You've heard all the claims about content marketing being one of the most effective and cost-efficient marketing strategies available today. But is it?
Obviously, a content strategy comes with built-in variation; no two companies will have the same audience, the same goals, or the same brand, so no two companies could execute the same content strategy. Therefore, it's impossible to create a perfect guide to doing content marketing "right," and it becomes difficult to tell whether your strategy is ultimately paying off.
The problem is complicated by the fact that content marketing affects so many independent areas (increasing traffic, increasing conversion rates, improving your brand reputation, etc.); it's almost impossible to calculate an exact cost-to-benefit ratio or return on investment (ROI). Still, we can come pretty close with this estimation process.
Step 1: How much are you spending?
This might be the easiest step or the hardest step depending on how you're paying for services. If you're contracting with an agency or a freelancer, you're probably already paying a bottom-line monthly rate. This makes things easy. However, if you're investing your own personal time, paying for subscription software, and employing freelancers to fill in the gaps, this calculation can get messy. We're not after perfection here, just an estimate, so come up with the most accurate figure you can and set it aside for now.
Do note; you'll need to keep your parameters consistent throughout this process. For example, if you determine your monthly content budget, you'll need to look at your other figures (traffic, conversions, etc.) on a monthly basis.
Step 2: Find your total inbound traffic
Log into Google Analytics and take a look at your total traffic under the Acquisition tab; you'll notice it's broken down into four (or more) distinct categories: Direct (traffic from direct URL entry), Organic (traffic from search engines), Referral (traffic from external links), and Social (traffic from social media sites). Since your content is at least partially responsible for your Organic, Referral, and Social traffic, total these figures to come up with your total Inbound Traffic.
You may also want to make adjustments for significant deviations; for example, if you have a strong referral link that didn't come from your content strategy, filter it out from your total figure. Use your best judgment here.
Step 3: Find your conversion rate
Next, take a look at your site-wide conversion rate. Your content could have directly contributed to this figure (by offering a call-to-action, or warming up a prospect by impressing them with your expertise), or it could have had little to do with it. Either way, we're going to be looking at traffic that your content brought in the first place. Multiply your site-wide conversion rate by your total Inbound Traffic to determine how many conversions you're getting from traffic brought in by your content marketing strategy.
Step 4: Evaluate the average value of conversion
The value of your conversion may be easy or difficult to calculate depending on your business. For example, an e-commerce platform might be able to precisely calculate the average user transaction, but a B2B company with only a contact form as a conversion mechanism will have to do some complex math to figure out the benefits of one new lead.
Step 5: Determine your total new revenue
Once you get there, multiply the average value of one of your conversions by the total number of conversions your content marketing strategy has brought your site (found in step three). This is going to account for your total new revenue--the total amount of money that your content strategy is currently bringing in.
Step 6: Account for secondary factors
There are tons of secondary value factors that your content is benefitting, some of which were excluded from our calculations and some of which are practically incalculable. For example, our calculation in step three doesn't account for direct traffic that only converted because of a call-to-action in one of your content articles.
These calculations also don't account for things like brand awareness, brand reputation, return traffic influence, or word-of-mouth referrals that your content can influence. It's extremely difficult to put a number to these figures, but knowing what you do about your target market and current company performance, come up with a "best guess" and add it to your total.
Step 7: Compare your costs to your rewards
Now, you should have two figures: an estimated dollar amount of benefits your content strategy has brought you and a total cost figure to go along with it. This is the easiest part; compare the two figures, and determine whether you're making a profit. If your costs are higher than your benefits, something is definitely off.
It's worth noting that it's neither unusual nor particularly harmful to experience a deficit in your first few months of practicing content marketing. Content marketing is designed to be a long-term strategy, thanks to its typically compounding returns. The more you invest, the greater your proportional return will be, so it's rare to see a profit until you've had at least a few months to establish a foundation. Beyond that, if you're not seeing the returns you want, work on improving the quality and focus of your content or support your content more fervently on social media and other syndication platforms. If executed and supported properly, any content marketing campaign has the potential to yield a profit.