Author: Michael Andrews

In a previous post, I explained why a brand should not expect their content marketing programs to drive sales growth, because such expectations can interfere with a brand’s ability to build long-term relationships with audience segments.  In this post, I examine how building relationships with audiences using a content marketing program can lead to greater customer insights, support the development of the brand, and enhance profitability.

Marketing is fundamentally about identifying the needs of a segment, and understanding the profit potential the segment represents.  Content marketing enables long-term relationships with audiences.  Content marketing plays an important strategic role precisely because it has a long-term focus, rather than the short-term focus of promotional content.  As Philip Kotler notes: “marketing is not a short-term selling effort but a long-term investment effort.” Brands need engaging content to support that long-term effort.

Relationships enable understanding of marketing segments

Understanding customers for marketing purposes requires a higher resolution picture than offered by personas.  Personas may be a starting point for thinking about segmentation, and may have value helping content writers develop their content, but they don’t provide the deep insights available from data.  Personas should reflect data, but can’t themselves represent that level of detail.

Content marketing can be a fantastic tool for understanding customers.  The more you talk about the interests of your customers, the more they will open up and the more you will learn.  While customer research using content marketing is not a substitute for ethnographic research or other qualitative techniques, it can deliver tremendous insights that can deliver profitability.

Businesses exist to be profitable, and a key part of that is knowing who is profitable.  Audience directed content can help answer at.  When content is focused on the natural interests and motivations of people, they will share their views and preferences in ways more faithfully than in surveys or focus groups.

Part of the purpose of content marketing is to learn what segments are most profitable for which products you offer.  Targeting content helps to distill target market segments according to actual motivations.

Brands can learn many things about potential customers through content:

• the interests of different people, according to how attracted they are to content of different themes and genres
• what their attitudes to different topics are, and how their attitudes may shift according to different dimensions of a discussion
• their values: what they spend time on, what they most talk about and share with others
• demographic information: household characteristics or profession, either self revealed or inferred through content usage, which can be cross-referenced with offline research sources
• financial orientation: concerns about finances and willingness to spend on certain kinds of products and services, which can be cross-referenced with offline market data about income, assets, spending and credit

Content can foster audience activity by presenting audiences something they care about, and offering them something to talk about.  This activity produces data on:

• content consumption behavior
• search terms used to discover content
• social interactions relating to content

Through the use of standard digital analytics techniques involving cookies and IP address identification, marketers can learn more about who is engaging with the content, and where else they spend time online.

The process is iterative.  As marketers learn more about distinctions that matter within a segment, they can refine their segmentation to adjust the focus of content, potentially creating new areas of content focus that are even more closely aligned with the interests of a group.  They may also conclude some segments aren’t likely to be profitable, and avoid actively marketing to them.

Even though this content is not aimed at selling, the insights that can be developed from it are useful for developing sales oriented content to present when people from a segment have a need to purchase something.  First, the insights provide guidance on how to message to a segment by using criteria that matter most to them.  Second, the insights help to personalize the offer.  The marketers understand how a segment evaluates a product, and how their values, interests and general circumstances come into play.  They get better insights into what are the chief dis-satisfiers for a segment, can tailor what they recommend based on expected satisfaction of a particular model for a given segment, and offer incentives as necessary to prevent “buyers remorse”, be they discounts codes or coupons, upgrades or membership award perks, or after sales service.

The exact mix of the personalized offer has a big impact on the profitability the brand realizes, so being able to optimize the mix through data developed from audience interaction with content is highly valuable.  Content can clarify how personal values translate into revenue value.  To cite a basic example, some customers will be more time sensitive than others, so they will value time more highly.   The widely variable pricing and service levels the airline industry offers different passengers is based on projected customer profitability.  Some of the this profit yield maximization is starting to be adopted by other industries (without the baggage of having high fixed costs for an essentially undifferentiated product.)

Aligning brand values with values embraced by market segments

Since the purpose of content marketing is to develop a long term relationship rather than a short term sale, it provides an excellent vehicle for brand building.  Calculating the ROI on brand activities is more involved than calculating the profit margin on sales, but it is well established that strong branding reduces sales costs, since you have to do less “selling” when people already trust your brand.

