Have you ever tried to calculate return on investment from your content marketing?
It’s not always a simple feat. It is, however, a metric that gets people listening.
After all, return on investment (ROI) is a financial metric that decision makers use to mitigate risk and judge profitability. If they can’t mitigate the risk, or don’t know if a project will be profitable, they’ll be reluctant to invest.
So, while it’s nice to dream about a time when no one will need convincing of the value of content marketing, for the time being it seems that it needs to be quantified.
Besides, tracking ROI will help you streamline your strategy by identifying what’s working and what’s not.
It’s a win-win!
To calculate return on investment you need two figures–the cost of your investment and how much revenue it generated in return.
This relies on allocation of credit to a sole project in order to get these two figures.
Content marketing, however, isn’t that simple.
When it takes a number of interactions before prospects are persuaded to sign on the dotted line, how can you allocate any one piece of content the sole credit for conversion?
Imagine a football team that only paid the players that scored. Failing to account for the contribution that the rest of the team made to scoring is rather like giving sole credit to a single piece of content.
But, if various touch points are contributing to conversion, how do you quantify each impact so that you get an accurate metric?
See what I meant by ‘complicated’.
Because of this, content marketing is often an investment that struggles to prove its worth–which puts it on the chopping block when tough decisions need to be made.
If you want continued investment, the following method will help you prove that content marketing is an invaluable lead-generating tool that you can’t afford to lose.
1. Last touch attribution
The point of highlighting that various pieces of content can contribute to conversion was to show that, while some content might not demonstrate great ROI as standalone pieces, they might still serve as valuable support pieces.
But, at the end of the day, you need a figure you can take back to those that want it.
So, to simplify things we recommend you focus on the ‘last touch’ content piece. This is the final piece of content the buyer comes in to contact with before purchasing (make sure it’s gated, so you can track exactly how many people click the call to action).
2. Calculate investment
Calculate how much time that piece of content took to create.The more accurate you are at this stage, the more accurate your final figure will be.
Multiply this by your hourly rate. You can work it using the following equation:
(annual salary x 1.5 for overhead costs / 260 for avg. days worked per yr) / # of hours worked in a day = hourly rate
($50000 x1.5/260)/8= $36.10
(The multiplier for overhead costs allows for business expenses like rent, bills, human resources, training, insurance, office supplies, etc.)
So, if your hourly rate is $36.10 and the content takes you 7 hours to create, then it cost the firm $252.70. This is the investment.
3. Determine return
To determine return, you need to decide what result is important to your firm.
Let’s say, for example, the content you’ve create has the ultimate goal of generating new leads for the business.
You could simply use the number of leads generated as your ‘return’ or you could track how many of those leads actually convert to paying clients, and how much revenue that actually generated.
At the end of the day, as long as you pick one metric and stick to it, it will allow you to track how each piece is performing. If you can see which pieces are winners and which are losers you’ll know where your efforts are best placed.
4. Calculate ROI
Once you’ve decided which metrics you want to use, you can calculate return on investment pretty easily:
ROI = ( return – investment ) / investment x 100 (for percentage)
If a white paper cost you $600 to create, and from it you collected a bunch of leads, out of which 2 converted to clients (generating the firm $20000 in revenue), your ROI calculation would be as follows:
(20000 – 600)/600 x 100 = 3233% ROI
Ideally you should track the ROI of all of your content for a couple of months before making any judgements. Just remember to avoid instantly discrediting pieces that haven’t resulted in a high ROI–they do serve a purpose. Use them as touch points to develop trust with your audience.
And when it comes to pieces that are performing, make the most of them by expanding their reach with advertising–this will ensure that you streamline your spending and get the most bang for your marketing buck.
We have a number of lead generating packages that will ensure you get a return on your marketing investment that speaks for itself–no convincing needed.