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For all of the words written about the power of content marketing, too few discuss how it should be measured. Last year I wrote a two-part piece about what I called the economics of content marketing, in which I shared two formulas to measure its impact. The two formulas measure content consumption and profitability.
Compelling people to consume – read, watch, listen to – your content is the name of the game. Here is a really simple for measuring consumption:
Consumption = Production * Distribution
The amount of consumption is the effort put into production multiplied by the amount of distribution. The better the quality of the content – the production – multiplied by a larger or more targeted channel – the distribution – the greater the consumption. You can invest heavily in creating a great piece and zero in distribution on social media and few people may find it. A tree has fallen in the woods. Likewise, a heavily promoted piece of schlock will be passed over in your reader’s Twitter feed. I think this is pretty straightforward.
Once you get people to consume your content, you need to know it it’s making you money. Obviously, the more you spend on creating and distributing the content, the better, but is it worth it? Profitability is nothing more than an ROI calculation.
Value of Actions – Cost of Production – Cost of Distribution ____________________________________________________________ Cost of Production + Cost of Distribution
The hardest part of this calculation is putting a value on the actions your content compels.
There are six basic actions that a potential customer can take. This is how I look at measuring each action.
|Action||What to Measure|
|Views||The number of people who see your ad or content|
|Shares||The number of people who share your content|
|Clicks||The percent of clickers who later convert via ad retargeting|
|Subscribes||The percent of subscribers who later fill out forms|
|Form fills||Your known lead conversion rate from forms|
|Contact sales||Your known lead conversion rate from sales contact forms|
Table 1: Measuring the value of actions on content.
If you have a mature funnel have been measuring actions, you can plug in values for each. I’ve put in a few conservative percentages to flesh out our example.
Let’s assume we have a product that sells for $1000. Think of views and shares as pre-funnel, and the subsequent rows moving down the funnel. The closer we are to the bottom, the higher the conversion rate.
Table 2: Conversion rates and values for actions on content.
These are average values, since some leads never convert. For example, if 1 out of 100 leads converts (1%), and our sales price is $1000, the actual value of 99 of your leads is zero, but the average value of each one is $10 ($1000 * 1%). So, each click above is worth $10. You can do the math for the other actions.
Continuing our example, if each click is worth $10 to us, and we get 1500 of them, that’s $15,000 worth of actions.
Let’s say we paid a writer $2500, and a designer $1000, to create an ebook for our product. Then, we spent $1500 on Twitter promoting the ebook to our audience. Plugging in the numbers, we have our equation below:
$15,000 – ($2500 + $1000) – $1500 __________________________________ ($2500 + $1000) + $1500
This reduces to
$10,000 _______ = 200% $5000
So we have a 200 percent return on investment. Not bad.
Now you have a framework to use when planning your content marketing strategy. By understanding the cost of production and distribution, weighted against the value of specific actions, you can remove subjectivity from the process and base your investments on their profitability.