Emotionally engaging content is a powerful way to develop a sense of shared connection with audiences.  You have enhanced your brand with the target segment to the extent your content captures a sense of shared identity with the audience engaging with it.  Customer segments will share common concerns and interests (the segmentation), and the brand needs to learn what these are and how they relate to the brand’s values.  Brands can promote and contribute to the interests of the segment, by offering them exclusive content resources not available elsewhere.  Content can be tailored to match segment’s interests, and highlight common values between the segment and the brand.

The role of content marketing is to translate high-level brand values into content that embodies more specific brand attributes that will resonate with various audience segments.  The content will have a niche focus, but by using a coordinated content marketing strategy, individual segments can be aggregated into larger groupings to align with products and divisions in an organization.

Applications

To see how brands can use content marketing to enhance profitability without resorting to using content as a sales tool, we will examine an example from a unit of HSBC.  While many consumers rate their bank as being unhelpful, HSBC Expat, a unit that manages funds for people who live in foreign countries, has managed to develop content that shifts common brand perceptions.  They have created a community open to all (one doesn’t need to be a customer) that focuses on issues of vital concern to expats. Some of these issues are financial, but most of them relate to other life concerns such as housing or schooling. HSBC contributes some of the suggestions, while community members supply their own tips.

The content works well on many levels.  While I don’t have any visibility into the internal metrics of the site, one can see that it has been successful attracting participation.  The content is valuable to expats who access it, and it also provides HSBC with insights into the concerns of expats, and what they most value.  Many comments concern issues like language, or making friends.  Other issues are more specific to financial topics such as taxes.  HSBC can understand more about the various audiences who interact with the content.  Some people will already be expats, while others will be thinking about becoming expats, and some may be ready to give up the expat life and move home.  By providing an emotionally safe space to discuss these topics, free of sales content, HSBC can understand how to serve needs of prospective customers in different situations, and be seen as a brand supportive of their needs.

This example uses a community model, but other media such as videos and games can be used to foster greater engagement.  The focus of the content can be anything that matters emotionally to an audience segment that has relevance to the brand.  In many cases brands develop content around a theme that isn’t directly tied to the brand’s products, but represents aspects of the brands values that resonate with audience segments, which could be values such as performing at one’s best, or innovation and creativity.

Content marketing’s unique role

When brands embrace the possibilities of content marketing as a living laboratory that supports their evolution, they can gain precise insights from small, well-defined segments.  In contrast, when brands expect content marketing to deliver sales growth, they have to chase large numbers of people, and can’t offer content truly targeted to the interests of any group.

There remains a role for persuasive sales content to support the customer’s buying journey, and task focused content to support after sales support.  People who are motivated to do something expect to be persuaded that your choice is the right one.  When they decide what they want to do, they want to get on with it, and need content to facilitate that.  But recommendations only work when people are ready to make a decision, and are interested in listening to the opinions of the brand.   Persistent persuasion, even when subtle, is exhausting, and people’s attention will wonder elsewhere.

To become engaging and sustainable, content marketing needs to provide emotional safety for audiences.  Content marketing also needs to provide brands with actionable insights that can enhance their profitability in order to become a sustainable strategy.  Neither of these things is easy to do.  Engaging content requires enormous creativity and sensitivity to audience needs.  Insights also require creativity to identify, and imagination to see how they can create big opportunities for brands.  Despite the effort required, the payoff can be great precisely because so few brands do either of these things well.

—Michael Andrews

Content marketing is generating lots of buzz, and not a few questions.  Content marketing’s leading pitchman, Joe Pulizzi, recently published a book boldly entitled “Epic.”  Money is pouring into content marketing efforts, while executives ask if content marketing is a good long term strategy, and a sustainably profitable one.  There’s a lot of confusion about the ROI of content marketing because there’s still a lot of confusion about exactly what content marketing is, and what it can accomplish.  I believe content marketing has an important role, but I also believe many people expect the wrong things from it.  They are wasting money on things content marketing can’t deliver, and ignoring things content marketing can deliver.

