How We Calculate the ROI of Our Content Marketing—in One Duck-Themed TaleBy Sam Slaughter April 14th, 2015
Tying content to revenue is hard. Actually, let me rephrase that. Tying content to revenue is hard to do well. The Internet is awash with examples of people doing it badly, using metrics like traffic, reach, and influence as proxies for actual ROI, or cloaking their lack of hard numbers with smoke and mirrors (or, in this case, Tina Fey GIFs). But that kind of soft talk doesn’t fly when you’re in the room with your head of finance trying justify your content spend—trust me, I know this from experience.
Here ’round Contently way, we’re still working on a refined ROI formula for content—one that can be applied across an entire organization. For a formula to scale it needs to take into account dozens of inputs—from how content affects outbound sales efforts, to what stories are most effective at pushing prospects into contract, to how share of voice affects a brand’s bottom line. That said, we’ve managed to do a decent job tying the content we produce here directly to our sales funnel. Every deal is different, especially in a B2B company of our size, but I want to take a look at one new customer to illustrate a little bit about how our content directly drives sales and ROI.
The story concludes in March, with a contract signed by a new Contently client—a company that we’ll call McDuck Enterprises. But it begins a month earlier, with a simple article. Using a powerful if often misused tool called Marketo, we’re able to work backwards and track the whole customer journey—from the first time they found out about us, to the day they signed on the dotted line, and beyond. And what do you know: Content played a part almost every step of the way.
Our initial contact was the senior marketing manager at McDuck Enterprises—let’s call her Webigail Vanderquack (Webby for short). Webby first encountered Contently on February 16, when she read an article we’d written on the 12 best content marketing blogs of 2014. She went on to check out almost all of the blogs on the list, and then return to The Content Strategist to read a story on how brands can build owned audiences.
Cost of these two articles: $700
Ten days later, on February 25, Webby was back, again reading two articles:
What’s interesting about the first four articles Webby read is that they were all over two months old, and none of them mentions Contently. This illustrates two really important tenets of content marketing:
1) No self promotion or product placement! The key is to establish a reader’s trust—the fact that you wrote the article in the first place is product placement enough.
2) The articles weren’t new, which shows the compounding return of publishing consistently. Contently commissioned and paid for those articles months ago, and yet they continue to drive interest from potential clients. The marketing cost of these is basically zero.
Those two articles cost another $700, bringing the tab up to $1,400.
Down the funnel
Two days later, our content marketing really started to bear fruit.
On February 25, Webby decided she wanted to talk to us about what we do, so she went to Contently’s homepage and filled out a lead form. When that happens, red lights and buzzers start to go off in the windowless cave where we keep our sales team (not really), and one of our sales strategists reaches out to Webby, setting up a call for the next week.
On March 2, in the hours leading up to that call, Webby checked out our homepage, a couple examples of work we’ve done for clients, and a couple of case studies (which cost us around $450 each to produce). She also looked at the portfolio of one of our writers, Ritika Puri, who had not coincidentally authored the story on startup blogs.
By the time she got on the phone with Luke and Ali from our sales team, Webby mainly wanted to talk about McDuck Enterprises’ content goal: launching a content hub for its B2B customers. It didn’t take long for her to decide we were a good potential partner—two days later, she brought in two other members of her team for a demo.
The final push
At this point, Webby moved from being a prospect to being an opportunity —that is, there was a reasonable likelihood of her becoming a customer. But she still wasn’t convinced.
Webby’s main question: Why shouldn’t she use her budget to hire two writers in-house, as opposed to spending it on a vendor like Contently. Luckily, Ali and Luke had an answer—you guessed it, another story. In this case, “Build vs Buy,” an examination we’d done about the pros and cons of hiring in-house vs. partnering with a vendor.
Webby called back the next day and asked for proposal. After spending a few hours on the phone negotiating with Luke and Ali, McDuck Enterprises came onboard. The total value of the contract: $82,000.
Between the time she came in the door and the time she was ready to sign a contract, Webby read five articles and two case studies. She visited seven pages of our website, and spent a total of about five hours on the phone with our sales team. Attribution is tricky, and there’s no set standard, but here’s a quick back-of-the-envelope calculation:
We decided to attribute 50 percent of the revenue to content and 50 percent to sales, since the first touchpoint came from an article (for outbound leads, sales would get a higher percentage of the credit).
Sales revenue: $41,000
Sales cost: $6,500 (this is basically the cost of the sales team’s time and commission)
Sales ROI: 6.3x
Content revenue: $41,000
Content cost: $2,650
Content ROI: 15.5x
We can also break down the content ROI a bit further by attaching a value to each article. (Note: We give the first and last touch points more value, usually 20 percent of the total.) Here’s how it breaks down:
- “12 Best Content Marketing Blogs”: $8,200 (23x ROI)
- “Build vs. Buy”: $8,200 (23x ROI)
- “12 Startup Blogs Killing the Game”: $3,280 (9.4x ROI)
- “How Brands Use Influencers to Build Owned Audiences”: $3,280 (9.4x ROI)
- “These 4 Companies Prove Content Marketing Is Essential to Startups”: $3,280 (9.4x ROI)
- Case Study #1: $3,280 (7.3x ROI)
- Case Study #2: $3,280 (7.3x ROI)
Now for the caveats.
One important thing to note is that this just looks at a single deal—some of our clients spend a lot more time in our marketing funnel, and spend a lot more time looking at content before they buy… and some spend less. It’s also true that a single story can (and does) impact multiple deals. Another very important note is that I haven’t addressed the cost of our content marketing as a whole, which includes, among other things: stories that don’t impact the sales funnel, my own inflated salary, and the cost of the software we use to manage the process—that’s a story for another day (soon).
But by taking these basic calculations and applying them out across our entire publishing operation and sales funnel, we’re able to get a pretty accurate picture of just how much revenue our content is driving. And it’s a lot.Image by Neftali