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Content Marketing ROI: How to Calculate [Step by Step]

Content Marketing ROI: How to Calculate [Step by Step]

There’s only one metric that really matters when marketing for business: the Return On Investment, or ROI. 

To invest in something, you need an expected return. 

Calculating the ROI of your content marketing efforts is crucial because it allows you to allocate resources to be most effective, and to accurately predict the future results of your content marketing efforts.

This is not as simple as 2 + 2 = 4. Content marketing is not an exact science and calculating ROI can be tricky because there are many things we can’t control. 

While there is some level of risk and uncertainty involved in everything we do, there are ways to evaluate the ROI of content marketing based on measurable inputs and outputs.

Following the methods and techniques in this step-by-step how-to, you can calculate your content marketing ROI with surprising accuracy. 

What is Content Marketing ROI?

Simply put, content marketing ROI is a percentage that indicates how much revenue you generate from content marketing, compared to the amount you’ve invested. This is one of the metrics to measure the performance of your content marketing strategy.

How to Calculate Content Marketing ROI [Formula]

The Content Marketing ROI percentage comes from this simple formula: (Return – Investment ÷ Investment) x 100 = ROI. Now, let’s look at the details of how each number is calculated.

Step 1: Calculating your investment

First of all, when it comes to calculating your investments, it’s important to add up the costs. This includes expenses you spent on content creation like salaries or outsourcing fees.

On top of that, you may have spent on additional services and tools to optimize your content quality, for instance, keyword research and content optimization software. Any other related expenses like paid ads and other software subscriptions should be added to the total cost too. 

For example, let’s say your total costs for a month are as follows:

  • Content writing & editing: $900
  • Graphic designing: $500
  • Paid ads: $100
  • Total = $1,500

Step 2: Calculating your return

Now you have the amount you spent, the next step is pretty much the same thing. This means assessing your net return generated by your content marketing. 

For example, let’s say your net return for a month is:

  • Sales Revenue from the blog: $4800

Lets replace the formula with numbers: (Return – Investment ÷ Investment) x 100 = ROI.

Here is what we got: (4800-1500/1500)*100 = 320%

Understanding More About Content Marketing ROI

You may ask what I can do with the content marketing ROI data on my hand? Most brands use a variety of marketing channels, for example, social media, websites, and Emails, to name a few.

By leveraging ROI data, you can gain valuable insights into which channels drive the highest traffic and what kind of content captures the attention of your target audience. This lets you decide which part of the budget you would want to cut or increase. 

So if you ever need (and you will likely need) to develop your marketing strategies, Content Marketing ROI will come in handy.

Actually, don’t be afraid to take inspiration from successful big brands around the world that have implemented ROI-driven content marketing campaigns. 

One standout example is Airbnb. At first, Airbnb was merely an online marketplace and community for people who look for short-term homestays.

However, Airbnb offered relevant and helpful content to help around-the-world travelers by providing new content on their own site. If you click on Airbnb, you will notice they have “Neighborhood Guides” that show the list of places to eat, local attractions, and hidden gems.

This kind of content can increase the number of users, which may lead to more engagement, more bookings, and ultimately to a strong ROI.

The next example is Sephora. Sephora has created what they call the “Beauty Insider Community”. This is an online forum where Sephora’s customers can share and discuss beauty tips and recommendations. Aside from encouraging user-generated content and enhancing brand perception, Sephora can also use this opportunity to gather customer insights and drive sales. All of this, ultimately, led to a growth of ROI.

Of course, these are not the only two examples in the business world. You can also explore and venture out in this field by yourself.

Metrics to be Measured for Content Marketing ROI

According to the Content Marketing Institute, a recent study reveals that measurement poses a significant challenge for 33% of content marketers. Their concerns often arise from difficulties in integrating data across multiple platforms and aligning performance metrics with initial goals. 

Therefore, in order to implement Content Marketing ROI efficiently, it is crucial to have a precise understanding of how you define “return” and “investment” in the first place. This clarity will let you know which metrics you are going to use as there are a number of key metrics available out there.

Conversion rates

Conversion rates are calculated by simply taking the number of conversions (this could be anything from interaction with your ads, clicking a text, or even purchases) and dividing that by the number of opportunities for that action to happen.

Lead generation

In general, a lead is any person who has an interest in your product, service, or your brand. Lead generation is the process of attracting people to your business. In other terms, the lead generation rate will show how much audience your business has attracted.

Customer acquisition cost

Customer acquisition cost is the amount of money a business spends to get a customer to purchase its product or services. 

Revenue attribution

Revenue attribution is a method that connects different data sets to determine exactly which forms of marketing are resulting in revenue.

In most cases, these metrics should be enough for an ROI analysis. However, all of these metrics above are not always directly correlated with ROI, it should be observed and read case by case.