Content marketing is an umbrella term that covers many different activities that in reality share little with one another.  The moment someone says “everyone’s doing it” we should ask ourselves whether definitions are overly loose.  Examples of content marketing range from email newsletters produced by small businesses, sales testimonials in whitepapers from widget manufacturers, to expensive social media gaming platforms created by billion dollar beverage brands.  The purpose of these activities can be vastly different, as will be the ROI they deliver.

Much of the buzz about content marketing highlights compelling examples of new genres of content that seem far more exciting than conventional marketing collateral:

• Native ads: articles that look like normal journalism, and appear along side articles in leading publications
• Branded content: videos, games and storytelling that are as fun as stuff you normally have to pay for
• Communities: places where audiences can relate to each other about the topics that they are most passionate

Once the awe has quieted, people may reasonably wonder what the actual payoff is for producing such engaging content.  It sounds expensive, and it is.  Do brands spend big money giving away free content out of altruism, or perhaps out of vanity?  Not likely.  Does splashy content generate so much word of mouth that it becomes contagious and sales just happen?  Again, no.  Making a splash is harder than ever, and content initiatives increasingly succeed or fail based on who they reach, rather than how big an audience they reach.

Common definitions can mislead

While definitions of content marketing vary, they generally involve three aspects:

1. that the content is owned and created by the brand
2. that the content is meant to focus on audience or customer interests
3. that the content delivers a result for the brand

Of those three items, only the first is clear cut.  The second, about being audience centric, is open to much interpretation.  The third, about ROI delivered, is even less clear, partly because of the squishy definition about what actually constitutes audience centric content.

As for defining audience-centric content, I prefer Google’s engagement guidelines, which ask: “What value do you offer consumers who visit your owned channels? Are you offering entertainment, education, peer recommendations and feedback?”  Note that no mention is made of imparting information.  Simply telling audiences what you are doing is not audience centric, no matter how well written.  They would never pay for that anyway, so offering it to them for free is hardly generous.  So content marketing definitions that describe audience-centric content being “relevant and valuable” are insufficient, because too often they assume the audience is in the mode of buying.  Even if someone is a potential customer who may eventually purchase an item, they may not think of themselves that way if they haven’t yet decided they want or need it.

In terms of the business payoff of audience-centric content, discussion is often aspirational rather than concrete.  There is much attention given to views and likes and shares, to big numbers or trending momentum.  As I will argue shortly, these metrics are a distraction from the actual business value of audience engagement.  The Content Management Institute furnishes unspecific guidance, setting an “objective of driving profitable customer action.”   Exactly how profits result is not detailed.  There is discussion about messaging to customers for “the 99 per cent of the time they aren’t ready to buy,” of “marketing less” or “selling less,” while at the same time trying to “change.. customer behavior” to drive “conversion” and boost sales.  Such statements, even if each sounds appealing on its own, don’t add up to a coherent story of how customers can at the same time not be shopping but persuaded to buy.  Stories are meant to help us buy into a rationale for taking action, but the plot here feels a bit sketchy.

Setting sales goals for content marketing is a mistake

When the discussion of content marketing turns to ROI specifically, the expected role of content gets more explicit, but at odds with the narrative that content marketing is about less selling.

What some marketers and CRM vendors call content marketing focuses on demand generation (creating awareness of products you sell) and lead generation (getting names of prospective buyers.)  Brands may believe they are being more customer-centric in how they talk, but the focus here is about promoting a product.

To justify the ROI, proponents may talk about content marketing as using content for in-bound marketing or out-bound marketing.  By directly tying content to sales, they continue old formulas that have been used since the days of direct mail or call center up-selling.  The scripts are longer, but messaging remains paramount. Proponents will suggest the key difference is that the marketing is no longer about campaigns, and no longer creates an abrupt interruption, because they are always doing it.  They are communicating marketing messages to their customers all the time, so now they feel they have a relationship.

But as the legendary marketing scholar Philip Kotler notes: “Marketing is too often confused with selling. ”

What many promoters consider to be content marketing, I would describe as long form advertising that happens to be written by the brand.  It seems like the perfect fix: use longer content to explain complex issues over time, when short ads don’t get noticed.  Like other advertising, its purpose is to increase sales, and it is failing if it doesn’t deliver sales growth.  So if you produce content that doesn’t ignite buying impulses, but you are expecting it to increase your sales, you will have an ROI problem.  Those nice infographics and video clips you produce look like a cost, rather than as an investment.

