Finding the hidden ROI in content marketing

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