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Based in Melbourne (Victoria) we deliver business valuations all over Australia using expert business valuers and resources that allow us to work remotely.

We have completed:

Contact Us

L3/162 Collins St, Melbourne, 3000

0421 069 717

m.williams@exitvalue.com.au 

Digital Marketing Business Valuation Issues 

Digital marketing has taken over from the traditional marketing industry where the aim was to get eyeballs on print or the TV screen.  Now the aim is to get eyeballs on a phone or laptop and through socail media, web or direct marketing. 

 

The industry is highly fragmented and includes a broad range of services including web design, SEO and PPC advertising, social media management and promotion​.

The key changes that influence a digital marketing business valuation include:

  • Increasing uptake and use of cloud technology

  • Broad services focused in either regional areas or industry verticals.

  • Use of onshore and offshore staff.

  • Advent of changes in social medial platforms and Google algorithms.

  • Use of social media in business advertising.

The industry is not dominated by any one or a small number of large players, but many smaller businesses of a wide range of sizes.

Some acquisition and merger opportunities exist as businesses seek scale, however a key issue is transfer of clients to acquirers and this issue limits the EBITDA multiples achieved.

Key Drivers of Digital Marketing Business Valuations

Key Industry Statistics

According to IBISWorld, the Advertising Agency industry:

  • Grew revenue by 3.3% pa over the past five years to $3bn.

  • Average revenue per business is $370k

  • Revenue is expected to grow by 3.3% in 2019.

  • Four largest players account for 28% of industry revenue

 

We have collated industry performance statistics based on ABS data and detailed them in a whitepaper, which can be downloaded from the link below.

What Makes a Business Highly Valuable?

SME Performance Whitepaper

A Digital marketing business valuation is driven by key factors below such as: 

  • Number of clients and level of recurring revenue

  • Location and business population (if regionally based)

  • Use of on-shore and off-shore staff

  • Low reliance on owners with documented processes and systems

  • Staff structure in place

  • Effective management systems and integrated IT systems

EBITDA Margins range from less than 25% to 45%, depending on the size of the business, localtion, range of services, technology and automation.

Typical EBITDA Multiple ranges we have observed are:

  • Revenue of $1m - $10m: 0.5x - 3.5x

  • Revenue of $10m - $20m: 2.5x - 4.5x

  • Revenue greater than $20m: 3.5x - 5.0x

Our Business Valuation Experience

Our digital marketing business valuation experience has included including business valuations for:

  • Regionally located (two owner) social media marketing agency

  • Creative industries digital marketing specialising in social media, web design and SEO services.​

  • Web design and SEO business