The Right Way To Measure Content Marketing ROI
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There is no doubt about the potential of content marketing to boost your business. However, the results depend on the quality of the strategy and execution. Since there is no single recipe that works for all companies, it is essential to evaluate each individual case.
And while it is a generally cost-effective and less expensive practice than other forms of promotion, it does come with some costs. That’s why budget managers pay close attention to the ROI of content marketing.
What is content marketing ROI?
ROI is the acronym for “return on investment.” Therefore, the ROI of content marketing is the amount of money generated by the implementation of a content strategy. It is calculated mathematically by subtracting the costs of design, execution and monitoring of the activity from the revenue obtained.
While the formula is widely known, setting up the measurement poses some challenges. First, it must be determined which design, or means of content marketing, e.g. campaign, channel or type of pieces, should be estimated. The overall result will be the weighting of all the individual values. On the other hand, there are certain limitations to quantifying the return to be explained in detail later.
In any case, it is vital to keep in mind that content marketing is a long-term strategy. In fact, most content plans report a negative ROI early on. Nevertheless, perseverance is necessary as a lack of patience can lead to discarding a useful and powerful business tool.
Why is it important to measure content marketing ROI?
Measuring content marketing ROI or, each of the initiatives, allows you to strategically allocate resources. It is an accurate guide to the effectiveness of actions that will help you to invest your budget wisely.
Providing management with concrete performance data will help you provide data for obtaining the funds you need. Abstract benchmarks, or benchmarks disconnected from the company’s objectives, are unlikely to convince those in charge of managing finances. Speak to them in their language and back up your proposals with numbers. Otherwise, developing robust plans may be hindered due to a lack of resources to execute them.
Explaining that content marketing generates more leads will be fruitless if you can’t demonstrate that contribution. To do so, you must establish metrics that you can test and assign value to them. The same goes for customer retention and authority building.
Admittedly, many marketers don’t know how to measure the ROI of content marketing. In a study released by Semrush, only 35% of participants quantitatively measured the impact of activities.
How to calculate content marketing ROI
The difficulty of measuring content marketing ROI is not related to the complexity of the formula. In fact, the same calculation is used to evaluate other marketing actions:
ROI = (return – total investment / investment) * 100
The challenge is to quantify and associate these values. Unlike pay-per-click ROI, the data is not automatically generated.
It is necessary to define KPIs to measure the actions that generate revenue and to account for all expenses or investment costs. For example, the cost of writing a blog article is not limited to writing the content. It must include the resources dedicated to the strategy and administration of the project as well as the design, editing and promotion of the content.
The contribution of the content to the business objectives also needs to be estimated. This value is equivalent to the performance of the campaign or piece.
In the case of a blog that directs the audience to your e-commerce site, this is simple, but, when it comes to B2B or B2C sales, where there are multiple touch points, attribution is less straightforward. Most likely, different metrics will need to be combined to build your own model to measure the performance of your content strategy.
To determine conversion rate, companies often use surveys and other research tools. If the sample is statistically representative, the data can be projected and figures can be obtained to calculate the content marketing ROI.
Content marketing conversions and ROI
The application of this formula to calculate content marketing ROI involves identifying the following values:
- Number of potential customers: for example, the number of visitors to your website.
- Lead rate: the percentage of leads converted into prospects. Let’s say you have an e-book that can be downloaded by anyone registering on the site. Visitors who share your data are qualified leads. Convert that number into a percentage.
- Average sales price: the average lifetime value of your customers (LTV) or average sales price.
- Investment or expenditure in content marketing.
Obtaining the data to calculate ROI
You must establish benchmarks, that is, conversion potential and sales value. Company historical data can give you a good indication of this. Look at past results achieved through similar activities. Also take your current sales into account to establish a comparison.
Moreover, determine how many high quality leads you will get and what percentage of them will convert into actual customers. If your conversion rate is 10% and you get 2,000 organic visits per month, you will get 200 leads per month. Then calculate how many of them will convert into leads.
