Content Marketing is one of the biggest strategies in Marketing but rarely understood as a revenue driving discipline. The common sense behind content marketing is that somehow it works. Most often this mindset is informed by the reasoning that people reading your content will trust your company that you can build an audience. However, for number driven managers this explanation often fails to convince. So what is the mathematical reason why content marketing can work?
Let's consider the case of e-commerce. In e-commerce the money is made by sales or interactions on the website's landing pages, i.e. pages that facilitate a transaction. Content marketing usually does not happen on these pages, but on distinct blog pages, which in their intent have an informational character. I will refer to these articles which do not feature transaction possibilities as Content Pieces (CP).
So, by itself content pieces do not drive revenues. What content does bring however is traffic. In every conversion funnel, the user starts by noticing his need for solving a given problem. Next up, they start rearching how they can satisfy this need, after which they will try to navigate to the right supplier whereinafter they conduct their transaction with the chosen one. At each of these steps the consumer uses external sources which lead them to the next step in their process, each representing a chance for gaining traffic through Google searches or gaining reputation in word-of-mouth. Content marketing can be applied exactly at these points to drive value for your business.
The content value formula
The value of an individual content piece is hard to measure. Next to effects like branding and reputation building, the most direct value of a given content piece is given by the additional traffic it can drive to your transactional pages. Here, the flow is as follows.
- An user searches for information related to a transactional topic relevant to the company.
- The user visits a content piece delivering the related information and reads the information.
- The user finds a link for taking the next step in the conversion funnel - the landing page
- The user conducts a transaction on the landing page
- $
Following this reasoning, the value of a page can be calculated based on the following formula
m = Number of LPs linked to k = Number of Traffic Sources for the CP (content piece) -> i.e. keywords in SERP or other sources CTR(to LPj) -> Click Through Rate to the Landing Page j CR(LPj) -> Conversion Rate of the Landing Page j t = Number of other CPs linked to CTR(CPr) -> Conversion Rate to another content piece r Val(CPr) -> Value of that Content Piece r (This is recursive)
The second part of the sum refers to other content pieces that are linked to the content piece at hand, for example when you would have a "related article" or other further information embedded in the article. See the following graphic as an example for this interconnection between content pieces.
Using the variables of the function we can derive a number of ways that we can maximize the value of a given content piece. Here are some strategies:
- Maximizing m: Creating content that relates to a wide number of landing pages, e.g. an article which helps understand which service you need
- Maximizing k: Creating content which is easily finable and can work on multiple traffic sources (e.g. Facebook, Google, etc.) or caters to a wide variety of keywords, e.g. long-detailed content for popular topics
- Maximizing Traffic: Writing about a very popular topic
- Maximizing CTR(toLP): Creating content that leads people to click towards the next step, e.g. content that clears all open questions and enables transaction
- Maximizing CR(LP): E.g. by selecting a target landing-page which works well or by improving the landing page at hand
- Maximizing TicketVal(LP): e.g. by selecting a high value target landing page
- Maximizing t: Creating content that is closely related to other content pieces which people want to explore further -> cross-linking
- Maximizing Val(CP): Maximising the value of the linked to content pieces by applying the aforementioned strategies there as well
Based on these insights a few main principles can be derived:
- Keep track of the content you have created: Make sure you are able to add cross-links to other content pieces even after a specific content piece has been published. Adding these connections can continuously increase the value of a given content piece without needing to adding to it
- Maximize the distribution of Content: More traffic will lead to more value
- Consider the point in the conversion journey your content caters to: Broad informational content may generate more traffic but this can quickly be offset by the CTR(toLP) which will decrease proportionally (as people are not ready for conversion yet)
- Content marketing is a numbers game: Using content to generate traffic adds another layer to the acquisition-funnel, it may increase the initial funnel size but this gain will be way lower in value than a gain in later stages of the funnel. You will need to be able to create content cheaply and at scale to engage in content marketing profitably if your only revenue driver is only the conversions on your landing pages
- Value grows with size: When applied correctly, content marketing can generate tight knit networks of content which keep users on your page and increase its value with each content piece added to the network.