How to measure content ROI is a recurring question in forums and at conferences. It’s a complex topic — I wish it were simple. Some people present the topic in a simple way, or claim only one kind of measurement matters. I don’t want to judge what other people care about: only they know what’s most important to their needs. But broad, categorical statements about content ROI tend to mislead, because content is complicated and organizational goals are diverse. I can’t provide a simple formula to calculate the value of content, but I hope to offer ideas on how to evaluate its impact.
The Bad News: The ROI of Content is Zero
First, I need to share with you some bad news about content that nearly everyone is hiding from you. There is no return on investment from content. If you don’t believe me, ask your CPA how you can depreciate your content.
A widespread misconception about content ROI is that content is an investment. Yet accountants don’t consider most content as an investment. They consider content as an expense. The corporations that hire the accountants consider content as an expense as well. In the eyes of accountants, content isn’t an asset that will provide value over many years. It is a cost to be charged in the current year. From a financial accounting perspective, you can’t have a return on investment when the item is considered as an expense, instead of as an investment.
Many years ago I took an accounting class at Columbia Business School. I remember having a strong dislike of accounting. Accounting operates according to its own definitions. It may use words that we use in everyday conversation, but have specific ideas about what those words mean. Take the word “asset.” Many of us in the content strategy field love to talk about content assets. Our content management systems manage content assets. We want to reuse content assets. The smart use of content assets can deliver greater value to organizations. But what we refer to as a content asset is not an asset in an accounting sense. When we speak of value, we are not necessarily using the word in the way an accountant would.
I warned that broad statements about ROI are dangerous, and that content is complicated. There are cases where accountants will consider content as an investment — if you happen to work at Disney. Disney creates content that delivers monetary value over many years. They defy the laws of content gravity, creating content that often makes money over generations. Most of us don’t work for Disney. Most of us make content that has a limited shelf life. Until we can demonstrate content value over multiple years, our content will be treated as an expense.
So the first task toward gaining credibility in the CFO office is to talk about the return on content in a broader way. Just because content is an expense, that doesn’t mean it doesn’t offer value. Advertising is an expense that corporations willingly spend billions on. Few people talk about advertising as an investment: it’s a cost of business, accepted as necessary and important.
The Good News: Content Influences Profitability
Content is financially valuable to businesses. It can be an asset — in the commonsense meaning of the word. It’s entirely appropriate to ask what the payoff of content is, because creating content costs money. We need ways to talk about the relationship between the costs of content, and revenues they might influence.
Profitability is determined by the relationship between revenues and costs. Content can influence revenues in multiple ways. Content is a cost, but that cost can vary widely according to how the content is created and managed. The overall goal is to use content to increase revenues while reducing the costs of producing content, where possible. The major challenge is that the costs associated with producing content are often not directly linked to the revenue value associated with the content. As a result, it can be hard to see the effects on revenues of content creation costs. Content’s influence on profitability is often indirect.
Various stakeholders tend to focus on different financial elements when evaluating the value of content. Some will seize on the costs of the content. How can it be done more cheaply? Others will focus exclusively on the revenue that’s related to a set of content items. How many sales did this content produce? These are legitimate concerns for any business. But narrowly framed questions can have unintended consequences. They can lead to optimizing of one aspect of content to the detriment of other aspects. Costs and revenues can involve tradeoffs, where cost-savings hurt potential revenue. Costs also involve choices about kinds of content to produce, so that choices to spend on content supporting one revenue opportunity can involve a decision not to produce content supporting another revenue opportunity. For example, a firm might prioritize content for current customers over the needs of content for future customers, especially if revenue associated with current customers is easier to measure.
The key to knowing the value of content is to understand its relationship to profitability.
Customers Generate Profits, Not Content
Spreadsheets tend to represent things and not people. There are costs associated with different activities, or different outputs, such as content. There are revenues, actual and forecast, associated with products and services. The customers that actually spend money for these products and services are often represented only indirectly. But they are the link between one set of numbers (expenses involved with stuff they see and use) and another set (revenues associated with stuff they buy, which is generally not the content they see).
Unfortunately, the financial scrutiny of content items tends to obscure the more important issue of customer value. Content is not valuable or costly in its own right. Its financial implications are meaningful only with respect to the value of the customers using the content, and their needs. The financial value of content is intrinsically related to the expected profitability of the customer.
