measuring return on investment - ADMA ROI...methodology for measuring return on investment (ROI) of...

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1 a measurement model for content marketing Content Marketing Whitepaper Series measuring return on investment in association with supported by

Transcript of measuring return on investment - ADMA ROI...methodology for measuring return on investment (ROI) of...

Page 1: measuring return on investment - ADMA ROI...methodology for measuring return on investment (ROI) of content marketing, which will be used to support marketers in determining and seeking

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a measurement model for content marketing

Content Marketing Whitepaper Series

measuringreturn on

investment

in association with supported by

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ADMA and a team of leading Australian content marketers under the banner of the ‘Content Collaborative’ have set out with Lonergan Research to help marketers find a means of attributing the impact of content as a part of their marketing mix.

The team has created an open-source methodology for measuring return on investment (ROI) of content marketing, which will be used to support marketers in determining and seeking approval for their content marketing budget.

Content marketing is fast becoming a must for businesses wishing to compete effectively in their respective markets. The use of the Internet by consumers to conduct primary and secondary research prior to purchase has driven the need for marketers to produce content that is useful, informative, engaging and compelling. This, combined with the ability to use content to create customer value and build relationships at the other end of the sales funnel makes the case for content marketing strong.

However, while it is widely acknowledged that a content marketing approach is important to be a customer-centric brand, business is struggling to understand the full value and return that their content delivers, hence making a financial business case for investment in robust content marketing strategies a challenge.

Content marketingOverview

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At a time when consumers are being bombarded with different messages 24/7, not getting drowned out by the noise is a top priority for every marketer. This is why, Customer Experience Management (CEM) becomes crucial to your success. You need to carefully focus on how you customise each customer’s experience to their specific wants, needs, and priorities. Today’s customer is accustomed to receiving content in a myriad of ways, from video to audio to email, websites, SMS, social media, and more. While creating good content is a good step towards success, things shouldn’t stop there. To get the ROI on your content, you need to have the right systems in place to enable management of the entire content lifecycle from creative production and collaboration to publishing and distribution of high quality digital and rich media assets. As a marketer, you’re in a race where your ability to reach customers faster with more and more interesting content will determine your ability to win their business. You need to leverage automation to optimise your customer communications by customising them to each customer, promoting a deeper relationship with every touch. To do that you need to closely manage your content making them readily available for delivery through your website, email, social media, and other channels. Close coordination with each of your channels creates the kind of customer experience you need your customers to enjoy. Kevin OliverCustomer Experience ManagementOpenText

Foreword

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Content marketing is the creation and distribution of content to create a positive value exchange between the consumer and brand via entertainment, information or inspiration that leads to a positive return on investment.

Inherently customer-focused brand marketers know that content marketing is a priority investment for the future. In an effort to cut through today’s information-rich environment a focus on producing high-quality content is essential.

two competing aims

What is content marketing?

content marketing balances

positive valueexchange

positive return on investment

Creates a positive value exchange for the consumer

(includes entertainment, information, emotional/wellbeing, reputational).

ContentMarketing

(the sweet spot)

Leads to a positive return on investment for the client

organisation. Often a direct or indirect financial return, unless

government or non-profit.

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Consumer preference for online content is increasing exponentially. Digital ad spend continues to rise and integrated technology and tracking allow content and advertising to work seamlessly.

Content often provides the glue for a smooth customer experience across a brand’s digital ecosystem spanning advertising, PR, sponsorship and SEO at the top of the funnel through to commerce, CRM and loyalty programs.

However, very few marketers can provide an accurate ROI for their content activity.

Currently, content marketers are overly focused on what they can measure easily. This is a fatal flaw in measurement. The focus needs to change to measuring a path to value. How are we changing the thoughts, intentions or behaviours of consumers in a way that will lead to a financial return?

In order to do this, marketers need to have a clear view of the customer journey, and each piece of content marketing activity must have clear objectives to move people down this path. Integrated technology for digital marketing has now given us visibility into who we reach and how much this costs.

