decision.
Your content should be designed to address the different phases of the buying behavior. As a result, you need different types of content to address these different needs. For instance: The customer looking to define their problem will be interested in a free sample or product, while the one looking for alternatives will be willing to pay a very small fee to try out your offers. This is why displaying your products at different price points is quite important. The person searching for alternatives might not want to pay $500 right away for your online course but might be willing to spend $9.99 for an eBook. If they like the eBook then they will be willing to make a bigger purchase.
Keeping track of your content asset: Content inventory
Content is an intangible asset meaning that unlike tangible assets like equipment, content assets cannot be touched. The content asset only has value to the business who created it and other businesses that are looking to buy or strategically align with the business. Since the value of content is hard to measure they typically do not appear on the balance sheet. However, you should still track the value as this could produce useful insight if you do decide to sell.
Content inventory is taking stock of all the content you have in your online business. It is a great way to know what you have and to ensure your content is still meeting the purpose it was designed for. A great resource to help you start the process of taking inventory of your content can be found on the Harvard University website.
Valuing your content
There are a variety of ways you can use to value the content on your website. Some common methods are:
- Cost replacement method: this is the amount it will cost you to replace the content on your site
- Life time value approach: First you will have to find determine the economic value of your content then multiply it by the number of years you expect it to produce value
- Market value approach: this method compares a business to similar businesses that have recently sold
- Earnings value approach: In this method an expected level of cash flow is determined based on past earnings record. The numbers are adjusted for unusual revenue and expenses. Finally, the number is multiplied by a capitalization factor. This capitalization factor is based on what a reasonable investor will expect to make on the investment.
Content asset valuation example
Using the earnings value approach, let us determine the value of Pat Flynn of Smart Passive Income content. Pat Flynn has quite a lot of content on his website. Pat’s average monthly income adjusted for abnormalities is right around $59,000. Recent sales of similar websites suggest that websites have a 20 times multiple on average monthly income. This means Pat Flynn’s content is valued at 59,000 * 20 = $1,180,000. Besides his customer list, a potential buyer will be interested in acquiring his content and systems around his content.
Please note these are very rough estimates, if Pat was to sell his website, he will be served best by looking for strategic partners who can take the site to a whole other level and thereby earn him a higher return. There are other factors that should be taken into account that are not discussed here.
This article is part 8 in the building financial freedom from your lifestyle business series