The financial value of content is clear only when seen from the perspective of the customer. Let’s look at a very simplified customer lifecycle. The customer first enters a stage of awareness of a brand and its products. Then the customer may move to a stage where she considers the product. Finally, if all goes well, she may become an advocate for the brand and its products. At each stage, content is important to how and what the customer feels, and how likely he or she may be to take various actions. So what kind of content is most important? Content to support awareness, content to support consideration, or content to support advocacy? Asked as an abstract hypothetical, the question poses false choices. The business context is vital as well. Is it more important to get a specific sale, or to acquire a new customer? Such questions involve many other issues, such as buying frequency, brand loyalty, purchase lead times, product margins, etc.
There can be no consideration of a product without awareness, and no advocacy without favorable consideration (and use). And awareness is diminished without advocacy by other customers. The lifecycle shows that the customer’s value is not tied to one type of content — it is cultivated by many types. At the same time, it is clear that content is only playing a supporting role. The customer is not evaluating the content: she is evaluating the brand and its products. Content is an amplifier of customer perception. The content doesn’t create the sale — the product needs to fulfill a customer need. While bad content can hurt revenues for otherwise excellent companies, content doesn’t have the power to make a bad company overcome poor quality products and services. Content’s role is to bring focus to what customers are interested in learning about.
Conversion is a Process, Not an Event
Marketing has become more focused on metrics, and so it is not surprising that content is being measured in support of sales. A/B testing is widely used to measure what content performs better in supporting sales. Marketers are looking at how content can increase revenue conversion. This has often resulted in a tunneling of vision, to focus on the content on the product pages. Conversion is seen as an event, rather than as a process.
Below is a landing page for a product I heard about, and was interested in possibly purchasing. It represents a fairly common pattern for page layouts for cloud based subscription services. The page is simple, and unambiguous about what the brand wants you to do. The page is little more than a button asking you to sign up (and, in the unlikely event you missed the button on the page, a second button is provided at the top). I presume that this page has been tested, and the designers decided that less content resulted in more conversions per session. If people have few places to go, they are more likely to sign up than if they get distracted by other pages. What’s harder to judge is how many people didn’t sign up because of the dearth of information.
Some online purchases are impulsive. Impulse online purchases tend to be for inexpensive items, or from brands the customer has used before and is confident in knowing what to expect. Most other kinds of purchases involve some level of evaluation of the product, or of the seller, sometimes over different sessions. In the case if this product, the brand decided that it could encourage impulsive sign-ups by offering a two-week free trial. This model is known as “buy before you try”, since you are presumed to have bought the product at sign-up, as your subscription is automatically renewed until you say otherwise.
A focus on conversion will often result in offering trials in lieu of content. Free trials can be wonderful ways to experience a product. I enjoy sampling a new food item in a grocery, knowing I can walk away. But trials often involve extra work for prospective customers. Online, my trial comes with strings attached. I need to supply my email address. I need to create an account, and make up a new password for a product I don’t know I want. If it is a buy-before-you-try type trial, I’ll be asked for my credit card, and hope there is no drama if I do decide to cancel. And I’m being forced to try the product on their schedule, and not my own.
Paradoxically, content designed to convert may end up not converting. The brand provides little information about their service, such as what one could expect after signing up. The only information available is hidden in a FAQ (how we love those), where you learn that the service will cost $100 a year — not an impulse buy for most people. When prospective customers feel information is hidden, they are less likely to buy.
Breaking the Taboo of Non-Actionable Content
There is a widespread myth that all content must be designed to produce a specific action by the audience. If the content didn’t produce an action, then nothing happened, and the content is worthless. It’s a seductive argument that appeals to our desire to be pragmatic. We want to see clear outcomes from our content. We don’t want to waste money creating content that doesn’t deliver results for our organization. So the temptation is to purge all content that doesn’t have an action button on it. And if we decide we have to keep the content, we should add action buttons so we have something we can measure.
I don’t want to minimize the problem of useless content that offers no value to either the organization or to audiences. But it is unrealistic to expect all pages of content to contribute directly to a revenue funnel. By all means weed out pages that aren’t being viewed. But audiences do look at content with no intention to take action right away. And that’s fine.
