How to Calculate ROI
for Your Content Creation Marketing Campaign

21

SEPTEMBER 2016

Let’s say you have a meeting in half an hour with your c-level boss who wants to know, again, why the company spends 16% of its marketing budget on that “content creation marketing” when he’d rather spend that on yet another direct mail campaign. He’d like to see the return on investment (ROI) for the content marketing, because really – who needs blog posts when you can mail 100,000 spot-color postcards?

Don’t panic. You won’t have to work in the mailroom. We’ve got this.

Calculating Content Creation Marketing ROI: the quick-and-easy way

ROI for online marketing relies on conversions, which can be broken down into sales figures and email list opt-in subscribers. Both types of conversions are useful for demonstrating your campaign’s effectiveness, but together, they’re even more effective in making your case for your marketing strategy.

Content Creation Marketing ROI dollars stand out in 3D
photo credit: frankleleon via Flickr cc

Before calculating your ROI, you’ll need to know:

Current monthly spending

As Jayson Demers, Founder and CEO of Audience Bloom, writes, it’s important to understand the investment part of return on investment. How much do you pay for blog content services? How much do you pay internal and external content writers for your websites? Does someone in-house post that content to your sites? Add that cost in, too. If you purchase images, be sure to have the subscription or per-image cost.

Example:

content marketing budget = $1,280/month

Current monthly revenue and email list size

What was the company’s gross sales revenue for the past month and the month before that? How many site visitors did you have two months ago? How many in the past month? How big was your email opt-in list two months ago? How big was that list a month ago?

Example:

Gross sales revenue, last month = $100,000 in revenue
Gross sales revenue, two months ago = $85,000 in revenue

Number of transactions, last month:  20,000 transactions
Number of transactions, two months ago: 12,000 transactions

Site visitors, last month = 10 million visitors
Site visitors, two months ago = 9 million visitors

Opt-in subscribers, last month = 250,000 subscribers
Opt-in subscribers, two months ago = 240,00 subscribers

“The sales ROI is the return on your content marketing investment in terms of sales.”

Now that you have the numbers, grab your calculator and crunch your content creation marketing’s ROI.

1. Calculate Sales ROI

The sales ROI is the return on your content marketing investment in terms of sales. Calculate the average sales last month and the previous month. Use those averages to calculate the content marketing campaign’s ROI from a sales perspective.

Average sales

This number represents how much the average customer spends in a transaction. For each month, divide the gross revenue by the number of transactions.

Gross revenue ÷ number of transaction = average sales

Example:

Last month: $100,000 gross sales revenue ÷ 20,000 transactions =  $5 (last month’s average sale)
Two months ago: $85,000 gross sales revenue ÷ 18,000 transactions = $4.72 (average sale two months ago)

Sales ROI

If sales have increased (or decreased) over the last month, It’s not easy to tell if that activity comes from your content or from other marketing efforts. However, let’s assume that the increase comes from the new online content campaign that started in the past month. With that in mind, to find the ROI, first divide the sales change by the content budget.

Last month’s sales – two months ago’s sales = sales change

Sales change ÷ content budget = sales ROI

Example:

$15,000  revenue increase ÷ $1,280 content budget = $11.72 of revenue per $1 spent on content creation marketing (sales ROI)

“Think of it this way: subscriber is just another word for future paying customer.

2. Calculate opt-in subscriber value

If you’ve ever bought an email list, you know that the names and addresses of people who have demonstrated consumer interest in a product are a valuable commodity. People who have opted in to your subscriber list have done so because they have found useful content on your site. Subscribers are valuable because they’ve demonstrated an interest in your information and your product. They know you and trust you. Soon, they’ll begin spending money with you and continue to do so. Think of it this way: subscriber is just another word for future paying customer. Claim all of the new subscribers as the fruits of your new content marketing campaign.

Average subscriber’s value

This number represents the value of each of your opt-in email list subscribers for one month. Start by calculating  the average subscriber’s value for last month by dividing the month’s gross revenue by the number of opt-ins.

Gross revenue ÷ number of subscribers = average subscriber’s value

Example:

Last month: $100,000 gross revenue ÷ 250,000 subscribers = $0.40 (average subscriber’s value)

Total subscribers’ ROI

A company’s opt-in list varies each month; we hope that it grows, but sometimes it decreases. If it increases, that increase is a positive return on investment for the content campaign. To calculate this ROI, multiply the number of new subscribers by the average subscriber’s value. Divide that amount by your budget to find the cost per dollar of marketing money invested.

new subscribers × average subscriber’s value = total subscriber ROI

Example:

10,000 new subscribers × $0.40 individual subscriber value = $4,000 total subscriber ROI.

Subscribers’ ROI per dollar

Using the total subscriber ROI and dividing that by the content creation marketing budget will yield the ROI per dollar, which is in the same format as the sales ROI.

total subscriber ROI ÷ content creation marketing budget =  subscriber ROI (dollars) for each $1 spent on content creation

Example:

$4,000 total subscriber ROI ÷ $1,280 budget = $3.13 subscriber ROI/$1 spent on content creation marketing

photo credit: photosteve101 via Flickr cc

The bottom line: use both types of content creation marketing ROI 

It’s important to know these numbers for your content marketing strategy monthly meetings, not just because your c-level boss wants them and needs convincing to increase your budget, add more content writers for websites or hire a blog content service. ROI lets you know that your efforts are bringing real value to your organization.

Don’t be afraid to calculate and use ROI for both sales and subscribers. Using them both is valid because content creation marketing pays huge dividends not just in sales, but also in building your opt-in list (which will result in sales). And who knows? Your c-level boss might be so impressed with your numbers that he never mentions his good ol’ days of direct marketing ever again. At least until next month.

Diane Trim

Diane Trim

former mathlete

Diane is a former middle school math team competitor and current freelance writer and editor with over 20 years’ experience in journalism and journalism education. When asked to solve equations, she fakes amnesia, head trauma or both. Diane lives in Titletown, U.S.A., where her husband accepts her math limitations and puts up with her Packers obsession.

 

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