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Content Marketing ROI: How to Measure the Impact of Content
Content marketing drives 100% of our sales at our content marketing agency. It’s also responsible for 80% of more of the sales from other projects we run. But how can you measure the ROI of a content marketing campaign? Here’s how…
What’s a Good ROI For a Content Marketing Campaign?
For us content marketing has produced The highest ROI out of any growth channel, because unlike virtually every other growth channel, with content marketing your costs stay the same, even as your campaign scales in size.
To make this clear we’re going to build out a really simple content growth model and compare it to a paid ads growth model to show how in many cases, content can out-perform paid ads.
So let’s get started.
In order to do this, we need to round up the metrics needed to properly calculate the expected ROI for a content marketing campaign.
First, we need our customer lifetime value (LTV). For some of you watching this this number will be $10 other others this number might be $100,000 or higher.
However in order to keep numbers simple for this example let’s set the LTV to $1000. In this example the product could either be a one time payment for $1000 or it could be a subscription payment for $100 / month with the average contract length being 10 months.
Also, as a side note, if you want to use the exact same content marketing ROI template that I’m using in this video, I’ll provide a link to the download page in the description below where you can get it for free.
Okay, now moving on.
Next, we need to know what our total addressable market is:
Now, I’ve covered keyword research in another tutorial, so I won’t dive into that topic again now, but imagine we’ve determined that we have a total addressable market of 100,000 searches / month and we’ve identified 100 keywords that we want to target and create content around.
In my previous tutorial, I talked about how we break content production down into TOFU, MOFU or BOFU categories.
So let’s break this 100,000 total addressable monthly search volume into funnel categories. It will either fall under bottom, middle or top of the funnel content.
Next, we need to know our conversion rate. Different content marketing ROI models will use different conversion calculations.
For example if you study attribution models, or track page value, you can more easily weigh the importance of your BOFU, MOFU or TOFU content.
In this example, let’s imagine that our TOFU content has a conversion rate of 0.1, our MOFU content might have a conversion rate of 0.2 and our BOFU content might have a CR of 0.6.
Alternatively, in order to keep your ROI model easy to work with, you can just use a sitewide conversion rate. For example, let’s imagine our site’s overall conversion rate is 0.25%.
Now, I’m being really conservative with these numbers. The reason why I’m not plugging in a 1% or 2% conversion rate, is because many of our content marketing clients at Blackship.One sell much higher priced products and therefore have longer buying cycles, bigger buying committees, lower search volume and lower conversion rates. So I’m keeping my numbers low in order to keep the model on the realistic side, rather than showing overly optimistic and unrealistic numbers.
Lastly, we need to know the cost of producing our content on a monthly basis. Let’s imagine that the cost of writing, editingi and optimizing the content to rank in the top three positions of organic search costs $1000 / article. This means that our monthly cost for 10 high-end long form articles will be $10,000 / month.
Now we have some of the key metrics we need to start measuring ROI. So let’s start crunching the numbers.
Along the bottom of this chart, let’s place the months of the year. Again, in order to keep these numbers simple, let’s imagine we’re going to blitz our content marketing campaign over the course of 10 months.
By the end of 10 months we will have 100 pieces of content that target a monthly search volume of 100,000 searches.
Let’s now break this down on a monthly basis. Again, to keep this example easy to follow let’s imagine that each month we write content for 10 out of the 100 articles in our backlog and those 10 articles target 10,000 out of the 100,000 total addressable monthly search volume.
Next, we have to start production. And this is where content marketing differs greatly from paid ads. With paid ads, you get the awareness you pay for right away. For example, if you were to spend $10,000 on paid ads and each click cost $2, then you could drive 5000 views to your site each month.
With a conversion rate of .25% you would make $12,500 dollars, which essentially leaves you with $2500 after the expense of the paid ads campaign.
These are by no means spectacular results. And in fact, likely wouldn’t be sustainable because this model isn’t taking into consideration the cost of goods sold or the cost of services rendered or any other expenses for that matter. If you’re interested in doing a more comprehensive content marketing ROI model for your specific company, reach out to us and we’d be happy to run through your numbers with you. But for now, let’s just keep focusing on building out this basic model.
So here we’re left with our paid ads ROI.
Now, let’s look at how this shapes up if we plug in numbers for an organic growth campaign. You’ll notice that by the time we complete this chart, that the growth curve will look entirely different.
One of the biggest differences between paid ads and content marketing is that with content marketing there is a delay between input and output.
I’ve covered this topic in other tutorials but essentially your content won’t rank the same month you create it. It’s a lot like a pregnancy. There is a natural delay between conception and birth. There is not much you can do to change this natural rhythm.
Again, just to make this really easy to understand, let’s imagine that we have a website with a strong domain authority. If we publish exceptional content and we already have a high DA, we might expect our content to rank a few months after initially creating it.
Content created in the first month will rank in the 3rd month. Content created in the 2nd month will rank in the 4th month and so on.
Next, we need to know which position in organic search we think we can rank for.
We have a SEO value calculator over on our site which will show you the estimated traffic you can expect based on search volume. Essentially, just because you see a keyword with a search volume of 10,000 searches / month, that doesn’t mean you’ll get access to all 10,000 searches even if you rank in the first spot.
The reality is that each position within organic search will capture only a fraction of the total awareness. The top three positions will see the lion’s share of the traffic. The first position will capture 33% of the traffic. The 2nd position captures roughly 18 %. And lastly, the third position captures roughly 11%. By the time you get to the second page of organic results, those websites are fighting over attention scraps.
However, remember, this won’t happen until month 3. So from month 3 onwards, we’re capturing 33% of the attention from 10,000 searches / month which equals 3,300 page views / month. With a 0.25 CR, we would make around 8 sales / month. With an LTV of $1000, this means this content would drive an additional $8000 / month to our bottom line.
