Content marketing is a big part of business strategy in 2016. More and more companies are creating content as an official marketing channel. There’s this premise that it if everyone is doing it, it must be working.
But what is the ROI? Will content marketing work for you? How do you track it?
The key to any good marketing campaign is being able to measure the results in real dollars. If you can’t do that, there’s no way of actually knowing if what you’re doing is profitable. Sadly, many small businesses don’t track ROI on most of their advertising. They just don’t understand or don’t have the capabilities to do it.
They’re not alone. Even large businesses struggle with ROI sometimes. According to the Content Marketing Institute’s content marketing report for 2016, there are some pretty big gaps in measuring the ROI for a content marketing strategy.
According to that study, 88% of B2B companies have a budget for content marketing. Of those, 80% implement some type of strategy behind the content. What’s shocking is that only 32% of them actually have the strategy documented. If it’s not documented, it’s more of a “culture” than a “strategy”.
The report also mentions that 52% of businesses list tracking content marketing ROI as a challenge. What’s really interesting is that only 30% of businesses believe their organization is effective at content marketing. That’s not that surprising when you look at their own stated difficulty in tracking ROI.
Despite the challenges and lack of documentation, the report also states that more than half of all companies will increase their content marketing budget in the next year.
What’s strange is that all of the usual channels for content marketing do have a solid way to track ROI. According the report, these are the channels they’re using: Social Media Content (93%); Case Studies (82%); Blogs (81%); eNewsletter (81%); In-person Events (81%). They’re just not doing it.
Just so we’re all on the same page, let’s sum this up: Most businesses have a content marketing budget and some type of loose strategy that likely isn’t documented. The large majority of those businesses have no idea if it’s working or what they’re actually getting in return for their money. However, they do know they’ll spend more time, resources and money creating content in the next year.
Does this sound like your company?
The good news is that you’ll soon be miles ahead of the companies that are bumping around in the dark: You’re about to find out how to measure your ROI on your content marketing.
Define The Goal
It’s extremely hard to determine what your ROI is without knowing a little more about your sales funnel. More specifically, the last part of that funnel: what is the end goal? This is usually what generates the revenue. Your content marketing strategy could be as simple as sales, or it could be as complex as using content to move people to the next portion of the sales funnel. Whatever your conversion goal is, defining it is step 1.
For the purposes of this article, we’re going to keep it simple and directly tie content to sales to show how measuring it can work. However, if you’re using content to achieve another goal: growing a leads list, moving people through the sales funnel, or getting data – just replace the dollar amount with your metric of choice.
For some people that sell a simple product or service, it’s really easy to look at the sales numbers and know if they’re going up or down. For others that have multi-faceted businesses with many sales channels and product lines, it’ll be a little more work to set up the tracking, but the theory is the same. This is why creating user personas that are used to create content can be highly effective. You can then simplify your analysis to each persona.
Once you know what your goal is, you can work backwards from there to help determine the ROI. here’s how to measure it.
How Do You Measure ROI?
Measuring ROI is extremely simple in theory, sometimes difficult in practice. The basic formula is the same: You take the net profit you’ve made, minus the cost of investment from it, and then divide it by the cost of investment. It would look like this:
(Net Profit – Cost of investment) / (Cost of Investment)
Remember, we do the math in the brackets first.
For example, if you made $10,000 last month, and you spent $1,000 to earn that money, the formula would look like this:
(profit)$10,000 – (cost of investment) $1,000 = $9,000
$9,000 / (cost of investment) $1,000 = 9
ROI = 9
For every dollar you spend, you earn $9. That’s your return on investment.
It’s important to fully understand how your profits are made and what metrics you need to measure to get a clear picture of your content marketing efforts. A really simple way to look at it is that is to draw a direct line between visitors and profit. This should be the very least most people do with ROI.
So, you need to know what percentage of your visitors convert. If you know that you convert 1% of all visitors into a sale after they read a blog post, you can calculate the ROI of your blog.
Let’s say your blog attracted 10,000 visitors this month. If 1% of those visitors convert, that means 100 people bought your product. If you make $30 in profit on each product you sell, that’s $3,000 in net profit.
Further, let’s say you spent $1,000 on your campaign. That means you ROI formula would look like this:
(profit)$3,000 – (investment)$1,000 = $2,000
$2,000 / (investment)$1,000 = 2
Your ROI is 2. For every dollar you spend, you make $2.
It’s often not quite this simple, though. Just because your conversion rate site-wide is 1%, it doesn’t mean your blog converts at the same rate as your landing pages. For example, if you have a landing page for your product that converts at 2% but your blog only converts at a rate of 0.05%, the blog won’t be pulling its weight. Any ROI measurement under 1 means you’re losing money.
The opposite could also be true. Your landing page might convert at around 0.05%, but your blog is way more effective and those visitors convert at 2%. That’s a pretty big difference.