Creating content biased for action only makes sense when the content is discussing the object of the action. Otherwise, the call to action is incongruous with the content. A UX consultant may tell a nonprofit that people have trouble seeing the “donate now” button. But the nonprofit shouldn’t compensate by putting a “donate now” button on every page of their website — it looks pushy, and is unlikely to increase donations.
Conversion metrics measure an event, and can miss the broader process. Most analytics are poor at tracking behavior across different sessions. It is hard to know what happened between sessions — we only see events, and not the whole process. Even sophisticated CRM technology can only tell part of the story. It can’t tell us why people drop out, and if inadequate content played a role. It can’t tell us if people who bought supplemented their knowledge of the product with other sources of information — talking to colleagues or friends, or seeing a third party evaluation. To compensate for these gaps in our knowledge of customer behavior, businesses often try to force customers to make a decision, before they seem to disappear.
By far the biggest limitation of analytics is that they can’t measure mental activity easily. We don’t know what customers are thinking as they view content, and therefore we tend to care only about what they do. The opacity of mental activity leads some people to believe that the opinions of customers aren’t important, and that only their behavior counts.
The Financial Value of Customer Opinion
Customers have an opinion of a brand before they buy, and after they buy. Those opinions have serious revenue implications. They shape whether a person will buy a product, whether they will recommend it, and whether they will buy it again. Content plays an important role in helping customers form an opinion of a brand and product. But it’s hard to know precisely what content is responsible for what opinions that in turn result in revenue-impacting decisions. Humans just aren’t that linear in their behavior. Often many pieces of content will influence an opinion, sometimes over a period of time.
Just because one can’t measure the direct revenue impact of content items does not mean these items have no revenue impact. A simple example will illustrate this. Most organizations have an “about us” page. This page doesn’t support any revenue generating activity. It doesn’t even support any specific customer task. Despite not having a tightly defined purpose, these pages are viewed. They may not get the highest traffic, but they can be important for smaller or less well known organizations. People view these pages to learn who the organization is, and to assess how credible they seem. People may decide whether or not to contact an organization based on the information on the “about us” page.
Non-transactional content is often more brand-oriented than product-oriented. Such content doesn’t necessarily talk about the brand directly, but will often provide an impression of the brand in the context of talking about something of interest to current and potential customers. These impressions influence how much trust a customer feels, and their openness to any persuasive messaging. Overall content also shapes how loyal customers feel. Do they identify with being a customer of a brand, or do they merely identify has being someone who is shopping, or as someone who was a past-purchaser of a product?
Another type of non-transactional content is post-purchase product information. A focus on content for conversion can overlook the financial implications of the post-purchase experience. People often make purchase decisions based on a general feeling about a brand, plus one or two key criteria used to select a specific product. If they are looking to book a hotel, they have an expectation about the hotel chain, and may look for the price and location of rooms available. They may not want to deal with too many details while booking. But after booking, they may focus on the details, such as the availability of WiFi and hairdryers. If information about these needs isn’t available, the customer may be disappointed with his decision. Other forms of post-purchase product information include educational materials relating to using a product or service, on-boarding materials for new customers, and product help information.
The financial value of non-transactional content will vary considerably for two reasons. First, no one item of content will be decisive in shaping a customer’s opinion. Many items, involving different content types, can be involved. Second, the level of content offered can be justified only in terms of the customer’s value to the organization. Content that’s indirectly related to revenues is easiest to justify when it’s important to developing customer loyalty. Perhaps the product is high value, has high rates of repurchase, or involves a novel approach to the product category that requires some coaching to encourage adoption. Developing non-transactional content makes most financial sense when aimed at customers who will have a high lifetime value.
Measuring the impact of content that influences customer opinions is hard — much harder than measuring content designed around defined outcomes, such as the conversions on product pages. But with clear goals, sound measurement is possible. Content that’s not created to support a concrete customer action needs to be linked to specific brand and customer goals. Customer goals will consider broader customer journeys where the brand and product are relevant, and where is there is a realistic opportunity to present content around these moments. Appropriate timing is often critical for content to have an impact. The goals of a brand will reflect a detailed examination of the customer lifecycle, and a full understanding of the future revenue implications of different stages and the brand’s delivery of services prior to and following revenue events.
