Most content marketers struggle with figuring out the return on investment (ROI) of their work. Depending on which study you cite, as few as 21 percent of content marketers say they are successful at tracking ROI.
That’s daunting, but it doesn’t have to be you.
I think the No. 1 reason content marketers can’t figure out their ROI is complexity. And so my preferred approach to figuring out content marketing ROI is to simplify the problem.
How to Calculate ROI
Let’s start with ROI itself. This is the basic calculation for ROI:
Another way this can be written out is:
I like that second version a bit better, because when you drop numbers into it, it makes sense right away. Like this:
In the example above, a marketer spent $500 to create and distribute an ebook. That $500 investment resulted in $2,000 worth of leads, and he got back three times his investment: a 300 percent ROI.
Pretty simple, right? And that’s really all this breaks down to: knowing how much you’re spending versus how much you’re earning. That’s how to tell if your content marketing is generating a profit or not.
Of course, real-life examples are far more complicated. They look a bit more like this:
But the principle is the same. You have to figure out what your costs are and what the results are. Trouble is, there’s a long and meandering path from when someone first reads a blog post to when they become a customer.
That’s why marketers use “funnels,” which are the specific steps people take as they move from being a prospect to becoming a client. If you can define your marketing funnels correctly, then you can track and quantify each step a prospect takes. It’s the key to being able to calculate ROI.
In our example above, we showed that the ebook had generated $2,000 worth of leads. To figure that out, you’ve got to know what a lead is worth to you. You also need to have a tracking system that shows where your leads are coming from.
Some content marketing programs are set up specifically to generate and nurture leads. Every piece of content gets tied to that model. For example, every blog post is measured by how many leads it generates.
This brings us back to the idea of simplification. Except this time, we’re simplifying the metrics we use to measure content.
ROI Depends On What You Value
Lots of content marketers measure their content based on social media shares. And then they usually have trouble quantifying those shares. How much is a Facebook "like" worth? Not much. And you’ll go crazy trying to track and quantify a Facebook "like" all the way through to someone becoming a client.
So don’t. Only track the metrics that matter. Become clear about how those metrics translate into sales so that you can quantify each action. For instance, you can say a lead is worth $20, a product demo is worth $50, or a page view is worth 50 cents.
If generating more business is the primary goal of your content marketing, then tracking things like leads and sales calls makes sense. If your business goals are different, you’ll want to track different metrics.
Say you wanted to build brand awareness with your content marketing. Then those social shares would be important. You could legitimately measure each piece of content according to how many shares it gets.
Or say your business goal is to improve your existing customers’ experience and retention. Forty-three percent of the small business owners we surveyed earlier this year said that was their top strategy. So they should track how many additional orders their content generates.
Conclusion
Content marketing doesn’t generate sales or clients instantly. There are a lot of steps and a lot of time between when someone first comes across your content and when they finally buy from you. Tracking every single interaction along the way is too complex for most businesses.
So simplify. Pick the significant steps that happen as someone becomes more likely to buy from you. Track those events. Calculate how much they’re worth to you. Then measure your content based on how it generates or contributes to those events.
No, it's a not perfect system. But it’s plenty good enough to understand what works and what doesn’t, without drowning in data or spending weeks tracking your prospects’ every move.