The fatal flaw in current measurement trends

Reach

Engagement

Shareability

Cost per click

Cost per lead

But the focus needs to shift to what we don’t know… Conversion

sentiment

Spend

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two competing aimscontent marketing balances

positive valueexchange

positive return on investment

Creates a positive value exchange for the consumer

(includes entertainment, information, emotional/wellbeing, reputational).

ContentMarketing

(the sweet spot)

Leads to a positive return on investment for the client

organisation. Often a direct or indirect financial return, unless

government or non-profit.

Customer journey metrics sit here. These measure a change in consumers down the journey, which will directly or indirectly lead to a return. These are the key metrics.

To cross this chasm, marketers need to map out multiple customer journeys, create KPIs for every stage of those

journeys and track each customer touchpoint.

And this is not always easy.

Engagement metrics sit here. These are important and can predict ROI, but do not necessarily drive return, any more than showing Game of Thrones episodes to sell cars.

the keymetrics

engagementmetrics

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discover COMMITCOMPARE retainCONSIDER

goal:

make the case stand out win out contract signed partner happy

goal: goal: goal: goal:Finding the best options to consider for their engagement and loyalty needs.

• Blog• Case studies• Press• Newsletter• Webinar• WOM• Conferences• Assets• Outbound

• Product tour• Testimonials• Case studies• Feature lists • Pricing sheets• Product demos

• Sales calls• Sales meetings• Example implementations• Contract details• Pricing specifics • Implementation steps• Rules of engagement

• Contract specifics• Supporting documents• Kick off steps• Technical assistance• Design assistance• Expert strategic counsel

• Strategy documents• Performance reports• SLA• Client check-ins• In person meetings• Technical support• Design support• Expert support

Exhaustively compare the options and select a few front runners.

Identify the company or solution they want to work with to foster loyalty.

To enter the best partnership agreement and peace of mind in decision.

To prove program’s worth and continue to grow with partner.

What touchpoints are available for you to move a customer through the phases*?

Customer Journey metrics are hard but essential

Most advanced digital marketing automation products can provide KPIs for some stages of the customer journey. However, the challenge is often at the top of the funnel with paid and earned media sources. Also it’s rare that these systems combine offline metrics such as brand awareness. This capability rarely comes as default on most content management systems/ecosystems even though they are a direct link to ROI and essential for delivering a true business case for content marketing activity. It may require significant investment in time or budget to overcome this.

*Not everyone will complete all phases. Some will never become a customer.

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Customer journeys, combined with trigger-based content, allow the creation of segments of one. This approach allows marketers to reach the nirvana of perceived one-to-one content marketing at scale. This allows you to send the right message, to the right person, at the right time.

Journey maps need to be customised to each customer and take in disparate information sources. These need to be personalised by persona, product, need state etc.

Having a range of customer journeys will allow branded content to be highly targeted and, importantly, allow brands to clearly and easily articulate their goals at each point. Knowing the touchpoints will allow marketers to turn general KPIs (eg. a goal to drive preference) to specific KPIs (eg. the number of website visits to particular product page) and therefore establish a ROI.

Expect to have a range of customer journeys

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There are three broad ways that content marketing can demonstrate a return on investment.

So what does the model look like?

Improving the conversion

Bringing more people into any stage of the journey

Increasing lifetime value(or average revenue per customer)

The first step is to create and allocate a lifetime value of a customer at each stage of the journey. This is dictated by the lifetime value of the customer and the probability that you will convert that customer to a sale at each stage of the journey.

A detailed guide to applying the model is included as Appendix A. This shows how to calculate each stage of the journey and demonstrates how a return on investment on each piece of content can be applied.

You can use this model to measure the impact of one piece of content on one given journey as well as looking at this content piece working over time. This model also allows you to look at multiple content executions at the same stage of the journey (think weekly emails or social content) as well as looking at aggregating all content activity at each stage of the journey and applying a ROI to an integrated content marketing program.