Since there is so much data you can take into account when doing the ROI analysis, setting up tracking and analytics systems could be useful. Tools like Google Analytics or other automation platforms can collect data on website traffic, user behavior, and conversions – basically everything you will need. By setting up the tracking and analytics systems, you will be able to measure the content’s impact on ROI more conveniently.

Lastly, one thing you should bear in mind is that: Instead of trying to track all of the content marketing metrics, it might be more efficient to stick to a few that are aligned with your direction because each content has different purposes, therefore should be measured with different metrics.

Strategies to Improve Content Marketing ROI

If you already knew how to measure the ROI, and the results that came out are not impressive. You may be wondering if there is anything you can learn to improve your Content Marketing ROI. Lucky for you, there are still many effective strategies that you could try out. Here is the list.

Attribution models

Attribution modeling is a strategy that allows marketers to analyze every step during the customer journey and assign credit to marketing touchpoints that occur at certain steps of it. This ranges from searching for a product to making a purchase, and every action in between. 

Using attribution modeling will help you better understand which part of the marketing effort is driving the highest result that could lead to closed sales.

Customer lifetime value

Customer lifetime value is the total worth to a business of a customer over the whole period of their relationship with the brand.

Rather than looking at the value of individual transactions, this value considers all potential transactions to be made during the whole timespan of customer-brand relationships and calculates the specific revenue from that customer. 

This includes both historic value and predictive value, which are how much money loyal customers bring to your business, and how much they will likely bring based on previous data, accordingly. 

Calculating customer lifetime value will allow you to see a bigger picture of your business and ROI calculation instead of focusing on just the present number in front of you.

Cost analysis

If your previous marketing strategies didn’t perform really well, you can do the cost analysis to see whether you should allocate funds to different marketing strategies and how much you should. This is one of the simplest things you can do.

Those three things are what you should consider if your performance was not really impressive before moving on to the next plan. Next is the techniques you can employ when trying to improve Content Marketing ROI.

Content Personalization

According to a study, a marketing personalization strategy can deliver impressive figures of ROI that make a major impact on a bottom line. Moreover, content personalization can also boost revenue by 5-15%, increase the efficiency of marketing spend by 10-30%, and reduce acquisition costs by as much as 50%.

Don’t mind the figure too much. Just remember that what all of these figures indicate is that most customers love marketing personalization! Therefore, this may be one of the greatest ways to achieve your expected ROI.

Audience Segmentation

A study has shown that segmented campaigns in emails receive around 14% higher open rates, and a 100% higher rate of clicks. However, this absolutely doesn’t apply to only email campaigns.

In fact, audience segmentation or targeting the right audience doesn’t only help bring higher revenues. On the other hand, it will also save you some of the advertising budget and improve customer satisfaction. 

A/B Testing

If you want to increase ROI, you need to focus on what your customers or subscribers need and A/B Testing is another tool that could help you see their needs. 

Any kind of marketing materials can be put into A/B Testing to see which version of them matches the audience’s needs the most. Things you can test are so varied, for instance, headlines, texts, your call to action (CTA), copywriting, placement, or even the color to name a few. The bright side of this technique is that you don’t have to spend much time and money at all.

To sum up everything up to this point, if you want to increase your ROI, here is the mini checklist of what you can do:

  • Analyze which part of your marketing effort drives to closed sales
  • Calculate the revenue generated by a specific customer, based on the whole time span of the brand-customer relationship
  • Redo the cost analysis
  • Focusing on what your customers need, e.g. making more personalized content, making segmented campaigns, try out A/B testing

Analysis and Reporting

If you want to prove the Content Marketing performance and ROI, remember that these are the three most basic things you can do:

  • Observe your results before and after the strategy’s implementation
  • Leverage the existing statistics provided by social media channels
  • Evaluating insights from Google Analytics and other Analytics systems

Recent statistics show that content marketing typically costs 62% less than traditional marketing methods while yielding three times more leads.

Even so, it’s important not to have fixed expectations for every digital marketing plan. The minimum target to aim for is an ROI higher than 100% because that means the money you made surpassed its cost.

In reality, not all digital marketing materials perform equally well. This is why focusing on ROI analysis and deriving actionable insights from it is crucial.

For example, supposing your brand has found the best-performing advertising channel, you are most likely going to spend more on that channel. Nonetheless, it’s important to also keep experimenting with new strategies at the same time.

Let’s say that your main marketing channel is paid search, you can try expanding into organic search engine optimization (SEO). If this new channel proves to have a high ROI, it will improve your overall ROI while also improving sales.

Final thoughts

While calculating the ROI of content marketing may not be easy, it certainly isn’t out of reach. With all the tips, techniques, and tools we’ve provided, your business can start analyzing and implementing them starting today. 

Remember, it is crucial to have clear and concrete goals of what return is, and what your investment is and to make a few changes as time goes by. Don’t get overwhelmed by excessive analysis, as it can be counterproductive to your overall marketing strategy.

Now that you know every important topic around ROI, it’s time to create and experiment further with your content marketing!

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