Here at Hit Subscribe, our mission involves helping techies and tech companies. We’re techies, our customers are tech companies, and their customers are techies. This means that everyone involved has a strong appreciation for data and empirical concerns. And because of this, our customers disproportionately want to talk to us about blogging ROI.
How do we know that blogging will pay back the money we spend on it?

The Blogging ROI Calculation Challenge

This is a maddeningly difficult question to answer. Blogging (really content marketing, once clients are willing to invest) isn’t like the quantifiable things that I deal with as a techie. I can measure the performance of a test suite or how my site behaves under load. This surfaces problems and lets me make intelligent decisions about how to proceed.
Blogging creates a much more circuitous route between cause and effect. How much is a blog post worth? Are they all worth the same amount? The answers aren’t immediately obvious.
Part of the reason for this is that content marketing through your blog is truly a long play. Over the course of time, your blog will accumulate both followers and enough domain authority to attract organic search traffic. As a result, a post you write on day one and a post you write five years in will vary wildly in how much they’re worth.
And, on top of that, the path between readership and revenue is highly variable and notoriously hard to measure. Using Google analytics, you can easily measure visitors to your site. But your marketing funnel probably isn’t going to involve setting up a pricing page and nothing else. Readers might read a blog post, enjoy it, and bookmark your site. They may become regular readers for a long time before deciding to purchase your offering.
This can all get pretty confusing when you’re trying to answer the simple question of “How much additional revenue can I expect my investment in content marketing to generate?”

Start with Something Relatively Concrete: Lifetime Value of a Customer

Let’s come back to answering the blogging ROI question. For now, let’s talk about something that ought to be easier to compute: lifetime value of a customer.
In concept, this is pretty simple. Assuming that you can individually identify your customers (which most of our clients can), you can figure out how much money a given customer has paid you in revenue. Figure this out for all customers and take the average. And, just like that, you’ve got the lifetime value of a customer.
This is an excellent thing to know for a variety of reasons related to you business. But, for our purposes here, we’ll focus on one: it lets you know the marginal revenue generated for each additional customer you bring in.
Let’s make this a little more concrete. Say that you sell a subscription-based SaaS for $100 per month and that the average customer sticks around for ten months. You’ve got an average lifetime value of $1,000 per customer.
This means that each additional customer your blog brings in pays for $1,000 worth of investment in the blog. So, if you’re paying $250 per blog post and posting once per week, you’d need the blog to net you one additional customer per month to break even.

What Does Your Blog Cost You?

Let’s move onto something else that’s relatively easy: calculating what your blog costs you. First, take the obvious cost factors into account, such as what you’re paying for hosting, a CMS, and any plugins.  Do you have a stock photo subscription? Account for that too. Then, if you’re paying a content service like Hit Subscribe, that will, of course, factor in as well.
But don’t stop there. If you’re writing your own content, you should also factor that in. Are you having your engineers write blog posts instead of paying someone else to do it? That counts. Factor in their hourly wage times the number of hours they spend. Are you, as CEO, writing or editing the content? Calculate the cost of this as well. Any and all labor that goes into the blog has real opportunity cost.
So now you have a figure for what the blog is costing you each month. With this figure, you can now evaluate how many additional conversions the blog needs to bring in for it to be worth the money you’re investing.
For example, say you’re investing $2,000 per month in your blog. With the previous calculation of customer LTV, this means that you need $2,000 of cost / $1,000 LTV = two additional customers per month through the blog.

The Observer Effect and Calculating Blogging ROI

Alright, so now all you need to do is lean back and see how many new visitors each month wind up converting to customers. You’ll have this whole ROI thing completely solved.
And hey, there are some really cool tools out there that help you do just that. But those tools aren’t cheap.
In the physics world, there is an idea known as the observer effect. It describes a situation where the act of observing something changes that something. Think of filling your car’s tires at the gas station. The only way you have to measure the pressure in the tire is to let a little bit of air out, meaning that measuring the PSI involves changing it.
Well, that’s what happens when you start using sophisticated tooling to track visitors through the entirety of your marketing funnel. The cost of enabling that affects the ROI of your blogging.

Working Backward and Back-of-the-Napkin Math

If you have a lot of money to spend on content marketing, then I definitely suggest investing in these tools.  But then, if you’ve got a lot of money to invest in content marketing, you’ve probably already decided to do it, so you’re not in the skeptical “is this going to be worth it” stage of evaluating the merits of a blog.
So let’s assume that you want to get a feel for ROI, but without investing a lot in tracking tools. Here’s the way to do some back-of-the-napkin math: work backward.
If your spend is $2,000 per month, that means that you’d need to convert two people per month. How many people would need to look at your pricing/order page before you could expect two of them to convert? Well, do a little research and see what a reasonable conversion rate is, and then, perhaps estimate pessimistically. Say that conversion rate was one percent. That means you need 200 people to view your pricing page.
Of course, it’s not as though random people in your target market are out there on the internet, googling your pricing. In fact, the only people that are going to land directly on your pricing page are people already contemplating buying your product.  So your blog isn’t helping them.
You need to link from your blog posts to your pricing page (as an example of a possible strategy). So with that in mind, the question becomes, “how many people need to visit a blog post before 200 of them click through to the pricing page?” Now do a similar bit of math and say that you get a one percent click-through rate. Your blog posts, collectively, need to attract 20,000 people.

Plot Paths to Conversion

This gives you the framework for calculating the traffic you need. Each month, you need to generate 20,000 visitors to the blog per month with the four blog posts that you’re writing. This means that any given post that you write should have at least 5,000 visitors in order to break even.
Of course, this is fairly daunting. That’s a lot of traffic per blog post, especially if you don’t have an established blog. But fear not—you have options. A one percent conversion rate at each of these steps isn’t ideal. You have a lot of tactics at your disposal for significantly improving the respective conversion rates and thus ratcheting down the number of marginal visitors you need to attract to the blog.
But however you play with the numbers, the framework of thinking remains the same. First, you need to plot the journey from new visitor to conversion. In this little example, it was blog post -> pricing page -> customer. But you might involve landing pages, mailing lists, or plenty of other things that convert well.
And once you have that journey, you can approximate the conversion rate at every step. This will walk your break-even ROI point to raw traffic numbers, which you can easily measure.
Is this perfect? No, of course not. But is it a lot better than just plunging in on faith or investing thousands in marketing automation in order to make the decision? Absolutely.