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the model

conversion: 85% of journeypopn

conversion: conversion: conversion:

1.8 years25% 35% 45% 65%

discover COMMITCOMPARE PURCHASECONSIDER RETAIN

Example

KPI: awareness KPI: consideration KPI: request quote KPI: sales KPI: years retainedKPI: begin negotiations

acquisition ROI

retention ROI

Create KPIs for every touchpoint (or at least the major ones). Set a customer journey KPI for each stage.eg: a microsite with a sophisticated product comparison tool would aim to move people from compare to consider, with the KPI being the number of quotes requested.

Create a conversion rate for each stage of the journey based on current, holistic behaviour and marketing activities (ie. not the content you are measuring). If none are available, identify proxies or norms that are appropriate.

Identify conversion rates at each step based on the status quo (if hard ROI required).Remember, this information should be specific to people on this customer journey.

1 2 3

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summary

Today’s information-rich environment makes it crucial for marketers to find new ways to communicate with audiences. As content marketing continues to charge ahead as a powerful way for customer-centric brands to engage their audience, past ambiguity of accurate ROI measurement is no more. This measurement model helps marketers justify budget allocation towards content creation and reinforces the opportunities content marketing creates for reaching and engaging each audience. The model in the appendix offers a detailed breakdown of the process for measuring content marketing success, and makes it impossible to ignore the strong impact of content marketing.

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appendix a

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how to calculate roi at the point of sale and beyond

STEP 1 Create a customer journey

STEP 2 Reference marketing funnels

STEP 3 Calculate your marketing multiplier

STEP 4 Calculate your relative value

STEP 5 Calculate your relative $ value

STEP 6 Calculate your change in value

STEP 7 Calculate your marketing spend KPIs

STEP 8.1 Calculate returns for campaign style content

STEP 8.2 Calculate returns for perennial trigger-based content

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STEP 1

conversion: 85% of journeypopn

conversion: conversion: conversion:

25% 35% 45% 65%

discover COMMITCOMPARE PURCHASECONSIDER RETAIN

Example

KPI: awareness KPI: consideration KPI: request quote KPI: sales KPI: years retainedKPI: begin negotiations

acquisition ROI

retention ROI

Create a customer journey

Create a customer journey from the time someone in the target market first becomes aware of your

product to them being a loyal customer. You will probably need a specific journey for each

product/service category, and each segment within each category. If you know the conversion from one

stage to the next, include this information.

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STEP 2

discover

COMMIT

COMPARE

PURCHASE

CONSIDER

RETAIN

Awareness

Consideration

conversion

loyalty

advocacy

If you don’t know conversion rates, you can usually estimate these from marketing funnels, which often

contain key stages from the journey.

population perspective

individual perspectiveReference marketing funnels

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We need to create a marketing spend KPI. This requires a marketing multiplier. The multiplier is simply total marketing spend as a proportion of revenue on the product/service.

step 3

Calculate your multiplier using the formula:

Total marketing spend Total revenue

eg. if the credit card creates $100mil revenue and has a marketing budget of $5million, then 5% of revenue will be spent on marketing.

This % is used to calculate your marketing spend KPIs.

marketingspend

multiplier

Calculate your marketing multiplier

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relative value formula

Calculate a relative value, using the formula:

This tells you, for example, that someone who has committed but not completed a sale is worth 0.85 (85%) of a signed customer, and someone who is merely aware

of the product is worth 3% of someone who has signed on the dotted line.

You may choose to alter the relative value to fit strategic objectives, eg. awareness is more important for a brand seeking first-mover advantage, whilst a timeshare product with a weak value proposition may require additional effort from consider to commit.

the cell immediately below the cell to the upper left

start the calculations at the bottom and work upwards

These values are a starting point.

Conversion Relative value

Population 0.85 0.03

Discover 0.25 0.03

Compare 0.35 0.13

Consider 0.45 0.38

Commit 0.85 0.85

Purchase 1 1.00

step 4Calculate yourrelative value

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relative $ valueformula

Calculate the relative $ value through multiplying the relative value by the lifetime value of a new client.

