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Calculating the ROI of Content and Engagement Strategy
I often get asked, particularly by clients, what the ROI of content and engagement is. What is it going to cost, and what are they going to get out of it? This is always a tricky question to answer, but I’ll attempt to do so at the end of this post. First, some context.
Nothing in life is guaranteed…unless you’ve been working in advertising.
Content in old advertising was pretty simple: shoot a nice, glossy ad, pushing your product/service and then pay CPMs to distribute that content. Advertisers knew exactly how much that ad was going to cost to produce, how much it would cost to distribute and how many people the ad would (potentially) reach (“potentially” because impressions are not synonymous with engagements).
The Wild Web
Today’s content is a different beast. A good content strategy incorporates paid media, owned media, relationship media and SEO to generate earned media. None are mutually exclusive. And, the emphasis is on the engagement, not the impression.
Social Media
Notice I didn’t even mention social media in there? That’s because social media is ubiquitous across the aforementioned forms of media. Social media is a channel for paid media (e.g. Facebook Ads and Stories, Twitter’s Promoted Trends and Tweets, to name a few of the biggies). It’s a channel for owned media (e.g. Facebook Pages, Google+ Brand Pages, YouTube Channels, Tumblr accounts, Twitter accounts – these are all places to build an owned community). Social media is a channel for relationship media – my term for modern day PR (you can now identify who the top influencers for your brand are; many, if not all, will have a social media presence). Leverage these three media well, coordinated with a strong content strategy, and social media helps facilitate scaled earned media. But, please do not mistake social media as a siloed form of media.
The Brand’s Predicament
Now coordinating these media and solidifying one unified content and engagement strategy is difficult – particularly for Fortune 500 brands with large marketing budgets. That’s because each medium is often handled by a different agency or group. Paid media is handled by media agencies. The content for paid media is produced by the creative agencies. Relationship media is handled by PR agencies. You have a new breed of social media agencies doing some pieces of each (paid, owned and relationship media), while the PR, creative and media agencies are all fighting each other and the social media agencies for a piece of the social media pie. No wonder brands are confused.
Building A Newsroom
To help solve this issue, I’d like to see brands build something akin to a newsroom. This would be a cross-divisional/agency team focused on content and engagement strategy. They would work together to
- Identify the key existing and target audiences (i.e. consumers) for the brand;
- Identify what content is valuable to each of those audiences at different stages of the purchase funnel;
- Identify where (Facebook, YouTube, Twitter, blogs, TV, news outlets, etc.) and how (video, pictures, text, slides, etc.) audiences like to consume that content;
- Identify who the brands’ top influencers are; and,
- Then, assign team members and agencies to produce the appropriate content and distribute it through the appropriate channels (i.e. execute on the plan)
For more detail on the above bullets, see my posts “Content As A Platform” and “Building A Content Platform”.
Calculating the ROI of Content and Engagement Strategy
Now, I believe that social media and mobile technologies have empowered brands (large and small) to
- Access more specific data about their audiences;
- Produce and distribute a higher volume of content that is more valuable to their audiences, and do so more efficiently; and,
- Build deeper, longer lasting relationships with their audiences
With this in mind, I’d like to see brands and agencies use the following as a benchmark for calculating ROI
- calculate the average Customer Lifetime Value (= revenue x time [per month/per year])
- calculate Allowable Cost Per Sale (i.e. the amount your willing to spend to acquire a sale – e.g. 10% x CLV)
(Note: Jamie Turner does a great job describing Customer Lifetime Value and Allowable Cost Per Sale in this post)
With a successful content and engagement strategy, average Customer Lifetime Value should increase over time, while average Cost Per Sale should decrease over time.
I’d like to place emphasis on the words “over time”. While you can certainly run one-off social media campaigns, content and engagement are long-term initiatives that involve constantly listening, learning and iterating. You won’t see ROI tomorrow, or maybe even six months from now. Anyone that has ever started a blog and tried to build an audience/community around it will confirm that. But, I think a year in, you should probably start to see these effects starting to take place.
