What is a return on investment (ROI)?
Return on Investment (ROI) is a financial metric that evaluates the effectiveness and profitability of a content marketing campaign or strategy. It helps businesses determine whether their marketing is increasing their bottom line or if it needs refinement.
For businesses, it’s wise to assess ROI for programs and functions that require significant funds. Marketing and customer service are great examples. You can also use ROI to help build a business case for new initiatives that require executive buy-in.
Why is monitoring your ROI important?
Monitoring ROI in a content marketing strategy provides you with data-driven insights. Those insights will help you make informed decisions and optimize your efforts. It will also show the value of content marketing to your organization.
ROI is an essential metric that determines which strategies you keep and which you leave behind. Measuring your ROI also leads to the following:
Budget Justification: Content marketing takes innovation, experimentation, and risk. All of which require a financial investment. Monitoring ROI helps you justify those expenses to stakeholders and decision-makers.
Setting Realistic Goals: ROI data allows you to set more realistic and achievable goals for your strategy. By being grounded in your goal setting, you can avoid theoretical strategies that sound good on paper but are unrealistic in practice.
Adapting to Market Changes: New technologies and communication platforms can cause markets and consumer behavior to change rapidly. Monitoring ROI helps you stay agile and adjust your content marketing approach to address shifting trends and demands.
How to calculate your ROI
The basic ROI formula is simple, but you need to gather some data for the calculation. First, you need to derive the benefits of the investment. It’s a good idea to base your estimates on actual data whenever possible.
Next, you’ll need the total investment cost. If you’re looking at a business program, consider all the costs. For example, if you want to implement new customer service software, you may have human resources, training, and technology costs that come with it.
Once you have gathered both, you are ready to put your data into the ROI formula:
ROI = 100 x (Benefits – Investments) / Investments
Imagine you are adding a chat function to your website to improve customer service. You expect to gain $150,000 in benefits for the quarter, but you’ll need to spend $50,000 to implement the program.
Your ROI calculation will look like this:
ROI = 100 x ($150,000-$50,000)/$50,000
ROI = 100 x ($100,000/$50,000)
By calculating ROI, you can clearly show the business benefit of a planned investment. You can then use this data to secure the funding and executive support you need to make it a reality.
Assessing ROI in content marketing
Calculating ROI for content marketing can be complex because it often has both tangible and intangible benefits. Tangible benefits include direct revenue from sales attributed to content. Intangible benefits include increased brand awareness, improved customer loyalty, and higher organic search rankings.
To accurately assess the return on investment on your content, you will need to include metrics such as:
Click Through Rates
Customer Retention Rates
If you want to get in the weeds on your ROI, examine your customer lifetime value. One sale can turn into repeat transactions, upsells, cross-sells, and potential referrals. Focusing on customers who yield a high customer lifetime value dramatically increases your return on investment.
What are some effective ways to boost ROI?
When talking about boosting ROI, some folks want to direct their efforts toward cutting costs. While cost-cutting is sometimes necessary, don’t compromise on quality and relevance. Providing valuable content and establishing long-term credibility with your audience is critical. It takes financial investment to move the needle, but determining the right investment is how you boost your ROI.
Focus on High-Performing Content
The first and most obvious move is to identify the content pieces that have generated the best returns in terms of traffic, leads, or conversions. This content gives you the best insight into what your audience wants. Then, you can invest more energy into creating similar content and continue meeting their needs.
You don’t always have to create content from scratch. You can repurpose your existing content into different formats (e.g., blog posts into videos, infographics, or podcasts). You can also syndicate your content by republishing what you have already created on third-party websites. These approaches allow you to reach new audiences without incurring substantial additional costs.
Leverage User-Generated Content
User-generated content is low-cost, high-yield. It boosts credibility, customer engagement, and social proof. Invest in connecting with your audience and encouraging them to make content related to your brand. Some great examples are reviews, testimonials, and social media posts.
Strategic Content Promotion
Rather than spending a lot on paid advertising, focus on strategic content promotion. Social media, email marketing, and partnerships are all channels you can utilize. Collaborate with influencers or industry partners to expand your reach.
Continuously test and optimize your content and marketing strategies using A/B testing. This data-driven approach allows you to make informed decisions based on user preferences, leading to better ROI.
ROI Next Steps
Monitoring your ROI is essential to your marketing strategy and the success of your business. Return on investment measures how much value a company gains from its content marketing activities compared to how much it’s investing. High-quality, original content produces the best ROI. It also establishes yourself as an authority in your industry.
ClearVoice knows how to maximize your ROI to help increase your rankings, traffic, and conversions. Talk to a content specialist at ClearVoice today to make the most of your SEO.