How to calculate content marketing ROI

content marketing ROI

It’s impossible not to recognize that the business world is changing. Whether it’s the fall of the travel agent as people migrate towards online booking, or the irrelevance of the compact disc as Spotify and iTunes changed the music industry, or how advertising is done. Outbound marketing, such as print ads, TV ads, banner ads, trade shows, telemarketing, and direct mail are no longer what consumers are requiring. According to Forbes, many brands are moving their advertising budgets from television to online videos. The Content Marketing Institute reports that 8 out of 10 people identify themselves as blog readers, and 23% of all time spent online is spent on social media sites. With the rise of the blog, companies have gotten smart about how to reach their current and potential consumers.

In the B2B world things are changing, too, with many executives wanting to gain information through other mediums. The Content Marketing Institute also reports that a majority (80%) of business decision-makers prefer to get information from articles rather than through advertisements.

We know that inbound marketing is effective in garnering consumers’ attention. It’s aligned with a generation of people who want to be educated about the products they’re buying and who are willing to search for those products online. Even with all of this known, it’s important to ask: what is the ROI when it comes to content marketing?

According to Search Engine Journal, inbound leads cost 60% less than outbound leads. In the Harvard Business Review article, How to Profit from “Lean Advertising”, the shoe company DC Shoes is profiled as a model for inbound marketing. In an industry where star athletes are profiled in big-production advertisements via TV commercials, billboards, and magazine ads, the skateboard shoe company decided to take a different route. According to the 2013 HBS article, “Over the past four years they have gotten more than 180 million views—and in 2011 alone, sales jumped 15%. One was YouTube’s most-shared video of 2011; another garnered a million views in its first 24 hours. Paying online media for this type of exposure would cost upward of $5 million.”

Like any new tack in business decisions, relying on case studies from other businesses is helpful, but cost needs to be considered. In order to calculate ROI the cost of content marketing needs to be assessed:

  • salaries (if going in-house)
  • marketing agency or contractor services
  • additional overhead
  • distribution costs
  • design and publication software

After those costs have been calculated, the next step is to subtract that number from the revenue generated. The Guardian has put forth its simple content marketing ROI calculator:

(Revenue Generated – Cost of Content Marketing) / Cost of Content Marketing = ROI

According to the newspaper, “A simple calculation could say that you drove 1000 visits through a piece of content, and Google Ads would have cost £1 per click, e.g. £1000 to equal the same. If the content only cost £500, you have a saving!”

But with most seemingly simple things, there’s complexity underneath. Dig deeper and ask more questions. Is the money you’re spending on inbound marketing deterring other, less obvious, costs? Would it have cost you more through outbound marketing methods to achieve that same level of visibility than through inbound marketing solutions? Is inbound marketing bringing in customers or closing a deal more quickly than alternative methods (time is money, after all)? Is inbound marketing cutting down the need for staffing in other areas, such as support staff to manage inquiries or support calls?

Some incalculable values from inbound marketing, like consumer preferences, content intelligence, customer relationship strategies, and branding can be hard to tie to a number, but over time you will see that your ROI will become more clear to you as you generate leads, turn leads into customers, and see the result in the form of money gained (American dollars or British pounds!).

 

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