It’s Time to Rethink the Content Business
Recently, I shot a reality show-style video for the folks at Mention with my predictions for content marketing in 2017 along with Rand Fishkin, Benji Hyam, and ReadThink.com contributors Sujan Patel and Larry Kim. You can hear their (much smarter) predictions in the video at the bottom.
However, I see two trends that warrant further explanation:
Learning From Product Managers
The smart content marketers can tie their efforts directly into the inbound marketing and sales funnels, easily demonstrating the value they bring to the organization. They track metrics like views and subscribers, sure, but also clickthrough rates (CTRs) on their calls-to-action (CTAs) to drive traffic to landing pages. They can even do attribution analysis to show the direct impact of their content on generating leads (or direct sales, in the case of eCommerce).
While they value the contribution of content consumers to the customer acquisition funnel, they also value the growth in reach that frequent readers provide. Those readers may not become customers, but they amplify the reach of your content in social media and on other websites.
Non-customer content consumers have a value to the business, and content managers are starting to solve for them that way.
Tracking New Metrics
In Dan Wolchonok’s article “Good vs. Bad Retention — The User and Revenue Impact”, he explains how bad user retention can hamper — or destroy — the growth and success of a product. If you’re not able to retain significant percentages of your product’s users as “active”, you’re eventually going to reach a point where you’re churning users faster than you can acquire new ones.
The core metrics for products like these are “active users” — a relative definition that changes based on the product. Facebook, for example, probably defines active users differently than Mention. A product manager or owner (the person at the company responsible for the defining the features that drive value for the user) defines these activities and guides the engineering team in building an increasingly “sticky” experience that delivers more value more often — increasing user retention.
Companies can have daily, weekly, or monthly active users (abbreviated DAU, WAU, and MAU, respectively) based on how frequently someone needs to use the software to get value. A social network, for example, may want users to build a daily habit of checking in and optimize their product for DAUs. A B2B software company may have a product that people need to use monthly (such as financial reporting software) and track MAUs.
Content managers don’t typically track active users. They could define an active user as someone who reads their blog at least once a week or opens an email newsletter.
This redefinition of metrics on which to focus may enhance the entire approach. Should we send reactivation emails if someone doesn’t take an “action” within a set period of time? Should we run retargeting ads for users who are inactive, or who are particularly prone to sharing? What can we do to make the value that readers get from subscribing to the content “stickier”?
As content marketing publications mature, they’ll inevitably run into the growth plateaus that plague more traditional product teams.
Content Mergers & Acquisitions
Content marketers and conventional content developers (such as ad-monetized media companies) approach things differently. However, the ad-monetization model is being hampered by the proliferation of ad blockers (HubSpot Research has an incredible report that breaks down that trend here).
Content marketing can have superior business economics to ad-monetized businesses, and content CTAs are typically less reviled than ads. The average Cost-Per-Thousand views (CPM) that advertisers charge was $2.80 in 2015. So if a site gets 1M visitors per month, they could generate about $2.8M in ad revenue (assuming ad prices don’t decline).
A B2B software company using this for lead generation, however, might generate substantially more value. With a good marketing and sales funnel (5% CTR on the blog article’s lead generation CTAs, 50% conversion rate on the landing page, and 10% lead-to-customer rate), a content marketing operation could acquire 2,500 customers from 1M site visitors at a $400 customer acquisition cost.
The exact efficiency of the “good” funnel I’ve just modeled will change the value, but it’s easy to see how a company charging $100/month for their software can have a more profitable content monetization model than the traditional ad model (they’d break even on that customer after just 4 months, assuming no sales team costs and 100% margins).
If you have a media property that controls an audience valuable to a company with that sort of model, you might find yourself in their acquisition crosshairs.
So why aren’t we already seeing an M&A buying spree of traditional media sites?
The short answer is that most marketers still don’t model their marketing and sales funnels well enough to know that visitors to their content are worth that much.
Sneak peek: In HubSpot’s upcoming 2016 State of Inbound report, you’ll find (along with other data gems) that 46% of marketers do not or cannot measure the ROI of their marketing at all.
While business leaders are drilled to think of capital as a scarce resource that must be conserved at all costs, as Clayton Christensen and Derek van Bever discuss in their HBR article “The Capitalist’s Dilemma”, there’s plenty of business capital available for this kind of strategic growth, with non-finance U.S. companies alone sitting on over $1.82T in cash in 2015.
As the number of companies tracking the impact of their marketing operations increases, I think we’ll find more businesses eyeing content publications with audiences valuable to them as valuable applications of that capital.
Watch the full video here:
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