Are any of you building a newsroom in your organization? How are you calculating ROI for your content and engagement efforts? Would love to know.
Related articles
- Google+ Pages: Real-Time Platforms for Connected Brands (greatfinds.icrossing.com)
- The Content Strategy Burger [Infographic] (socialmediaexplorer.com)
- Infographic: The Content Strategy Burger (aht.seriouseats.com)
- How to Design a Content Marketing Strategy in 3 Simple Steps (e1evation.com)
- 7 Tips for Stellar Social Media Community Management (hubspot.com)
- How does an effective website content strategy benefit a business? (marketing.yell.com)
- A Deep Dive Into GetSatisfaction’s Content Strategy (contently.com)
- 5 Trends That Will Shape Small Business in 2012 (ducttapemarketing.com)
- Measuring Social Media ROI: 3 Things to Consider (socialmaximizer.com)
- Building a Content Platform (reciprocitytheory.com)
- Why Every Agency Needs an Earned Media Director (adage.com)
- How Can Startups Leverage Social Media? (currentindiaaffairs.wordpress.com)
Defining ROI of Social Media by Identifying Opportunities with Social Media
The social media industry as a whole is following a strikingly similar approach.
In the startup world there are rumblings of a bubble. It’s sexy to invest in social media startups in hopes of getting in on the next Facebook or Twitter or LinkedIn or even Groupon. The problem is that many investors trying to get into the industry don’t know what to look for, and so many entrepreneurs are, as Charlie O’Donnell so adequately stated in his newsletter a few weeks ago, “solving to get funded” instead of building products that are creating value by improving the lives of the greater population. It’s about the sprint, and the finish line is getting funded by a VC. While any VC or entrepreneur worth their salt knows it’s really about the execution, and that is akin to running a marathon several times over.
In the marketing world, we are reporting on the most-viewed, viral branded videos. We’re creating badges for every action and trying to figure out which new check-in or check-out startup we should use on the next campaign. We’re confusing brands about what’s important and valuable – probably because this is all still so new that we are, in part, figuring it out as we go.
So, I have a challenge for everyone: keep it simple and focus on the longview.
Here’s what I mean by that:
Social Media Is Not New
Instead of trying to give you a lesson in the history of social media, I’ll just refer you to a series of posts by Marc Suster. Honestly, he explains it better than I could. Here are Part 1 – Social Networking: The Past, Part 2 – Social Networking: The Present and Part 3 – Social Networking: The Future.
What it comes down to is that there is a common thread between the technologies from thirty years ago, and the ones today. What has changed is that the internet is now ubiquitous and the platforms more sophisticated in enabling people to connect with each other, and find, filter and share content that they find relevant and valuable.
When analyzing new technologies, focus on those that solve a real problem for a large audience (broad or niche) and create a community (i.e. a network or fan base) around that product/service.
So, What’s the Value of Social Media for a Brand?
The most valuable thing that a brand can do in social media is leverage its platforms to listen to, and communicate with, their customers to create an owned advocacy network where a brand’s most avid advocates can
- inform the brand directly on valuable improvements that the brand can make to its product/service
- help other customers solve issues that they’re having with the product/service
- gain exclusive access to content that the advocates crave and can use for their own social activities (participating in forums, blogging, etc.)
This is valuable because
- customers transform into advocates with an emotional connection to the brand
- brands can implement the insights from their advocates into product/service updates, improving their brands in a meaningful way
- advocates earn a real voice in the brand’s development and identity, which only deepens their connection with the brand and makes them want to participate more, leading to more insights and more positive word-of-mouth and content (and high search results) for your brand
- less money and time spent on a customer service team because your advocates are already answering many of the questions that a customer may have. And, they may be answering those questions in a clearer and more timely fashion than your customer service team would
What Does This Really Mean for a Brand?
