While creating content is a growing form of marketing, it’s still young and some in the C-suite still have their doubts as to how content can affect their company. Like many business leaders, data, and proof reign supreme.
We know some stats from others about content from case studies like:
- Conversion rates are nearly 6x higher for content marketing adopters than non-adopters (2.9% vs 0.5%). (Source: Aberdeen)
- When Zappos decided to start using video to show their products instead of just still images, they reported seeing a 6% – 30% increase in sales.
- Year-over-year growth in unique site traffic is 7.8x higher for content marketing leaders compared to followers (19.7% vs 2.5%). (Source: Aberdeen)
While these stats are a great reason to start producing video content (and content marketing in general), it’s nearly impossible to predict the value you may receive from your efforts. As with most marketing (and investing), there’s an associated risk of trying something new. To make money, all we can do is take that risk, measure the results, and make more informed decisions later. The key to any marketing initiative is to get long-term buy-in from leadership, to get that, they’re understandably going to want to see how you’re clearly affecting the bottom line for your company.
Doing that can be difficult, but it’s not impossible. Let’s start by diving into our content value formula. Yes, there’s a bit of math involved here, try to stay with me ????.
Average Sale Value * Conversion Rate of KPI * Amount Change in KPI * Time(months) – Content Cost = Content Value Over Time
Let’s break this formula down and then I’ll show an example near the end.
Average sale value
This would be the average order total from your customers per purchase.
Conversion Rate of Key Performance Indicators (KPIs)
Now the key to understanding the value for your content is to have a known KPI for everyone on the team. This might be something but not limited to:
- Web form submissions
- Website visits
While you’ll likely be able to change several KPIs with the help of content, it’s easier and more effective to focus on just one at a time.
Once you know that, you’ll need to know your conversion rate for that specific KPI. What percentage of people go on to purchase?
Now, it’s time to figure out the value for each time your KPI of focus increases by one. For something like “web form submissions”, you may have a conversion rate of 5% that goes on to make a purchase, and for a B2B the average sale could be $25,000. If that’s the case, each submission has a value of $1,250.
Amount Change in KPI
The next thing that we need to know to understand the value we’re creating is the current metrics. Using the example again of “web form submissions”, we’ll want to know how many submissions you’re currently getting without any content being used. This helps us establish a baseline to calculate the change created.
If your content campaign increases your web form submissions from 35 to 60 every month and as we figured out before, each web form submission is work $1,250, that means content created a value of $31,250 every month. An effort that could have a yearly value of $375,000+.
Now, creating a month’s worth of content might not be enough to see a clear value in either direction (lost/gained), so it’s recommended that you create content on a consistent basis for 3-6 months before you can get accurate data to measure. As I mentioned in another post, content marketing takes time and consistency to be rewarded with it’s full potential.
This is the cost to have your content created. Whether this is created internally or through an external partner like us, it should ALWAYS be factored to correctly understand the value of your content. Depending on the kind of content you have made, there’s a very wide range of costs. One trick here is to start with a reasonable number for your company for the first 3-6 months and add or reduce your content budget to make sure your content value is making a positive change in your company.
Content Value Over Time
Now, let’s see how the formula works if we plug in the numbers from above. For the “Content Cost”, I added a yearly content cost of $75,000. This isn’t an exact amount but a number that was reasonably budgeted after working out the rest of the formula.
$25,000 (Average sale) * 5%(conversion rate) * 25 (KPI Change) * 12 months (Time) – $75,000 (Content Cost) = $300,000 (Content Value)
We see here in this example that our content creates a value of $300,000/year. (Not bad!). The idea is that as long as this number is positive, it makes financial sense to create content for your company.
Something else that might make measuring value easier is to use a specific promo code with each piece of content and simply looking at the analytics for the product sold using that promo code. I don’t however like to offer too many discounts with any product though because it creates a bad feeling in customers that paid full price for the same product.
Where to go from here?
While the formula is simple, calculating the value of content can be difficult, especially if the intention of measuring isn’t made from the very beginning. However, measuring and identifying that value throughout a campaign or initiative might be the ONLY tool you need as a marketer to keep producing the kind of work you love to see and believe in.