Content marketing in Kenya is growing in popularity as a method to engage customers and generate leads. Research shows that 78% of prospective clients prefer to learn about businesses through articles and content distribution rather than traditional ads. But how to measure the ROI of content marketing? This article will give you the formula.
Creating engaging content takes time, money, and resources, and many small businesses don’t budget for it, erroneously believing that it’s not as important as direct advertising campaigns.
Even those companies who do write blogs and maintain a social media presence don’t have a clear picture of whether their content distribution is bringing success.
It’s difficult to calculate the return on investment (ROI) of content marketing. It takes time to cultivate a relationship with prospective clients, and a prospect can follow a business for a few months before ultimately becoming a client.
Additionally, 38% of businesses have a content marketing strategy, but it’s not documented.
It is wise to invest in your content distribution. The statistics on content marketing show that 76% of B2B marketers say that videos play a significant role in increasing their sales, and 91% of consumers appreciate receiving promotional emails from companies they have bought from in the past.
In fact, 30% of marketers think that videos are even more important than having an actual website!
Advertising has changed drastically over the years, from paper ads, radio jingles, and TV commercials broadcasting to the general public. Companies now have the capacity to target their intended audience with much more effective results.
How successful is your content marketing, and what is your ROI?
Your ROI, the return on investment, determines how much benefit you received from your content marketing. To determine your ROI in any investment, divide the net profits by the amount invested.
ROI = (Gains made from Content Marketing - Cost of Content Marketing) / Content Marketing Cost
For example, if your business spends $1000 a month on content marketing and it results in $2000 of sales each month, your ROI would be (2000 – 1000) / 1000, or $1.
That means that for every $1 spent, you profited $1 for a 100% return on your investment.
In order to determine your content marketing ROI, you will first need to calculate the total amount you spend on your content marketing each month. This includes your:
The total cost is your investment amount.
It can be difficult to calculate the exact number of sales or clients you gain through content marketing, but the following method will help you calculate a pretty close estimate of what you can expect:
You may be surprised to find which approach brings in the most leads for your company. 73% of content marketers say that webinars generate the best leads, and 68% found that videos gave them a better ROI than Google Ads.
For example, if your content brings in 1000 leads and your conversion rate is 10%, you can expect to gain about 100 new customers a month.
Take your total monthly content marketing cost and divide it by the number of new customers per month
You know how many customers you can expect to bring in, but how much value will the average company bring to your business?
If you have been tracking customer data, such as through a store loyalty program or by storing their demographic data, you can evaluate how many customers are repeat customers, how long do they continue to patronize your business, and what is the average sale amount.
For example, if your average customer spends $1000 a year and continues purchasing from your company for an average of 2 years, the customer has a $2000 lifetime value to your company.
You now have all the data you need to calculate your ROI of content marketing.
For example, if your total content marketing costs are $5,000 a month and is generating 500 new customers, your cost per new customer is $10, and they will generate $2000 over two years.
Keep in mind that your amounts are not static, and they can change depending on many factors, including a change in your marketing strategy and customer service, which can impact the length of time a customer will remain loyal to your company.
Content marketing can be a very profitable strategy. Social media, webinars, videos, blogs, and targeted emails can generate leads that result in customers and sales. Calculate your ROI of content marketing using the formula above to prove that it is profitable and worth investing your money and resources on it.