A tectonic shift in the way a brand manages its business. It must start behaving like a transparent startup, and that directive has to come from the C-Suite down. The value can be tremendous. Social media gives brands a channel to encourage innovation informed by its greatest advocates. It eliminates the guess work when thinking of improvements to your product/service – just listen to your advocates and you know that there will be a consumer base that appreciates the updates.
I’ll leave you with two Warren Buffett quotes:
- “The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective”,
- “There seems to be some perverse human characteristic that likes to make easy things difficult”.
Well, essentially, the same goes for social media. The press and ad agencies and VCs and startups generate a lot of noise and make social media sound a lot more complicated than it really is.
Focus on the simple behaviors – the basic actions that people take online. Understand why people take those actions and empower them to do more of it, while providing them value with your brand. And, remember that it all starts with listening.
A Brand’s Journey to Discovery
Previously, I wrote an introduction to the Reciprocity Theory – my theory that brands must earn their seat in the conversation by becoming a Valued Community Member (VCM). You can read that post here. In this post, I’m going to describe how a brand can identify the types of content to produce and curate, based on the ways that audiences discover brands online, so that the brand can become a VCM.
First, let’s recap that in order to become a VCM, the individual/brand must produce or curate Valued Original Content (VOC). According to AOL’s study “CONTENT: What Drives Consumption?”, the formula for VOC is:
Unique Content + Quality (trusted, fresh, relevant, authentic) Content = Valued Original Content
Now, let’s discuss what kind of content a brand should be producing.
In its study, AOL broke down online activities into two buckets:
- Content Activities; and,
- Communication Activities
The following are my assumptions and interpretations of the infographic above:
- “Seeking/getting info” refers to search (through a search engine like Google or Bing, or within an experience such as within a news site or social network)
- “Seeking/getting info” is not mutually exclusive with “Entertainment” or “Shopping”, as the former can lead to the latter and vise versa
- “Social Networking” refers only to the act of communicating with individuals in one’s network, not the act of discovering or sharing content. The latter is reserved for “Entertainment”
Just as there are two main online activities that audiences participate in, there are two main ways for brands to be discovered by their audiences. I call these the “Discovery Points”, and they are:
- Passive Discovery; and,
- Active Discovery
Passive Discovery
Passive Discovery addresses audiences in their passive state – i.e. while they’re participating in the following activities (defined by AOL):
- Social Networking (which = 15% of online activities); and,
- Entertainment (i.e. video, games, music) (which = 16% of online activities)
It helps me to think of these as activities that you participate in while sitting back in your chair.
You enter an experience (Facebook, Twitter, your favorite news site or celebrity gossip site, etc.), and passively browse, discover and consume the content that is featured that day or in that moment.
In Passive Discovery mode, the VOC is lifestyle/interest focused.
Now say you discover something interesting, and you want to learn more about it. How are you going to discover more information or find more related content? You enter Active Discovery mode…
Active Discovery
Active Discovery addresses audiences in their active state – i.e. while they’re participating in the following activities (defined by AOL):
- Seeking / getting information (i.e. search) (which = 26% of online activities); and,
- Shopping (which = 11% of online activities)
It helps me to think of these as activities that you participate in while sitting forward in your chair.
You’re seeking specific information (more reports on an interesting piece of news or gossip, related content from a publisher you just discovered, information about a product or service that you just discovered, etc.). You actively search, discover and consume this content.
And, thus, in Active Discovery mode, the VOC is product/service focused.
It’s important to note that Passive and Active Discovery are not mutually exclusive, but rather, when coordinated properly, they create a reciprocal ecosystem of content where each guides audiences into the other, as demonstrated in the below Discovery Map.
Now, different products/services follow different purchasing frequencies. For example, you may buy a box of cereal every week, but buy a new cell phone only once every year or two, and lease a car only every three to five years. How do you conquest audiences, so that when they arrive at the “Purchase Point” (the point at which they need to purchase a product/service in your vertical), they choose your product/service over your competitors’?
You must win “Share of Voice”, “Share of Conversation” and, ultimately, “Share of Mind”.
I’ll be covering this in my next post.
