I’m not a handy person, but I know how to use a tape measure. If I use a tape measure to calculate the height of the fence, I can determine the value of my house, right?
Well, no, of course not.
However, when it comes to measure the effectiveness of marketing activities , we often make leaps and bounds. We look at some arbitrary measurement – like page views or downloads – and try to link it to return on investment.
In the latest episode of Marketing Makers – series for marketers, I dive into the process of measuring return on investment for marketing – and more specifically, the content that powers the marketing engine. I’ll guide you through the art and science of putting all those arbitrary numbers together to tell a story about helping business performance.
Table of Contents
Why is measuring marketing so difficult?
Managing Marketing Expenses, written in 1948 by James Culliton, introduced many ideas about the marketing mix, which I talked about in Marketing Makers first episode .
I loved this book partly because of the introduction by Culliton. In the preface, he writes:
The discovery of the fact that I could not find what I had begun looking for – useful numerical data on what manufacturers were spending on marketing – made the preparation of this book become disturbed.
Chapter 1 begins with the subtitle “I wish I knew…” and ends with the following observations:
Managing marketing expenses is a work of ‘smart art.’ This work is not entirely scientific and many simultaneously believe that it will never be perfect but it should be more than it is… However, the emphasis on artistry or intelligence is detrimental to for others will not bring real progress.
Most 75 years later, marketers are still in the same position.
It is not that we suddenly lose some of the abilities we had when Don Drapers of Madison Avenue roamed the earth. Marketers have struggled to find a return on marketing investment as long as the reality persists.
But the idea of marketing as an “investment” is a relatively new development. The concept of return on investment (ROMI) gained popularity in the late 1990s and early 2000s digital technology begins to promise more detailed marketing-related analysis.
Whichever acronym you prefer — whether it’s ROMI or ROI or even ROC (return to customer) — the goal is the same: to maximize the effectiveness of each marketing expenditure.
The goal of #ROI, ROMI or ROC is to maximize the effectiveness of #marketing costs,” said @Robert_Rose via @CMIContent. #Measurement #MarketingMakers Click to Tweet RELATED CONTENT TO BE CLICKED: Proving Content Marketing ROI Is An Impossible Dream?
Are you measuring campaigns or content?
In one view, the marketer’s job is to combine the elements of the marketing mix in the least expensive way, using the cheapest ingredients.
But here’s the trick. This perspective directs marketing towards a very specific goal – efficiency.
Efficiency is a simple ratio between useful output and total input. That is P/C – where P is the amount of useful output (product) and C is the cost of the resource consumed.
This approach to measurement is good if marketing is simply a cost in total invest into a ‘successful’ business.
But there is another side to the marketing measurement coin. How do you measure an investment in an asset that has grown in value over time?
Remember our rate for measuring marketing effectiveness? It is the amount of product (i.e., media, campaign or event) divided by the cost to produce it.
In most cases, you have very little control over costs (physical space, wages, etc.) and every company has to pay for them. Your effort is to achieve the best and make the most of them.
But you can influence the product that is produced.
Traditional marketing and advertising related to campaigns exists as a set of activities at a time. Think of a three-month TV commercial, a month-long digital campaign, or a week-long sponsorship event. Those are no longer investments when the period ends.
Content marketing aims to create an asset that increases in value over time as costs – relative to the value the product provides – drop by a percentage.
For example, think about the value Monster.com has created with Career counseling center . In its first year, the site – which took a real budget to launch – had several hundred thousand pageviews. But by the end of the second year, it had developed 48,000 new leads, 22% of which were purchased organically. It also effectively generated $3 million on Paid advertising spend .
. @Monster’s Career Center has effectively brought in $3 million of its paid ad spend, @Robert_Rose via @CMIContent said. #MarketingMakers Click to Tweet Basically, you have two ways to make your company more valuable: You can drive more revenue, or you can generate more efficiency.
From a measurement perspective, campaign-based marketing is almost always focused on creating efficiency and saving the organization money.
A marketing campaign is an expense that provides value at a time. Content marketing is an investment that – if done well – offers increasing value over time. That’s why it should be measured as an asset.
Content marketing measurement pyramids
Marketing measurement for either approach involves agreed reference points.
I like to think of marketing metrics in an inverted pyramid:
Here’s how it works:
- Set goals . Target represents the investment value achieved by the common purpose. It should be like “Drive $10,000 in new revenue this year. ”
- Listed your key performance indicators . Composite measurements have been agreed to be the standard by which progress is assessed. Depending on your goals, this could be average conversion rate, number of leads, quality of leads, revenue per new customer, or another measurement. Decide how often to review KPI to see if you need to edit the course. It can be monthly, weekly or daily depending on how long you set to reach the goal.
- Agree on the numbers. Index are more granular measurements of what can help you achieve or optimize any of your KPIs. Think of these as the “must-have-right” numbers to optimize your KPIs.
Do you need more traffic to reach your goals? Do you need more conversions from your existing traffic? Almost certainly. Need better content? Do you need to test ads? Do you need to try different paid means? Do you need to spend less money on PR? List all the things that you will keep track of.
This approach gives you a very organized and discrete set of measurements to help you measure progress towards your particular goal.
You can then put together a measurement pyramid for each of your content or marketing team’s goals.
The pyramid below shows four goals – two campaign goals (a 10 % increase in qualified leads and 20 % increase in leads in one year) and two target contributions (a 10 % increase in address reach and 10 % decrease in content cost.)
The metrics to watch as they affect KPIs are likes/followers, shares, traffic, time on site, cost of content production by platform, cost of traffic and SEO ranking.
What’s next? Measurement purpose
What can we expect for future marketing measurement?
One thing that won’t change is that you need to understand what’s important to your business so you can focus on measuring and refining based on what you find. Recently, CEO Kate Bradley Chernis explained how her team measures what matters in this segment of the episode.
So what is changing? However, more and more artificial intelligence will be used to process the mountains of data generated from consuming digital content.
In most cases, this measurement is used to understand who is entering our sphere of influence – and intent they are there sometimes.
The idea of intent data is to determine who should be targeted with specific campaigns and when.
For example, many companies use website visits as a trigger to retarget visitors with ads.
Technology exists to track what visitors do on your site and only target those who have taken an action you’ve identified as demonstrating purchase intent. Intent data makes decisions about showing specific visitors a different ad or no ad at all based on actions they took or didn’t take.
There will be more artificial intelligence and algorithmic ways to measure marketing in the coming years.
However, remember that you don’t have to measure everything just because you can. Set standards to measure success and ensure agreement is reached to measure progress towards something important.
You don’t have to measure everything just because you can, says @Robert_Rose via @CMIContent. #MarketingMakers Click to Tweet Don’t fall into the trap of making things important because they are measurable. Make them measurable because they matter.
Cover photo by Joseph Kalinowski / Content Marketing Institute