Content marketing has made a name for itself over the past few years as an effective method of brand promotion and lead generation. But one element of this new form of marketing still plagues many - successfully calculating ROI (return-on-investment). 25% of B2C marketers say they aren’t measuring the ROI of their content efforts, according to CMI’s B2C Content Market ing: 2017 Benchmarks, Budgets and Trends — North America.
While measuring the ROI of your content and the success of your content aren’t synonymous, they are interdependent. ROI focuses on the actual money and time spent on creating and promoting content, the success of content depends on the goals you set in place for your content, whether that’s social shares, marketing qualified leads (MQLs), page views or all of the above.
The ROI of your content can’t be determined without a clear understanding of what successful content means for your business, and vice versa. In this essential guide, we break down the steps involved for effective measurement of your content marketing efforts.
Before you start your calculations, you must be aware of two big issues marketers face when calculating the ROI of a campaign. The first is that content marketing is a long-term game. Almost every campaign begins with a negative ROI overall, which should improve over time. Second, there are many benefits that content marketing offers that are hard to quantify numerically. Brand perception is one of these advantages. With that in mind, here are the steps you can take to measure your content marketing ROI, along with a formula for doing so.
Before you start determining what influences your content marketing ROI, it’s important to understand what ROI is in its simplest form. It looks like this:
Another way this can be written out is:
But it may be easier to understand the numbers when you see them like this:
Of course, like everything in marketing, it’s not that simple. There are many elements that go into both the return and the investment of a content marketing campaign - some of these are quantifiable and some aren’t. A content marketing ROI breakdown generally looks more like this:
The three major components of ROI for content are:
We’ll talk a bit about cost (writing content in-house vs. outsourcing it, etc.) in the section below. Let’s move on to content utilization.
Sirius Decisions reports as much as 60-70% of content is never utilized! If your content isn’t being used, all of the money you’ve spent for creation and promotion is negative ROI. So before you go creation-crazy, remember that your content won’t have any impact if it’s never used or shared.
Finally, content marketing ROI needs to define the business value of the outcomes it generates.What was the original goal of creating your content? Was it to support a product launch, gather new social followers? Every piece of content should have its own goal in addition to the general ROI calculations that you’ll be applying to it.
Now that you understand how complicated ROI can get, let’s start calculating.
Step One: Measure Your Investment
Before you see the results of your content,you’ll need to put some work in. Whether that’s managing outsourced writers, promoting your content via PPC and social ads or writing your content in-house. Take a look at all of the funds you’re attributing to making your campaign a success. If you’re working with one external agency, this will be a straightforward cost for all of the elements of a campaign, including writing, SEO, social ads and more. However, if you’re using full-time employees to do the work or enlisting multiple contractors, your calculations may get more difficult. If this is the case, you may want to create an average estimate for how much time these individuals spend per month and how that matches up with their salaries.
What this looks like:
Option One: Agency spending (PPC, copywriting, paid social ads, etc.)= $40,000 per campaign
Option Two: In-house copywriter (120 hours at $30/hour= $3,600) + social ad spending ($10k)+ PPC ($15k), content syndication ($5k)SEO consultant ($5k) = $38,600
*This is just an example. You may find that outsourcing is cheaper or more expensive for your business/campaign.
Step Two: Calculate Your Return
Content marketing has a reputation for doing a lot with a little. This will become readily apparent when you’re calculating your ROI return. Here are the four most important content performance metrics according to James Duffy.
Here are what those metrics look like broken out, with the added addition of another important metric: retention.
1. Consumption Metrics: Consumption metrics focus on how many people are seeing your content on your website and other channels. Metrics may include:
Most of these metrics can be tracked in Google Analytics, though downloads, open rate and clickthroughs can be tracked through marketing automation software and social analytics tools. Email is especially important to track because it’s one of the highest producing ROI tactics.
2. Retention: Retention is determined by how you keep your customers engaged. Metrics include:
3. Sharing: Most sharing metrics will come from your social media analytics tools (free and paid are available). These may include:
4. Leads: Leads are one of the easiest elements to track through a content marketing automation platform. In fact, according to Salesforce and Pardot’s study, companies that use automation have 53% higher conversion rates from responding to qualified leads. When looking at leads, look at those generated across the buyer’s journey (first touch, multi-touch, final touch, etc.)
5. Sales: This section is usually the most important for your C-suite. A lot of times, it all comes down to how much money your content is making the business. Sales metrics include:
Step Three: Determine Your ROI (the Formula You’ve Been Waiting for!)
Whew! We’ve covered a lot. But even with all of these elements, your content ROI really boils down to the formula Curata’s Pawan Deshpande has constructed. And though you need to take many factors into consideration, revenue is really what matters for most businesses at the end of the day.
Curata advises, “For each piece of content x in Campaign C, take the $ amount of Revenue generated (a sales metric) by Content x and divide it by the ($ Production Cost for x + $ Distribution Cost for x) (a production metric). If the ratio is greater than 1, your content was profitable from a sales perspective.”
This formula can be used for one piece of content, for a specific campaign or for your overall content marketing activities.
Looks familiar right? Truthfully, it’s very similar to the calculation you saw at the beginning. But it’s important to understand everything that goes into calculating your ROI-even if you don’t use every metric to prove to your C-suite that content works.
After all, as marketers, most of us care about more than revenue. We want to know who’s seeing our content, how they’re interacting with it and how they feel about it. Explore some of the other metrics listed above in determining your overall content marketing ROI, even if it’s something you only present to your fellow marketers. And don’t forget the additional hard-to-quantify benefits such as brand reputation, visibility and the future value your content will bring over time (not just at the time you’re measuring).
Content marketing is about attracting, engaging, identifying, nurturing and converting leads (and continuing to delight them once they are customers). Gain a solid foundation in key digital specialisms with a Professional Diploma in Digital Marketing. Download a brochure today!