When the success of your content is measured by the sales it generates, you will make your content more and more sales oriented, to get it to deliver those goals.  It becomes a death spiral, as streams of sales oriented content tax the interest and attention of audiences, who tune out, so the marketers in turn amp up the sales message.  Rather than developing a sustained long-term relationship with audiences who might be inclined to identify with your brand’s vision, you instead are left with casual and fickle audiences who are checking out information as part of their prepurchase research.

Understanding the core value of content marketing

If sales revenue is not the right ROI metric for content marketing, which after all is supposed to be different from sales-oriented content, what other meaningful business outcomes can content deliver?  The purpose of investing in high quality content needs to be more specific than aiming to be “epic,” and needs to offer more justification than promising profits without explaining how it actually happens.

So let’s return to the apparent enigma of why big brands are spending big money on content that on its surface doesn’t seem to be about selling units of products.  What is the ROI of such spending?

Surprisingly, many marketers think about the ROI of content marketing by applying pre-digital concepts of product-focused marketing and making a sale, and ignore profitability factors.  They make little reference to data-driven digital marketing practices, or to the ad tech infrastructure that enables it.  They don’t talk about how data analytics of audience behavior can show the revenue value of customers.

Marketing today is less about driving a sale, and more about determining what specifically you sell to whom, with the goal of using available data to maximize profit yield across different segments.   Understanding the customer is more important than showcasing the product.

Large brands are interested in content marketing for two reasons:

• it is an effective way to reach certain audience segments that offer attractive margins (the engaging media aspect)
• it provides more immediacy to learn from and interact with these segments than traditional bought media (the owned content aspect)

Branded content exists to understand customers and establish a relationship with them, and is not about selling to them. A branded game, for example, can be effective content marketing, but won’t directly result in sales changes.  The popularity of branded content is best measured in the intensity that it engages audience members, that is, how much they use it and how much it means to them, rather than the numbers of audience members who see it.  While big audiences are a plus, branded content can be successful with small audiences, provided it attracts the right audience.

Until recently, brands had to rely on traditional media publishers to reach segments of individuals.  These segments didn’t define their identities in terms of the products sold by the brand, but instead define themselves by their attitudes, interests, and lifestyles.  Effective content marketing connects the brand with the concerns that matter most in people’s lives.

Refining the scope of content marketing

There are already many, sometimes contradictory definitions for content marketing, but none adequately addresses precisely how content marketing makes firms more profitable.  I want to offer my own definition, in the interest of clarifying what works, and doesn’t work, with content marketing. Branded content is probably a better term than content marketing, given the widespread misunderstanding about the difference between marketing and selling, but since content marketing is widely used already, I will stick with it.

My definition adheres to many of the intents of other definitions (focus on attracting interest, building relationships and serving the financial interests of the organization), but drops some of the more problematic aspects (trying to change people’s behavior, focusing on conversions and other transactional processes.)  If content strategy is about the functional side (don’t waste people’s time, give them exactly what they are seeking), then content marketing is about the emotional side (make them like being with you.)

Content marketing is content:

1. owned and created by a brand
2. that is enjoyable to use because it is meaningful or fun
3. that builds long-term relationships
4. with specific communities of people who have similar interests, life goals and other motivations
5. who are attracted to the content (though do not ”need” it)
6. because it persistently addresses their interests over time
7. which are not related to any specific transaction needed from the brand
8. and who would likely want to be customers with a brand sharing their values and understanding their needs
9. which creates profit potential over the long term.

In short, content marketing is about offering emotionally engaging content that supports the larger, long term marketing objectives of a brand.   Content that is motivated by creating long term relationships can deliver long term profits.  The ROI depends on creating a long term relationship.

Content marketing can enhance long term profitability by furthering two key marketing needs:

• market research
• brand building

Focusing on these two needs addresses the core purpose of marketing, as defined by Philip Kotler: “Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.  Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.”

In a next post, I will cover how content marketing can support market research and brand building, both essential contributors to brand profitability.

— Michael Andrews