Everyone wants to measure their content marketing ROI, but not everyone will have the ability to do so with total confidence and accuracy.
For example, everyone’s ideal would be to say X piece of content generated Y sales, but as simple as this sounds, the reality is more complex. Multiple channels interlink, so while a piece of content might have drawn initial customer interest, they could easily have gone away and thought about it, only to return via a Google search, giving Google the revenue credit.
There are a myriad other scenarios where this can happen, from a prospect being retargeted and your content’s cookie being replaced; to a sales lead calling in from a phone number and being assigned the wrong lead source.
For those situations where you can’t directly link specific content to specific sales (which will be the vast majority of the time), there is a viable alternative way to prove the value of your content marketing programme, which I’ll run through below.
Step One: Understand your funnel and general conversion rates
If your business has been in business for more than a few months (weeks even) then you should know (or be able to find out from someone) what the general conversion rates are for the business.
Most businesses will have at least one of two different revenue metrics they look at, and track conversion rates for: sales revenue (requiring a sales team to close); and organic revenue (not requiring a sales team).
Businesses with business development or sales teams will be able to tell you how many leads they generate (or how few, if you ask the sales team!), how many of those leads turn into opportunities, and how many opportunities become sales (on average).
SaaS and eCommerce businesses will be able to tell you about the conversion rates of their key SEM terms, landing pages and email campaigns (and probably a huge range more). For those with multiple purchase stages (such as products with a free trial period) they’ll also be able to tell you how many people convert from account sign-up or free trials to paying customer.
You should also be able to find out the average lifetime value of each new customer, which means you can now assign a value back to leads, opportunities, traffic etc. by working up from the Lifetime Customer Value (LTV) and multiplying the previous stage of the funnel’s conversion rate.
For example if the LTV of a customer is £100, and you convert 1% of your traffic, a unique visitor should in general be worth £1. Similarly if a sales client is worth £1000 LTV and each opportunity is closed 50% of the time, an opportunity is worth £500.
Step two: Track as close to the sale as possible
Now your challenge is to find a way of tracking as close to the bottom of the funnel as you can, even if it’s not all the way to revenue.
For example if you use dedicated landing pages, marketing automation tools or tracking links/ pixels it should be relatively simple to directly link your content to a lead generated or an account sign-up.
Even if it’s not perfect, you should settle on a proxy as close to the point of sales as you can, and then use your company’s conversion rates to extrapolate out and ‘guestimate’ a sales figure.
So if you know leads are converted into opportunities at a 20% conversion, and opportunities closed 40% of the time, every 100 leads should result in 8 sales (an 8% conversion rate).
Step Three: Pour traffic numbers into the top
This is where we move onto the super simple step three, which is tracking your content-specific traffic (most likely using Google Analytics).
If you can link at least one stage of the conversion funnel reliably to at least one aspect of your content marketing programme, you can now start to extrapolate up and down the funnel.
For example if you know your blog gets 1000 visitors a week, and 10% of these go on to visit your landing page, which converts to free trials at a rate of 5%, and free trials turn into customers 15% of the time (and they are worth £1000 in LTV) then you can do the math to roughly calculate revenue associated with your content marketing for the week, which is:
1000 unique visitors * .10 * .05 * .15 * £1000 = £750.
Now you can also calculate the ROI of your content marketing.
Each unique visitor is worth 75p to your business, and so if you acquire new visitors at a cost of, say, 10p, your ROI would be 650% (75 – 10 / 10 * 100).
Step Four: Find our your performance marketing costs
While you could stop at step three, for a more rounded look at your content marketing ROI, you should also look at how your content is doing in relation to your performance marketing.
To do this, ask about for the average cost per action of your SEM, display and paid social campaigns – anything in your performance marketing programmes.
How much do you pay per click in your Adwords or social media campaigns? What about your CPM or CPA on banner ads?
Step Five: Look at the equivalent actions that your content generates
Now you can work out how much money you’re saving by creating organic awareness (or leads, or sales) through your blog or other content marketing activities.
To calculate the cost equivalency of your SEM campaigns, look at how many organic referrals you’ve driven to your blog and multiply that number by the average CPC of your SEM programme.
e.g. Your CPC averages 35p, and you drive 10,000 organic referrals each month = £3,500 worth of SEM spend generated by your content marketing.
(For a more sophisticated model of this, which looks at the specific value of different keywords, check out this great article on CMI.)
To calculate the cost equivalency of your paid social, look at how many social referrals you’ve driven to your blog and multiply that number by the average CPC of your paid social promotion.
Again, you can dive into a more sophisticated way of calculating this by looking at the CPC of each major social network and the proportional referrals you get from each (so for example if you get a lot of LinkedIn referral traffic, it is probably worth more than a lot of Facebook traffic because it’s CPC number is typically much higher).
To calculate the cost equivalency of your display campaigns, you can look at the average CPM costs across all your display network, and then multiply that by the number of unique visitors on your blog.
Step Six: Add up all your costs
So far you’ve only be looking at the upside, but to calculate ROI you will need to count up the full costs of your content marketing. What do you spend producing the content (including your salary), and do you pay to promote it?
Step Seven: Calculate your content marketing ROI
So here we are, add up all the revenue and cost-savings (whatever applies to your business), minus the costs and then divide that number by the costs, multiply by 100 and you have your ROI. See this basic example here:
|Converts to lead @ 2%||2000|
|Converts to opportunity @ 10%||200||Cost Equivellency|
|Converts to customer @ 20%||40||SEM||£12,000.00|
|Value @ £5,000 CLV||£200,000.00||Paid Social||£150,000.00|
|Visits landing page @ 5%||5000||Total||£503,000.00|
|Converts to free trial @ 10%||500|
|Converts to customer @ 25%||125||Costs|
|Value @ £1,000 CLV||£125,000.00||Production||£10,000.00|
|SEM CPC £0.40p||£12,000.00||Total||£20,000.00|
|Display CPM £1.50||£150,000.00|
|Paid Social £0.80p||£16,000.00||ROI||2415%|
If you find yourself in a position where you can’t accurately track the performance of your content marketing at a granular level, don’t let this stop you creating a rough and ready template for calculating its ROI, as you never know when you might get asked for a number!
It’s not perfect, and while you may prefer to be able to track the performance of your content marketing end-to-end, from page level traffic through to specific sales deals or online orders… we don’t live in a perfect world!
One final thought is that there may also be an advantage to looking at content marketing ROI through this broader, all-in approach, which is not to focus on any one single tactic, content type or stage of the buyer cycle, reducing the potential for bias and an imbalanced approach as I’ve written about previously.
This helps you focus on the bigger picture, which is creating a healthy, balanced content marketing programme that grows awareness (traffic), conversions and revenues across the board.
What do you think? Is this a useful way to look at content marketing ROI? Can you see any challenges to implementing it in your organisation?