Aim to set realistic content marketing ROI goals that are appropriate to the characteristics of your industry and market. Benchmarks are not universal, as they depend on many factors. The success or failure of a content strategy is contextual.
Non-financial return on investment
While it is vital to track numerical data to evaluate your content strategy, you should not neglect qualitative measurements. Knowing how your audience perceives your brand and how relevant your message is will allow you to refine your strategy.
Be sure to record both financial data on content marketing ROI and non-commercial impact indicators. The Content Marketing Institute broke down the most important KPIs for each type of content. Reactions on social media or traffic to your website will give you clues about your audience. If you manage to connect with your audience and gain their trust, chances are they will become customers in the long run.
Generally, ROI is linked to the topic of sales. But there are other types of conversions, such as likes on social networks or visits to a website.
Focus on metrics that will help you optimize your strategy. Disregard vanity metrics as they only complicate the exercise. If you decide to outsource content creation, pay particular attention to the measurement methodology used by the provider. Consider the alignment of objectives and business vision.
Reviewing a case study is often the best method to facilitate understanding. Here we see how to measure content marketing ROI:
A fintech company, focused on alternative credit scoring, has commissioned a content provider to write 10 posts. Each piece includes a tracking URL, which directs prospects to a landing page. There, users can request a free financial consultation.
The company paid 500 euros to write the content and spent 100 euros on advertising. The articles generated 10 leads, 2 of which became customers. The company earns around €2,000 per customer.
According to the ROI formula, the first value to determine is the yield. To obtain it, multiply the sales value by the number of effective customers:
2 (customers) * 2,000 euros (yield per customer)
= 4,000 euros (content marketing performance)
Now calculate the costs of the content marketing plan:
500 euros (editorial) + 100 euros (promotion)
= 600 euros (investment)
Subtract this cost from the yield:
4,000 euros (yield) – 600 euros (investment)
= 3,400 euros
Divide that figure by the cost of content marketing:
3,400 / 600
Finally, multiply that figure by one hundred to obtain the ROI value in percent:
5.666 * 100
= 566 %
In this example, the hypothetical fintech company has achieved a content marketing ROI of 566%. Not bad, right?
Best practices when measuring content marketing ROI
Measuring your content marketing ROI will not only help you better manage your budget. It will also allow you to optimize your strategy to drive results. Remember that effective content marketing is content that connects with your audience and positively impacts your business. Keep the following recommendations in mind when analyzing content marketing ROI.
Content marketing ROI is a variable value that depends on the quality of your strategy and execution. For accurate tracking, try to structure your campaigns so that you can make minor modifications without altering the entire plan.
Analyze how these changes affect your results and how they influence ROI optimization. For example, evaluate the impact of calls to action (CTAs) or page design. The more responsive your content pieces are to your audience’s interests, the better your performance will be. Moreover, content marketing ROI will be more positive.
On the other hand, by optimizing your content strategy, you may be able to reduce development costs. You may find that you can reuse pieces, adapting them to other formats. This means you will need less new content, thereby spending less time and resources on its production. At the same time, it will be easier to plan and manage content distribution.
Both factors can be decisive when deciding whether to create content internally or outsource the work to a specialized content marketing agencies.
Do not forget non-financial KPIs
Non-financial indicators are fundamental to the ROI of content marketing. The impact of conversions on the generation of qualified leads and consequent sales is, for example, undeniable. It is therefore advisable to keep an eye on click and bounce rates, SEO rankings, traffic and social shares.
While these metrics cannot be directly transformed into ROI data, they can improve the performance of your campaign. Among other things, they can help you identify which types of pieces are most effective or which channels are appropriate. For example, they could lead to an increase in the frequency of your blog posts or the discarding of video production. These decisions will affect your budget and alter your content marketing ROI.
Pay attention to links and their conversion impact
Tracking links will help you better understand conversion. A tracking URL can help you determine where your page traffic is coming from. It shows you how many visits stem from your blog post or search engines. This will help you measure how efficient your content strategy is and guide future actions.
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