The Ultimate Goal: Content that Supports Higher Margins
The two most common approaches to “Content ROI” involve improving conversion rates, and reducing content costs. These tactics are incremental approaches —useful when done properly, although potentially counterproductive if done poorly.
To realize the full revenue potential of content, one can’t be a prisoner of one’s metrics. The things that are easiest to quantify financially are not necessarily the most important financial factors. Many organizations fine-tune their landing pages with A/B testing. Many of the changes they make are superficial: small visual and wording changes. They are important, and have real consequences, lifting conversions. But they only scratch the surface of the content customers consider. The placement and color of buttons gets much attention partly because they are relatively simple things to measure. That does not imply they are the most important things — only that their measurement is simple to do, and the results are tangible.
Conversion metrics measure the bottom of the marketing funnel: making sure people don’t drop out after they’ve reached the point of purchase page. What’s harder to do, but potentially more financially valuable, is to expand the funnel by focussing on who enters it. Content can attract more people to consider a brand and its products, and attract more profitable customers as well.
The biggest opportunity to increase revenues is by attracting people who would be unlikely to ever reach your product landing page. How to do this is no mystery — it’s just hard to measure, and so gets de-emphasized by many metrics-driven organizations. The first approach is to offer educational content, so that prospective buyers can learn about the benefits of a product or service without all those pesky calls-to-action. People interested in educational content are often skeptics, who need to be convinced a solution or a brand is the right fit. The second approach is through personalization. The approach of intelligent content points to many ways in which content can be made less generic, and more relevant to specific customers. Many potential customers can’t see the relevance of the product or brand, and accordingly don’t even consider them in any detail, because existing content is too generic.
But profitability is not just about units of sale. Profitability is about margins.
The first avenue to improving margins is reducing the cost of service. Many content professionals focus on reducing the cost of producing content, which can potentially harm content quality if done poorly. The bigger leverage can come from using content to reduce the cost of servicing customers. Well-designed and targeted content can reduce support costs — a big win, provided the quality is high, and customers prefer to use self-service channels, instead of feeling forced to use them.
The second avenue to improving margins involves pricing. Earlier I noted that the financial value of content depends on the financial value of the customers for which the content is intended. A corollary holds true as well: the financial value of prospective customers is influenced by the content they see. Valuable content can attract valuable customers. It’s not only the volume of sales, it’s about the margin each sale results in.
Customers who see the brand as being credible and as being leaders are prepared to pay a premium over brands they see as generic. This effect is most pronounced in the service industry, where experience is important to customer satisfaction, and content is important to experience. Imagine you are looking to hire a professional services firm: a lawyer, an accountant (who appreciates the value of content), or perhaps a content strategist (maybe me!). What you read about them online affects how you view their competency. And those impressions will impact how much you are prepared to pay for their services.
These effects are real, but require a longer period to realize. Long-term projects may not be appealing to organizations that only care about quarterly numbers, or to product managers who are plotting their next job hop. But for those committed to improving the utility of content offered to prospective customers, the financial opportunity is big.
When seen from the perspective of how brand credibility affects margins, content marketing that often doesn’t seem linked to any specific outcome, now matters significantly. It is not simply who knows about your firm that matters: it is about how they evaluate your capabilities, and what they are prepared to pay for your product or service. Potential customers not only need to be aware of a firm, and have a correct understanding of what it offers, they need to have a favorable impression of it as well.
Content that provides a distributed rather than direct financial contribution needs its own identity. Perhaps we should call it margin-enhancing content. Such content enables brands to be more profitable, but does so indirectly. The task of modeling and monitoring the impact of such content requires a deep awareness of how pieces may interact with and influence each other. By its nature, estimating the strength of these relationships will be inexact. But the upside of endeavoring to measure them is great. And through experience and experimentation, the possibilities for more reliable measurements can only improve.
Measurement is important, but it’s not always obvious how to do it. For much of human history, people were unaware of radiation, because it could not be directly seen. Eventually, the means to detect and measure it were developed. The process of measuring the financial value of content involves a similar process of investigation: looking for evidence of its effects, and experimenting with ways to measure it more accurately.
— Michael Andrews