How to Assess the Brand Value of an Online Business

Let’s address this brand thing when looking for an online business to acquire.

There are several factors that affect the earnings multiple and subsequent valuation of an online business. I recently covered them in the post The Key to Valuing Small Online Businesses: Understanding Earnings Multiples and intentionally listed ‘brand’ first.

Here’s why: A branded business doesn’t have to constantly chase new customers; instead, it attracts them naturally. This kind of built-in demand is incredibly powerful. It also has an audience that can be leveraged for further marketing efforts. Branded businesses are pretty common place among offline businesses — but quite rare among online businesses.

Key Metrics to Assess Brand Value

When it comes to assessing the brand power of an online business, there are two key metrics I focus on. Other metrics may exist, but these are the most quantifiable and impactful.

1. Branded Search Volume

One of the first things I check is the branded search volume using a tool like SEMrush. This metric tells you how many people are actively searching for the business by name. A business that generates significant traffic from branded keywords is a strong indicator that people are seeking out the brand directly. This kind of brand recognition is incredibly valuable and often justifies a higher earnings multiple—sometimes as high as 60x.

• Why It Matters: Most online businesses, particularly content sites, don’t have any branded search traffic. They rely entirely on generic, non-branded keywords, which means they’re just piggybacking on free Google traffic. This strategy is risky because it’s highly dependent on search engine algorithms, which can change at any time. A business with a strong branded search volume, on the other hand, has a loyal audience that actively seeks it out, making it much more sustainable and valuable.

• What to Look For: When evaluating a potential acquisition, I would only consider a business that has at least some branded search traffic. The more branded search volume, the better, as it indicates a strong, recognizable brand that customers trust and seek out.

2. Repeat Customer Rate

The second metric I focus on is the repeat customer rate. This tells you how many customers come back after their initial purchase. In a SaaS business, for example, this might be reflected in customer lifetime value (LTV). A high repeat customer rate indicates strong customer loyalty and satisfaction, which are key indicators of brand strength.

• Why It Matters: A business with a high repeat customer rate doesn’t have to spend as much on acquiring new customers, which can significantly increase profitability. Moreover, it suggests that customers see value in the brand, leading them to return and make additional purchases. This kind of loyalty is a strong indicator of brand power and can significantly boost the business's valuation.

• What to Look For: When evaluating a business, analyze its repeat customer rate closely. For subscription-based businesses, check the churn rate and customer LTV. A low churn rate and high LTV are strong signs of a healthy brand.

On that note:

Always start exploring these metrics quickly upon getting the details of an online business for sale. Personally I weed out any businesses with no branded search volume.

On the flip side a business that has high branded search volume or repeat customers will get a juicier offer from me. Particularly if the business is priced in-line with businesses that have no branded search volume (hello mis-pricing!)