Content marketing strategy is one of the most popular online strategies nowadays, and for good reason. It’s generally hailed as a cost-effective strategy that generates compounding returns over time, as the longer you remain consistent with your approach, the more growth you’ll inevitably see. However, because content marketing affects many different areas of your business’s online visibility—from search engine ranks to far less quantifiable metrics like brand awareness—it can be difficult to tell whether all your efforts are actually paying off.
Some benefits of content marketing are simply unquantifiable—they’re qualitative and often subjective, and because of that it’s hard to reach an objective value. Still, with the knowledge and tools you do have, it’s possible to calculate whether or not your current content marketing efforts are adding value to your online marketing campaign.
Step One: Calculate Your Cost Basis
Your first step is to figure out exactly how much you’re paying for your content marketing campaign. In all my examples, I’ll be using monthly figures, but you can also calculate this weekly, yearly, or in any other time interval you’d like.
If you’re outsourcing the work to a professional marketing firm, this should be relatively easy—unless you’re complementing their effort with your own, you simply take your monthly cost and use that as the cost basis. If you’re doing the work in house, this becomes significantly more difficult. You’ll have to figure out exactly which of your workers spend time on writing, publishing, or syndicating content, about how much time they spend on it, and what their relative hourly rates are. Using one of these approaches, or a combination of the two, you should come up with exactly how much you spend on content marketing each month.
Step Two: Calculate the Value of a Conversion
Your next step is to calculate an approximate average value for one conversion on your site. If you’re an e-commerce site, and you consider a conversion to be a complete checkout, you can calculate this value by determining the average lifetime value of a new customer. For example, if someone discovers you for the first time and completes a checkout, how much will they spend with your brand over the course of their lifetime?
If you’re a B2B company and a conversion is something more like filling out a contact form, you’ll have to do a little more math. First, figure out the average lifetime value of a new customer. Then, figure out the close ratio (the ratio of completed sales to the number of people who filled out a form), and apply that ratio to the lifetime value of a new customer. This metric should represent the average value of a conversion.
Step Three: Determine Your Traffic to Conversion Ratio
The next step is pretty simple (assuming you have Google Analytics installed). Log into Analytics and figure out how much traffic your site has received in the past month, as well as how many conversions you’ve received. Divide the latter by the former, and you’ll have your total traffic conversion ratio.
Step Four: Calculate How Much Traffic Your Content Generates
Next, you’ll take a look at how much traffic your content actually generates. In Analytics, click on the Acquisition tab and look at the breakdown of your total monthly traffic. Virtually all your Organic traffic can be attributed to your content strategy, because it increases your search ranks and gets you listed higher. If your content makes up the bulk of your social media posts, you can also include your Social traffic (or a percentage of it, as you see fit). Click on Referral to see how much traffic is generated by your offsite content, and add that to your total. Do not count Direct traffic.
Eventually, you’ll have a figure for the total number of monthly visitors you received thanks to your content efforts.
Step Five: Calculate How Many Conversions Your Content Yields
Now, take the total amount of traffic your content has generated (in this case, let’s say 1,000 people), and multiply that by your traffic to conversion ratio (in this case, let’s say 0.5 percent). This will show you how many conversions your content has generated—in this case, it’s 5.
Next, you’ll multiply this by the value of a conversion—so if your conversions are worth $1,000 each, 5 conversions would yield a value of $5,000 from your content marketing program.
Step Six: Add in Qualitative Benefits
Of course, there are a number of benefits to content marketing that go beyond traffic generation. Increased brand exposure, greater brand reputation, and word-of-mouth influence all matter, and should be considered in your calculation. Unfortunately, there is no objective way to measure this, so you’ll have to come up with a “best guess” estimate to add to your running total. To do this, estimate the number of people who are influenced by your content marketing strategy (including the total number of site visitors, offsite readers, and social media fans you have). Then, assume at least 20 percent of those will have a more favorable impression of your brand (this keeps your estimate conservative). The value of that extra impression is then up to you and your understanding of your customer.
Step Seven: Compare to Your Cost Basis
Once you’ve determined the total monthly value your content marketing campaign has generated, you can compare it to your monthly cost. Hopefully, you’ve kept everything evaluated at the monthly level so you can compare it on a one-to-one basis. If it’s greater, then congratulations—you have a profitable campaign. If not, your content approach may need some work.
A Note on Progressive Growth
It’s also worth mentioning that the power of content marketing accumulates over time. If this is your first month engaging in the strategy, it’s highly unlikely that you will be profitable; this is completely normal. Only after several months of committed work will you start seeing a profitable return on your investment, and the longer you’ve been running your strategy, the more accurately you’ll be able to determine its effectiveness.