How to Measure the ROI from your Content Marketing

How to Measure the ROI from your Content Marketing

A business needs few defined metrics to accurately measure the ROI from their content marketing strategies. Many digital marketers follow traditional metrics such as click-through rates, cost per acquisition (CPA) or return on ad spend (ROAS) to measure these results, however, these do not translate into actual results in the end. Several other techniques can help marketers analyze and display the effectiveness of their content.

 

 

The first aim of marketing is to grow the business at the lowest possible expenditure. Brands that depend on acquiring and nurturing leads for further growth need to use metrics that align with this goal. All business activities, be it promotions or test runs, need to produce positive returns on the invested time and money. In this post, we explain some content marketing measurement basics and some basic ROI calculations.

 

Content Marketing (CM) measurement basics: Any metric you measure has three aspects:

 

1) Deciding what to measure or analyze: To decide what to track or measure, work on identifying the top priorities and related data to support these priorities. Then establish certain performance benchmarks for these metrics and calculate baseline costs required to execute your decided content plan. Basically, you are required to decide the key performance indicators to measure the impact of your content and tag the visitor actions related to these metrics.

 

It is imperative to note that a lot of these KPIs simply indicate performance and do not directly relate to revenues. It is, therefore, recommended to analyze and track data that actually helps calculate costs incurred and revenues generated per campaign.

 

2) Measure and manage collected data: It is essential to decide on how frequently you need to collect data. Collecting and measuring data too often may not provide any useful behavioral patterns while taking too much time between data collections can shadow some major underlying issues that could prevent the content from showing its intended effects.

 

The best way would be to start tracking and analyzing data on a monthly basis initially and adjust timelines later on if need be. Track performance of every chunk of content collected to compare to established benchmarks.

 

3) Converting collected data into actionable insights: A business can employ Google Analytics to get a broad overview of its content performance, but to properly study the results, the effect of each piece of content needs to be analyzed. Using modern marketing automation apps with your current marketing technology, you can track the type of content your intended audience prefers and correlating this content with visitor actions can help understand which content pieces provide better results and why. 

 

Calculating ROI:  Working out the return on investment for each campaign is the best method to demonstrate business value. ROI is the actual metric that the marketing team cares most about. To calculate ROI, first the baseline costs involved in creating, distributing and promoting content need to be estimated. This includes an approximation of average production costs and team overhead plus administrative costs.  

Calculation of expenses and revenues can help figure out the ROI per campaign as ROI = (Revenue - Expenses) / Expenses

After ROI for each marketing campaign has been calculated, consolidate these revenues and expense amounts to get the overall marketing ROI.

 

Calculating the value of Leads: Talking in terms of leads and their value is common among content marketers. To calculate the revenue value of leads to integrate into the above ROI calculations, let’s assume you sell a particular software and your efforts have generated 100 SQLs for a month, where SQL is a prospective customer as identified by the marketing and sales team. Many marketers use the term marketing qualified leads or MQL instead of SQL, which implies a website visitor whose engagement levels indicate higher chances of a successful conversion.  Each of these leads, if successful, generates $1000. In general, only 4% of these SQLs can be converted to paying customers. Therefore, the revenue value of all leads is:

$1000 x 100 x 0.04 = $ 4000 or $40 per SQL.

To get ROI, substitute these values in the ROI calculations.

 

The ROI of Video Marketing: Good videos generate higher returns than textual content. A simple calculation to find out the ROI of video marketing is to divide the revenue generated by your video campaign by total video production costs.

For instance, if you convert 20 paying customers worth $50 each, and the video production cost is $200, ROI would be ($1000 - $200) / $200 = 4.

This metric can also help compare the effectiveness of different video campaigns. If one video generates higher ROI than others, you can direct traffic to the higher-performing video, thereby, increasing chances of conversion.

 

An advanced way of analyzing video performance uses lifetime value (LTV) and requires certain data points to calculate churn rate and average revenue per user. Using this analysis, a business can better allocate marketing spends for future campaigns.

 

To calculate LTV for a video campaign, average revenue per visitor (ARPV) is divided by customer churn rate i.e. the percentage of customers who leave you each year. In short, LTV = ARPV / Churn Rate.

If your ARPV is $50, and your churn rate is 2.5%, then LTV = $50/0.025 = $2000.

 

To calculate the ROI, subtract the cost of acquisition from LTV and divide it by the cost of acquisition. Using the cost of $200 from earlier, the ROI based on LTV would be:

($2000 - $200) / $200 = 9.

 

ROI Calculator: The ROI calculator makes ROI calculations much simpler and faster. Using values of revenue and cost for each campaign or aggregate values for several campaigns, the calculator provides ROI much easily.

To conclude, return on investment (ROI) is what a company’s top executives actually care about when looking at marketing campaigns and associated metrics. A business should consider this as the most important metric for marketing analysis and make it an essential parameter to invest more in marketing tools and technologies that convert more of your leads into customers.  

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