Calculate the ROI of Your Content Marketing With This One Simple Equation

Calculate the ROI of Your Content Marketing With This One Simple Equation
Posted on 02 Aug at 12:25h

in B2B Marketing, Social Media Marketing

By Steven Aguiar

content marketing roi

How much money does your business make thanks to your content marketing program? No idea? You're not alone.

Tying content marketing efforts to profit is a complicated task—and it's not getting any simpler. Customer journeys are increasingly non-linear: our leads hit many different marketing touch points, often out of "order," producing multiple sets of metrics to analyze. As a result, the amount of data at our fingertips becomes overwhelming, even distracting.

As CB/I Digital COO Mike Le recent pointed out, it’s easy to get tied up in the vanity metrics of each channel and lose sight of actual conversions. We've all been there (as we'll get into shortly). To avoid data distraction, we'd like to resurface an oldie but goodie practice: look at the big picture.

The way we see it, there's one simple equation for understanding true ROI: the total amount of money invested in your content marketing versus the total value of the generated leads. Let's go back to math class for a second and build out this equation.

The first step in evaluating the impact of your content marketing program is to convert both sides of your "equation" to the same unit of measure. First, to understand the value of your investment, add up every dollar you’ve spent producing and marketing your content. Make sure to include blog posts, social media management, design, video production, vendors and paid media. And if you're managing the process yourself, assign a value to the hours you’ve spent on the campaign personally. If you have a staff, consider their salaries and the percentage of their workload.

Once you have a dollar amount in your head: that's your total investment.

Now, let’s look at the other side of the equation to understand the total value of your content marketing program's output. The first step is to determine the monetary value tied to each lead you receive. If you could put money into a machine and, in return, you'd receive a quality lead (let's say, an introductory phone call with a potential client), how much would you be willing to put into that machine for a new lead, every time?

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Benchmarking your cost-per-lead is a challenging but meaningful exercise. For B2C companies, the value tends to be low, hovering around single dollars or even cents. But for B2B companies, the number tends to be higher, often reaching hundreds if not thousands of dollars.

So, where to start? First off, think about the average lifetime profit of a customer or client. As an example, let’s say you make $10,000 profit from each. Next, consider the percentage of all the leads you get that ultimately become customers or clients. Let’s say 1 out of 5. In this example, the most you should pay for a lead is $2,000, since only one in five will convert and you will break even at that rate. If you can pay any less than $2,000 per lead, you’re in business.

Looking at the aggregate cost of your content marketing program versus the value of leads generated is not only a simpler way of understand ROI, it’s also more accurate in today's fragmented landscape.

Here's a hypothetical situation: a user learns about your company in TechCrunch, follows your CEO on Twitter, randomly discovers a 6-month old blog post, gets retargeted with compelling video—and only then reaches out for a demo. Assigning direct attribution to PR, influencers, blogging or paid media strategies would be impossible. In today's landscape, the whole is greater than the sum of the parts.

What's more, analyzing the value of your content marketing program from a high level helps eliminate the temptation to focus on vanity metrics. It's exhausting to consider how much a Twitter impression is worth compared to one on Instagram; a Facebook video view versus a YouTube view. In the long run, assigning value to these metrics doesn’t matter. While it can be tempting to pad a report for your client or boss with huge “impressions” and “engagement” numbers, if your campaign isn't driving quality leads, there’s no meaningful return. The only metric that matters is what shifts the bottom line.

Adding up all the inputs of your content marketing may have you second-guessing how much you're investing. It’s true, content marketing programs tend to be expensive (especially in the beginning). According to the Content Marketing Institute, the average program takes 15 months to be profitable. But there is hope. Because of A/B testing and the learning curve, content marketing generally becomes less expensive and easier to execute over time. Even better, the content you consistently produce compounds in effectiveness.

Consider the difference between publishing your first blog post and your thousandth. Not only do the first 999 posts passively attract leads through long-tail search and social referrals, they also validate the trustworthiness of the thousandth post. A 2015 report by Hubspot noted that, on average, companies began seeing exponential growth in leads on their 400th blog post. Like saving for retirement, investing in content marketing early and often sets you up for passive income down the line—especially if you know how to accurately measure its impact.

Our suggestion for determining the ROI of content marketing, by comparing the total value of inputs (investment) against the value of outputs (leads), is not perfect. For one, it assumes an isolated definition of marketing, where that department's sole function is to generate leads and hand them off to the sales team. If those leads are low quality, the sales team will have a hard time converting them to clients. To take on this disconnect, resurgent approaches like account-based marketing are redefining how marketing and sales are aligned and evaluated. With an ABM strategy, you'd extend our ROI equation to consider the value of your sales team and the business you actually win.

However imperfect, this method is worth your consideration. Big picture analysis is only going to get more important as marketing channels proliferate. So try comparing the total amount invested to the total output value, and see whether you have a better grasp on how content marketing is impacting your bottom line. It might work so well that you extend the exercise to all elements of your business.