Notice with content marketing, we spend some time early on in the red. Now of course, this isn’t always the case. For example, with our content marketing agency, from the first month we’ve been inthe black.
But again, I’m trying to be conservative with most of these numbers, so let’s stick with this model, because this is a quite common content marketing growth curve.
Notice that under these circumstances for the first three months we’re not generating any revenue. It’s not until month 4, when the content we created in month 1 finally starts to kick in and drive sales. After that, things start to compound, but it’s not until month 7 until the revenue generated from content has paid off the first expense of the campaign’s first three months.
Also, notice it’s not until month 8 before results start to really look promising.
And it’s not until you cross this threshold until things really start to work in your favor. When you reach this point, your content will be passively producing additional revenue for you without you having to continue to pay for the acquired attention.
With the exact same budget, same LTV and same conversion rate, look at the difference in growth between the paid ads campaign and the content marketing campaign. Notice that with a content marketing campaign, the campaign scales even as costs remain fixed.
Compare that to paid ads, where you’ll need to increase your ad spend if you want to scale.
You can see, at the end of 10 months, if we generated $2500 / month in revenue with paid ads, we’d be at $25,000 in total ad revenue (after advertising expenses) by month 10.
With content marketing on the other hand, your campaigns aren’t static. While content marketing often gets off to a slower start, the real magic happens when you start compounding growth on top of growth each month.
As you can see, with content marketing you often have to play the long game. In fact, this is a prerequisite. Content marketing, like going to the gym, requires that you do it consistently month after month in order to see results. It’s not something you do for a month and give up on when you don’t see the results you want. With content marketing, you need to play the long game, or not play at all.
Let’s look at the benefits of playing the long game.
For example, Imagine in our second month, we’ll produce 10 additional pieces of content. Again, that content might not produce results for 3months, but once it’s does, with a 0.25% conversion rate, it will generate an additional $8000 / month for us. Again, we do this each month and each month we produce content, there is a three month delay in output.
As you can see, what we’re doing here, is we’re spending a lot up front and not realizing our gains right away. However, by delaying gratification, by month 10 we’re up to $51,000 / month in extra revenue created from content alone.
So even though paid ads were running circles around our content marketing campaign early on, by month 10, our content marketing campaign is blowing the results generated from paid ads out of the water.
As a side note, one of the biggest marketing tragedies I see, is when companies early on in their content marketing campaigns, look over at competitors using paid growth channels and make the switch. They abandon organic growth, for what appears on the surface to be a bigger win with paid ads. It’s easy to see how someone might draw that conclusion if they are too zoomed in.
But now look, if we zoom out we’ll see the $100,000 invested in paid ads produced $25,000 in revenue, while the same $100,000 invested in content returned $124,000 in additional revenue. The difference is huge.
As I mentioned, this is a pretty common content marketing growth chart. However, I should mention again that this content marketing ROI model can change dramatically based on your specific business. I touched on previously that at our content marketing agency, we’ve been profitable with content from month one. In all of our businesses, content has always been the biggest driver or growth. Always, without exception.
Now, of course, I’ve oversimplified this model to help ensure understanding the concepts would be easy, but in order to make this content ROI model relevant to you, you’ll need to plug in your own numbers.
There are many variables at play here and in some cases the math won’t work. Generally speaking, the main reasons why content doesn’t work for people is for the following reasons.
1. They have poor product / market fit
2. They have high churn rates
3. Low lifetime customer value
4. Low conversion rates
5. Lower priced products
6. Low margins
7. They use low quality writers
8. They don’t search engine optimize their content
9. They are inconsistent with content marketing
However, if your business doesn’t suffer too badly from any of these issues, you can likely make content marketing work for you.
There are a couple of other major benefits as well that I want to touch on briefly.
Another huge benefit of content marketing is that your organic traffic won’t go away if you stop funding your campaign. Notice, in this model that we pull the plug on funding new content month 11, and our traffic doesn’t go away. In fact, it will likely continue to increase for a few months and then it will likely just plateau.
With paid ads on the other hand, you stop funding your campaign and this is what happens to your traffic. It’s all gone.
Similarly, another big benefit of content marketing is that your ROI improves over time. So even though we only had a ROAS of 2:1 our first year, in our second year, the content we created in year one won’t cost us anything more. We can leverage our older content to passively drive sales. Therefore, at the end of year 2, the content you created in year 1 could be producing an additional $240,000 / year in revenue without you having to spend a penny to support that passive revenue stream.
So, this brings me back to what I said at the beginning. Content marketing is a growth channel unlike most others, because as your campaign scales in your size, your costs stay the same. This makes it one of the most effective and affordable growth channels available to companies today.
At blackship.one we look at content much like Warren Buffet looks at stocks. We’re not in it for short-term or gimmicky wins. We look at the bigger picture and see how our investments in content today will create HUGE value for your company in 1 to 3 years down the line.
Again, remember to make your life easier, I’ve included this content marketing ROI spreadsheet over in our website. You can download the resource directly from our site and then enter your own number to see the impact that content can have on your company.
And lastly, if you’re looking to work with one of the best organic growth teams on the internet, I encourage you to get in contact with us today and schedule a free 45 minute no-pressure consultation to see if we would be a good fit for your company’s organic growth needs. We could work through this model with you to see if we could make the math work for your company. Again, I’ll provide a link to our website below and you can get in contact with us over there!
Thanks for stopping by today.
We Help You Grow Through Content
Blackship.one is a content marketing agency that helps hi-tech brands grow through the use of our organic growth playbook. We help with content planning, strategy, writing, publishing and SEO optimization. If you want to learn more about how we scaled a recent project to over 160,000 organic page views / month in 6 months, watch the video to the right. 🤝