In our example, we set the lifetime value at $100.

Relative Value Lifetime value

Calculate your relative $ value using the formula:

Conversion Relative value relative $ value

Population 0.85 0.03 $2.84

Discover 0.25 0.03 $3.35

Compare 0.35 0.13 $13.39

Consider 0.45 0.38 $38.25

Commit 0.85 0.85 $85.00

Purchase 1 1.00 $100

Now we know the value of a customer/potential customer at each stage of the journey.

step 5Calculate yourrelative $ value

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change in valueformula

This will be used to calculate ROI.

Relative $ value below Relative $ value above

Calculate your change in value cost, using the formula:

start the calculations at the bottom and work upwards

In the example below, making someone aware of the product is worth 50c in revenue, whereas helping someone move from commit to purchase is worth $15 in revenue. Note: this is $15 and not $100, as we assume that 85% of the people we help move along to this step would have signed on the dotted line anyway. Recovering a sale defined as lost is a different activity.

CHANGE IN value

$0.50

$10.04

$24.86

$46.75

$15

Conversion Relative value relative $ value CHANGE IN VALUE

Population 0.85 0.03 $2.85

Discover 0.25 0.03 $3.35

Compare 0.35 0.13 $13.39

Consider 0.45 0.38 $38.25

Commit 0.85 0.85 $85.00

Purchase 1 1.00 $100

Content marketing often aims to move people from one stage of a consumer journey to the next, so we need to calculate the change in lifetime value from one stage to another.

step 6Calculateyour change in value

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$0.03

$0.50

$1.24

$2.34

$0.75

$0.50

$10.04

$24.86

$46.75

$15

marketing spend KPIs

Now that we have a change in value we can set a marketing spend KPI, or an amount we are willing to spend per person to

move people down the consumer journey.

Marketing spend multiplier (step 3)Change in value

Calculate your marketing spend KPIs using the formula:

Conversion Relative value relative $ value CHANGE IN VALUE marketing spend kpis

Population 0.85 0.03 $2.84

Discover 0.25 0.03 $3.35

Compare 0.35 0.13 $13.39

Consider 0.45 0.38 $38.25

Commit 0.85 0.85 $85.00

Purchase 1 1.00 $1000.05

0.05

0.05

0.05

0.05

If we assume in the example below that we aim to move people from compare to consider, we are increasing the value of each person we move down one level by $24.86, implying we have a target marketing spend of $1.24.

step 7Calculate yourmarketing spend KPIs

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returns forcampaignformula

In short, the return calculation is:

increase in value number of people (over the lifetime of the content)

For ‘campaign style’ content, this is a simple calculation if you can attribute each request for a quote to this piece of content.

Conversion CHANGE IN VALUE marketing spend kpis

Population 0.85

Discover 0.25

Compare 0.35

Consider 0.45

Commit 0.85

Purchase 1

step 8.1 (campaign style)Calculate returns for campaign style content

$0.50 $0.03

$10.04 $0.50

$24.86 $1.24

$46.75 $2.34

$15 $0.75

(which moves people down the consumer journey)

e.g. a piece of content that moves 1,000 people from discover to compare will generate an increase in future sales of ($10.04 x 1,000 =) $10,040. This should be achieved with a marketing budget of less than (0.05 x $10,040 =) $502.

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Improving the conversion rate

The basic principle is:

value if content is in place value if content is not in place

For perennial trigger-based content, you may be changing the conversion rate,

as you are enhancing an existing mechanism.

value of content

step 8.2 (perennial)Calculate returns for perennial trigger-based content

Conversion CHANGE IN VALUE marketing spend kpis

Population 0.85 $0.50 $0.03

Discover 0.25 $10.04 $0.50

Compare 0.35 $24.86 $1.24

Consider 0.45 $46.75 $2.34

Commit 0.85 $15 $0.75

Purchase 1 - -

0.40

If you are increasing conversion by 5% (from 35% to 40%) and over the life of the content you expect 100,000 people to see it, you are moving 5% x 100,000 = 5,000 people down one stage, for an increase in sales of $124,300 (5,000 x $24.86) and a targeted marketing cost below $6,200 (5,000 x $1.24).

