How to track the financial value of your content

Tracking the financial value of your content sounds like a silly thing to attempt. Until you do it, that is.

If you have ever tried to understand the return on investment of your content, but haven’t been able to get sensible answers out of your digital marketers, read on. This is for you.

If you want to skip the lesson and go straight to the template,
DOWNLOAD THE CONTENT VALUATION TEMPLATE HERE.


Do you want us to come to you to teach this to your team?

We last taught this in Melbourne in Feb 2017. Contact us to get started.


Doesn’t content have an ROI problem?

According to the internet, it does. And according to the internet, it’s not an insignificant problem, either. It’s such a big problem that there are pages and pages of content, maybe hundreds of articles about it. One blog[1] went so far as to claim that reducing content to a dollar value is not possible. Others have confused the notion of ROI with the notion of impact or awareness, instead of the calculation of dollars.[2]

Given that most of those articles and blogs address marketing, and are confused about whether the return is awareness, impact, or finance; and given that the articles are also confused about whether the ROI relates to content assets or marketing assets, we can consider that the content ROI problem is simply a definition problem.

Therefore, before you learn the mathematics that will show you how to track the financial value of your content, we both need to be on the same page. The maths you’ll find here you won’t get from a marketer. This about value to your business, not value in relation to your marketing spend.

Content assets are items that grow the financial value of your business.

The return on investment of pay-​per-​click advertising is not the same thing as the financial value of content assets that you own and maintain.

Pay-​per-​click advertising is an expense, or cost of sales. For it to be available, you pay whenever someone clicks a link to access whatever is ‘behind’ the advertisement. The lifetime of PPC advertising is only as long as you continue to support the expense.

In contrast, when you have a whitepaper developed or designed for you, that too is an expense, or cost of sales. The difference is that you upload it behind your own wall, which requires a different kind of payment: It’s payment in personal information. Then when it’s made available, you don’t pay to keep it available. The flow is instead the other way: It earns you personal information and, by extension, income. Apart from the initial expense, the item works to gain you revenue, and its maintenance is limited to perhaps 15 minutes annually to keep it updated.

A strategist recognises that every piece of content must support the financial future of an organisation, and be able to explain how it does so. If content is not designed in such a way that it supports the direction of an organisation, developing it is a waste of time, money, and effort.

That’s why learning how to demonstrate the financial value of content assets is critical. It gives CEOs and Managing Directors a method of seeing the value of content in a way that they understand. It then allows them to demonstrate to the board, to the partners, and the Chief Financial Officer the ways in which the company’s intellectual property is adding to the bottom line of the company. This puts the firm in a more powerful position when it comes to mergers or acquisitions down the track, because the intellectual property has been properly valued and given its rightful place in the valuation of the business.

Track the financial value of your content

There are two ways that you can track the financial value of your content. You can:

  1. Download this free template, which does all of the heavy lifting for you. Or,
  2. Learn the mathematics.

The mathematics isn’t that involved, but it varies depending on the type of content you’re working to track. In this lesson you will learn how to track the content of nearly every content type that is also properly an asset. A nod to the originator: The foundation mathematics are not mine. They’re adapted from this source. Please read the original!

Learn the mathematics

The mathematics of calculating financial value are here in four parts. Those are:

  1. Abbreviations used in the calculations
  2. Calculate value of books and ebooks
  3. Calculate the value of webinars
  4. Calculate value of website posts, pages, online series
  5. Calculate value of downloads and lead magnets


Abbreviations used in the calculations

There are some key abbreviations that you need to use in the calculations. These are:

EV Economic value
LV Lifetime economic value
CoP Cost of production
CLV Client lifetime value
DC Leads from downloads that turn into clients
NS Number sold or downloaded
PP Pages
R Revenue earned
F Fee or retail price
Y Years in use
VA Value added to your business
SR Sales required to break even
LVA Lifetime value added


Calculate the value of books and ebooks

The value of books and ebooks is determined by how many you sell.

EV = NS * F
10 sold * $3.95 ea = $39.50 Economic Value

The lifetime value of the books and ebooks is determined by the average number of sales per year, multiplied by the number of years they’ve been available.

LV = EV * Y
$39.50 Economic Value * 0.3 years available = $11.85

But you won’t necessarily have $11.85 in economic value added to the business simply by selling 10 copies of books. This is because you have a cost of production

VA = EV — CoP
$39.50 Economic Value — $150 Cost of Production = -$110.50 Value Added

You can work that same calculation to determine the Lifetime Value Added simply by replacing the EV with the LV.

LVA = LV — CoP
$11.85 lifetime value — $150 Cost of Production = -$138.15 Lifetime Value Added

Therefore you know how many copies you need to sell so you can start to positively gear your investment. If your LVA is a negative integer, work the calculation with F also as a negative integer so you get a positive number returned to you.

SR = LVA /​F; or, if you have a negative integer: SR = (-LVA) /​(-F)
-$138.15 Lifetime Value Added /​-$3.95 ea = 34.97 Sales Required to break even.

For the purposes of that example, you’d need to sell 36 more copies so that your LVA was positive.