In order to know your true ROI, you need to know exactly how your visitors are coming to you and which channels cause them to convert. Let’s look at a couple ways to drill down and track your content marketing channels.
Consumption is the simplest way to track your content marketing. It’s just taking a look at the top level of how your content is consumed, and by how many people. Once you know how many people consumed the content, and what the value of each of those leads are, you pretty much have your ROI.
Let’s look at blogs as an example. Tracking your blog consumption is extremely easy. Most websites use an analytics program like Google Analytics to track exactly how many visitors are hitting their website, what pages they’re visiting and how they got there.
Every time you create a blog post, you’re adding to your content marketing stable. This is important to remember. If you’re spending $1000 a month to create blogs, it’s not like traditional ads that stop being effective when the campaign is done. This content lives on your site for as long as you let it.
This means that if you start your content marketing strategy of blog writing today, the leads you get today will be minimal. You don’t have much content to give you an ROI. However, in 6 months you may have hundreds of articles.
For example, let’s say each article you create nets you between 500 and 2,000 visitors a month via organic Google search results. If this is your first month of marketing, you’re spending $1000 a month to create 10 articles. You can expect the one-month visitor total to be between 5,000 and 20,000.
However, those articles don’t just run for one month. That $1000 you spent keeps on giving. In 6 months, that same $1000 investment will have delivered 6 months of results, or between 30,000 and 120,000 visitors. Your ROI for one month is very different than your ROI for 6 months. This, of course, assumes the articles get the same level of traffic each month, which is false. Content has a lifespan, but it works for the sake of the argument.
Beyond just Google Search, people will also link back to your content, share it on social media, and talk about it in forums. This will all add to the total visitors.
Consumption metrics go beyond simple visitors though.
- Location Data. Where are these visitors coming from? If you’re a local HVAC company in Fargo, you only care about customers that are within your service area. If you’re calculating ROI based on total visitors, and only 70% are from Fargo, you’re ROI will be wrong by at least 30%.
- Source. Are the visitors coming from your social media channel where you posted the blog? A search engine? A forum? If it’s coming from social media, are the visiting because of the blog post, or could you have posted something equally as effective without spending money on the blog? You’ll want to keep this in mind when calculating ROI.
- New vs Returning Users. How many of your visitors are new vs people that have been there before? This can help you determine how many new customer’s vs returning visitors your content is attracting. Your conversion rate will be different between new vs. returning which will affect your ROI.
The same questions can be asked of all your marketing channels. If you take each channel one at a time, the task is a lot easier.
Beyond just counting visitors to your site, you can actually track the level of engagement they have with each individual piece of you create with your tools for content. It’s fine to sit back and look at all the content overall along with the investment you made and make a judgment, but looking at how people engage with the content will make a big difference in how you look at your ROI.
If consumption is the first layer of ROI, engagement is the second. It can show you which content is giving you the best ROI. The ROI difference between a one-time visitor from Google and someone who actually engages with you can have significant impacts on more than just your content marketing ROI.
Using Google Analytics, you can track engagement in many different ways:
- New vs. Returning. As mentioned above, a returning customer can offer more value. They clearly want to engage with you.
- Average Time. How much time someone spends with you matters. If people visit with you and only spend a few seconds, that’s much different than someone who spends 8 minutes. Engagement here will really impact your ROI. The longer they’re on the site, the more chance you have to convert them.
- Pages per Session. This often coincides with the time on site. However, it also tells you how much of you content they’re actually engaging with.
Facebook and Twitter also offer great examples:
- Shares and Likes. This is the first indicator that they’ve actually noticed your content. Not only did they see it, but they said they thought it was interesting / entertaining / useful.
- Comments. They now want to have a conversation about your content. This is fantastic. They’re hooked.
- Follower Growth. People don’t stick around and sign up for you updates if they’re not engaging with you. Many companies consider this metric to be the ROI itself.
To master content marketing ROI, you will need to drill into your analytics and engagement to ensure the goal is being met with your content. Which portions of your channel are actually driving most of the conversions?
Lastly, you’ll want to look at conversion rates for the most accurate assessment of your ROI. We touched on this above by talking about the site-wide conversion rate vs your blog conversion rate. Boring content can kill your conversion rate. Here are a few other conversion rates to look at.
You can track most of these through Google Analytics.
- Social media. How many people from your social media convert to sales? Do you do direct sales via social media, or just direct them through the site?
- Articles. Are some articles converting better than others? What are the topics and themes of these articles?
- Location. Where are the highest converting people located? Cities? Rural areas? Different countries?
- Time to Convert. How long does it take people to convert? Do different channels have different conversion times?
These are just a few ways you can check conversions. Every organization is a little different, which is why Google Analytics is so complex. It will allow you to track almost anything.
Accuracy with ROI is important, but even getting a ballpark figure from the simple calculations above is better than just winging it. If you’re not doing any ROI tracking, start with the simple measurements and work your way up from there. You’ll learn a lot on the way, and you’ll be better able to justify your spending to the C-suite.