In this example:

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HOW TO CALCULATE ROI AT THE POINT OF SALE and beyond

GOAL:advocacy

GOAL:retention

goal: increase basket size/average revenue per customer

If your goal is advocacy, in theory you can measure the impact of new people coming into, or moving along the purchase funnel.

Attribution can be hard in this instance, however questioning respondents at later stages in the funnel may help here.

If your goal is retention, the calculation is simple:

People reached X increase in lifetime value = return.

If your goal is to increase basket size/average revenue per customer, you can calculate ROI as follows:

People reached X increase in average revenue per customer = return.

Increasing average customer revenue

What if your timelines are long and you will potentially have to wait years to measure ROI? Choosing a realistic time scale will impact ROI calculations. You might need to use a leading indicator (e.g. an advocacy measure like Net Promoter Score, or intent to change providers) to provide faster feedback.

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Fergus Stoddart Chris LonerganManaging Partner at Edge

Managing Director at Lonergan Research

One of Australia’s leading content marketing and digital media experts, Fergus applies his 20 years of marketing and publishing experience to his role as Managing Partner and Commercial Director at the Creative and Content Marketing Agency Edge. Fergus is an industry pioneer and leader in the content marketing space. He teaches the marketing association ADMA’s Content Marketing Course, is an industry event keynote speaker and is frequently published through industry press and whitepapers. With award-winning agency Edge, he helps brands and organisations develop compelling storytelling and publishing platforms that connect with audiences and build communities over time. Clients include Suncorp, Westpac, VW, Lendlease, Australia Post, Petbarn and AAMI.

A career researcher, Chris has over 20 years market research experience including eight years as CEO and Founder of Lonergan Research. Chris has a thorough understanding of marketing and business strategy and issues gained on the job in his clients’ boardroom and through formal training (B.Sc (psych), MBA, QPMR).

Chris believes that modern day marketing should not be constrained by traditional techniques or what has been done before, but simultaneously does not stray from the principles of robust, representative data and evidence-based insights. Lonergan Research provides bespoke research to a range of clients including Uber, Westpac, Westfield, Nivea, Unilever,David Jones, Nudie, eHarmony and the Australian Federal Police.

ADMA’s Content CollaborativeADMA has pulled together some of the leading practitioners in the content marketing world to help develop this fast-moving space. Brands include Bupa, AAPT, Tafe NSW, Nestle, Lendlease as well as a collection of agencies and consultants. Special thanks to the members of the Collaborative:

The Association for Data-driven Marketing and Advertising (ADMA) is the principal industry body for data-driven marketing and advertising. ADMA isthe ultimate authority and go-to resource for effective and creative data-driven marketing across all channels and platforms, providing insight, ideas and innovation for today’s marketing industry.

OpenText Customer Experience Management (CEM) software solutions create a better way for organizations to combine content and process to deliver optimized, continuous and connected customer experiences that help increase engagement, drive revenue and maximize Customer Lifetime Value. For more information about OpenText (NASDAQ: OTEX, TSX: OTC) visit opentext.com

Jane Power BupaMarcus Marchant QBEFiona Corsie APT Mark Roppolo REA GroupFergus Stoddart Edge Bobbi Mahlab Mahlab MediaPaul van Wensveen Which-50media Paul McGrath LendleaseNoni Rosengren ToyotaRichard Bennett Nestle Catrin Hobart Tafe NSW Janine Pares Think Smart Marketing

Lonergan is a full service, customised market research agency. It has expertise across a wide variety of research approaches including content marketing, brand image, new product development, research for small and medium enterprises and PR research. Please call +61 2 9046 5600 for further information.