» DOWNLOAD THE CONTENT ASSET VALUATION TEMPLATE «


Calculate the value of webinars

The value of webinars is initially determined by how many tickets you sell. That’s what the calculations show below. But you could also calculate the value of webinars based on how many clients you gain. If you want that calculation, contact us to let us know.

EV = NS * F
10 sold * $55 ea = $550 Economic Value

The lifetime value of the webinars is determined by the average number of sales per year, multiplied by the number of years they’ve been available.

LV = EV * Y
$550 Economic Value * 0.3 years available = $165

But you won’t necessarily have $165 in economic value added to the business simply by selling 10 tickets. This is because you have a cost of production:

VA = EV — CoP
$550 Economic Value — $85 Cost of Production = $465 Value Added

You can work that same calculation to determine the Lifetime Value Added simply by replacing the EV with the LV.

LVA = LV — CoP
$165 lifetime value — $85 Cost of Production = $80 Lifetime Value Added

You can see immediately that the value of this webinar is much higher than the value to your business of the book or ebook.

Pro tip: You can work this out in advance, before production even begins, if you know your average acquisition figures. In fact, one could argue that it would make good business sense to do so.

DOWNLOAD THE CONTENT ASSET VALUATION TEMPLATE


Calculate the value of downloads and lead magnets

The value of downloads is determined by the number downloaded, but it’s factored on your average client lifetime value. This means that you need to know roughly what percentage of downloads turn into clients.

Of critical importance here is the understanding that if you do not follow up the downloads, and do not actively turn those leads into sales, then your download will have no value unless you can prove that it was a deciding factor in someone making a purchase decision.

DC = NS * %C
300 downloads * 10% downloads that become clients = 30 downloads-​to-​clients

The economic value is then based on the lifetime value of the clients that you gain.

EV = (DC/​100) * CLV
30 downloads-​to-​clients /​100 * $15,000 client lifetime value = $4500 Economic Value

The lifetime value of the download is determined by economic value, multiplied by the number of years they’ve been available.

LV = EV * Y
$4500 Economic Value * 2 years available = $9000 Lifetime Value

But you won’t necessarily have $9000 in economic value added to the business simply by gaining 30 clients as a result of getting your download. This is because you have a cost of production. If you have a sales team, you might choose to include the cost of sales followup into the cost of production. That would give you a more accurate figure.

VA = EV — CoP
$4500 Economic Value — $3000 Cost of Production = $1500 Value Added

You can work that same calculation to determine the Lifetime Value Added simply by replacing the EV with the LV.

LVA = LV — CoP
$9000 lifetime value — $3000 Cost of Production = $6000 Lifetime Value Added

DOWNLOAD THE CONTENT ASSET VALUATION TEMPLATE
and avoid doing all the maths yourself!


Calculate the value of your website

Finally, the thing you’ve been waiting for: How to calculate the value of your website.

Or rather, how much value each page of your website contains. While your website is a singular asset, each page is also a content asset. You are better off calculating based on website sprawl than you are as a singular entity, because more pages ought to earn you more revenue, not less.

One exception may be your blogs. Given people tend to read blogs and use blog articles as lead capture items in and of themselves, you may choose to value each blog separately, and consider each one as being comprised of one website page.

EV = R /​PP
$15000 revenue earned via website /​50 pages = $300 Economic Value

Or, for blogs:

EV = R /​PP
$800 revenue earned as a result of one blog /​1 page = $800 Economic Value

Again, the value added to your business is not the economic value of the content, because it has a cost of production.

VA = EV — CoP
$300 Economic Value — $16000 Cost of Production = (-$15,700) Value Added

Or, for the blog example:

$800 Economic Value — $160 Cost of Production = $640 Value Added

The lifetime value of the site is determined by the economic value multiplied by the number of years it’s been available.

LV = EV * Y
$300 Economic Value * 2 years available = $600 Lifetime Value

Again, over a lifetime we still also have a cost of production.

VA = LV — CoP
$600 Lifetime Value — $16000 Cost of Production = (-$15,400) Value Added

That might look terrifyingly difficult to make up and break even. But, if you have lead magnets, webinars hosted on your site, or blogs that actively bring you revenue, then you will break even reasonably quickly. Also remember that blogging is a cumulative activity.

The slow burn that we talk about is slow for a reason! Blogging is ever a fast and easy way to make some cash. If you have someone working for you part-​time for a year, it might well cost you $16,000 to produce a series of blogs. What you then have to do is make sure that the blogs are returning you an economic value.

Knowing real content value gives your planning real meaning

Whether or not your calculations are positive, having clarity about the real financial value of your content assets is the only way that you can create a plan to maximise their profitability.

As they say, what you can measure you can improve. Content is no exception.

Get your free content valuation template

Track the financial value of your content with the Content Valuation Template.

References
[1] Flanagan, Kieran. 2014. Content ROI is a Myth. https://​blog​.hubspot​.com/​m​a​r​k​e​t​i​n​g​/​c​o​n​t​e​n​t​-​r​o​i​-​i​s​-​a​-​m​yth-tl
[2] Fryrear, Andrea. 2016. Content marketing ROI: 4 ways to get started. http://​contentmarketinginstitute​.com/​2​0​1​6​/​1​0​/​c​o​n​t​e​n​t​-​m​a​r​k​e​t​i​n​g​-​r​o​i​-​s​t​arted/

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