We all know we should be measuring the ROI of our content... but actually doing it is another story. Ben Beck gives us four straightforward methods to calculate ROI that will help you with your content marketing mission.
One problem many marketers face is the chicken-or-the-egg dilemma of content marketing: You know you need a strong content marketing strategy, but you can’t get the budget to support the strategy until you’ve proven it works — the ROI. When I was managing a $6 million annual paid search budget for a major office supply store chain, I continually recommended that we should be creating valuable content to put in front of potential buyers, instead of only throwing money at advertising. My requests were denied. That office supply chain is now suffering — not simply because they chose not to do content marketing — but because they didn’t have a forward-thinking frame of mind.
As much as I’d like to blame their lack of action in the content marketing realm on their leadership team, some of that blame rests with me. Here’s how I see it:
- We all know content marketing is important
- Content marketing generates strong early funnel leads, and can help progress those leads through to becoming buyers
- It’s the job of content marketers to have a strong ROI measurement strategy to prove their campaigns and help refocus the organization’s marketing budgets around sustainable, long-term marketing and advertising endeavors
Looking back, I realize that if I could have built an ROI-backed case for content marketing, I likely could have received the blessing of the leadership team to take a content marketing approach that could strongly supplement the regular advertising I was doing.
I wasn’t alone in my naiveté concerning content marketing ROI strategy. Twenty-eight percent of B2B content marketers don’t have a method for measuring their ROI, according to the 2017 Benchmarks, Budgets, and Trends report from Content Marketing Institute and MarketingProfs. The pain of measuring ROI among B2C content marketers is just as vivid: In a similar report from 2016 on B2C content marketing, 46 percent of marketers said that ROI measurement is a top challenge.
In the last few years, I’ve set up closed-loop ROI reporting systems for a dozen or so employers and clients. In doing so, I’ve learned the importance of having a quantifiable method for proving your successes with content marketing. This article highlights several different methods you can take in calculating your ROI that will help you with your content marketing mission. If you’ve already got the chicken (budget is already approved), these methods will help you keep that budget. If you’re looking for an egg (no content marketing budget yet), understanding your ROI reporting options and taking one of them — with a well built-out plan — to your leadership team will help you get the budget you need.
Method 1 – Adwords Value
David Meerman Scott, author of The New Rules of Marketing and PR, coined the phrase Adwords Value Equivelancy (AVE). The basic premise behind AVE is that if you weren’t doing content marketing to generate your own leads or sales, you could be purchasing traffic from Google to do the same. Take a look:
- Let’s say a given piece of content has driven 3,000 people to your website, and the cost to create and distribute the content was $5,000 — then the cost per visitor would be $1.67 ($5000/3000)
- If the cost per click (visitor) from an Adwords campaign is $3.50, then your organic content marketing effort was a success
If you’re starting with a clean slate — at an organization who has no history with Adwords or content marketing — you can still use this approach. There are numerous tools out there (SEMRush is my favorite) where you can punch in a search term and see how much traffic is being generated from organic or Adwords approaches. SEMRush will also estimate what the cost per click is for that search term. Using SEMRush, you can back into what you would expect to pay for your Adwords-driven traffic, and then use that for building out your own ROI projections around content marketing.
Method 2 – Comparable Lead Value
Some businesses don’t do paid search advertising or are in a niche market where SEMRush-provided data wouldn’t be accurate. For example, let’s say you have a high-value product with a long sales cycle that is only being sold to CTOs at the Fortune 500. In this case, you’re likely not doing a lot of paid search advertising, as the volume of searches likely wouldn’t justify it. Likewise, SEMRush and similar PPC spend forecasting tools won’t be a big help.
Thankfully, in these situations there are generally lead generation companies that are already targeting your niche that you could reach out to for a bid. For example:
- Capterra generates and sells leads that cover more than 300 niches. To set the value of a lead, you could shop Capterra to see what the going rate is for a CTO at a Fortune 500 company, and then use their price as your benchmark
- In your justification, you would make the argument that you could acquire the lead from outside parties at X dollars, and thus your content marketing efforts should be held to a similar cost per acquisition value
Method 3 – Track to Sale
Another method, tracking back to the actual sales from the content, is a great way for measuring ROI if you have a strong system of tracking in place. In this method, you keep track of:
- The actual cost of your generated content
- The revenue generated from that content
- And then you run the calculation — revenue generated / cost of the content marketing campaign
This is a great solution for organizations that have strong tracking in place. However, many organizations, especially those just getting started with content marketing, can do a great job of tracking first touch or last touch, but struggle when it comes to tracking multiple touch, or a mix of first/last and multi-touch.
- First-touch tracking is when you’re looking at just the first content marketing piece or advertisement a prospective buyer saw before entering your funnel
- Last touch is tracking and attributing success to the last marketing touch point before the individual purchased
- In multi-touch, you track the first touch, last touch and all the touches in between (this is an ideal tracking solution, though it tends to be burdensome and can create problems of its own)
With these different attribution models, you can see why an organization needs a strong tracking system to accurately leverage this third method of tracking the revenue directly back to the sale.
Method 4 – Aggregated Campaign Value
This method is somewhat an iteration of all three of the other methods, in that it’s using some proxy variables to calculate the value of your content marketing efforts (methods 1 and 2) but it also takes the cost of the marketing efforts and runs them through a calculation (method 3).
Fractl, a Florida creative marketing agency, has created a content marketing ROI calculator that takes a fairly sophisticated approach to the endeavor of proving the worth of your content. The inputs of the calculator are:
- Your total campaign cost
- The value a visitor, social share, backlink or major placement is to your organization
- And the corresponding number of visitors, social shares, backlinks and major placements your content generated
After you input those figures, it will show you the project value as well as an ROI calculation. Not sure how much these different prospect behaviors are worth to you? See methods 1 and 2 above.
Which method should you choose?
One important aspect to consider when choosing a method for analyzing your ROI: First, understand what your “R” is.
Are you driving actual, bottom-of-the-funnel dollar revenue with your content? Or, is it meant to drive top-of-funnel prospective buyers?
- If your main purpose is to generate sales, evaluate whether you can use the third method of tracking costs and sales closely for the ROI calculation
- If you are shooting to get prospects into your sales funnel, it may be more appropriate to use method 1 or 2, due to the ability to quickly gauge the content effectiveness
- If you’re looking to really impress your executive team and get a good benchmark for where you’ve been and where you’re headed, the Fractl calculator method may be best for you
Whatever method you choose, don’t get stuck on perfection. Finding your true content marketing ROI is an iterative process, one where you’ll learn, try, make mistakes, learn, improve, repeat. So, instead of getting stuck, begin tracking the effectiveness of your content marketing with the assumption that you’ll continue to improve your analytics capacity in the future.
Do you plan on using one of these methods? What other methods have you tried? Let us know in the comments.