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Comet.co.uk – what’s it worth?

There are two inevitabilities in life: death and taxes, so for job security start an undertaking or accountancy business. The demise of electrical retailer Comet has led to the latter being busy, both on the side of the administrators and those who are interested in purchasing the brand.

The challenge facing all parties is how to determine the value of Comet, and once stock is set aside the only remaining asset is digital: the website and the customer data that Comet has built up.

holding image from comet.co.uk

Almost all of the pages on the Comet.co.uk website have been replaced by a holding page with the image above

Determining the value of a website

The process of understanding a website’s worth is not dissimilar from the process that we undertake at theEword when we engage with a client pre-campaign; drawing data from our own and industry standard tools to determine how successful a client is within the search market, applying metrics and market data and forming an accurate P&L. This allows us to predict every aspect of the campaign, through to the end profitability.

For the buyers and the seller of Comet the easy part is getting hold of the market data, although the margins may be hard to stomach. The commercial value of a website is based on the average order value and from that you derive the average margin, which in the online white goods sector is thin. (One sensible argument why their margins were so thin is that the offline retailers have struggled online because they’re saddled with large overheads that the pure play retailers don’t have).

There’s a reason for needing averages and not totals at the start of the process, and that’s because an online valuation should be driven by opportunity. The smart bidders for Comet’s online assets will be looking at what the website could achieve, not the current performance, and that will be based on elements like Comet’s previous rankings in the search engines (now that their site has been mothballed they’re losing rankings and will likely lose almost all before a buyer can work on the site).

A good valuation will also take in to account other digital channels, and in particular the performance metrics on them – at this stage the outside world doesn’t know the conversion rate of their digital marketing, the rates they were paying or the quality of the deliverables, but the bidders will be privy to that. A smart potential buyer could easily spot an opportunity to drop 10% off the average cost per acquisition (a core metric within digital campaigns that determines what bang you get for your marketing spend).

volume of comet.co.uk linking domains over time

Chart showing the number of domains linking to Comet.co.uk over time

Comet’s Search Valuation

Buyers Roadmap

The marketing value of the Comet website is decreasing on a daily basis, so the key to realising the full potential of the asset is to make key changes to the website quickly.

Firstly the buyer should relaunch the Comet.co.uk website so that the search engines can start to re-index (add the pages on the site to their search results database) the site. From a technical point of view (which sometimes goes against brand) I would prioritise launching the pages over creating an attractive or functional site (or even a site that can sell products).

Secondly they should start a base level search engine optimisation campaign to increase links in to the site, which will help bring back lost rankings. Links that Comet currently has may be based on a relationship that a website had with the previous team or SEO agency, so attention should be paid to the most powerful links and any relationships rebuilt.

These two tasks can be carried out independently of the creation of a new website and the complex integration tasks that may be required, but are vital to sweat as much value from the purchase.

Any buyer moving forwards from this should engage with a strong SEO agency on a search strategy as soon as appropriate to the business, and that strategy should include a heavy slant towards social, content production and real engagement with your potential customers.

The Value of Comet.co.uk

The value of anything is always related to what people will pay, and DRL (the Bolton based owner of Appliances Online) have tabled a £1m offer for the comet website and brand. They’re a smart business so they’ll have done their sums, and they’re also market leaders. Comet weren’t beaten by their competitors on cost alone (although this is the key differentiator) they also lost out on customer experience and the way they engaged with their customers. At the time of writing the CometLtd Facebook account had 35,224 likes, compared to AppliancesOnline’s 592,589.

Taking all of the above information into account, I would predict that a £1m valuation for the Comet.co.uk digital assets is accurate and would give a buyer a return within a three year period.

screenshot from comet.co.uk

A capture of the Comet.co.uk website before the homepage was replaced by a legal message
Written by Al Mackin

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