By David Capece, Managing Partner

Google has dominated the last five years through the surge in popularity and use of its money-making search machine. Marketers have focused online search efforts on ROI opportunity of Google’s paid search. We all know the math: bid on terms up to the value at which sales or customer value exceed the price paid.  Through this and other opportunities (i.e. banners, videos), online advertising has grown at a health pace since the last recession.  In the face of a dificult environment, projections of 4.5% growth in online ad spending signals that online is a mainstream advertising form and continues to build momentum relative to other forms.  And while profitability seems like a distant dream for Twitter, there is hope as Facebook recently escaped the red.

As more and more marketers jump into paid search, it has become a crowded space where significant positive ROI is difficult to achieve.  Recently, there has been increased focus on organic search results in which content providers can can gain an audience and prospective customers for “free” by showing up high in organic search results. The race is on to get into the top 10. There is a study from AOL that shows the relative clicks based on placement within Google organic search. Approximately 90% of clicks are for results on the first page. It’s even more concentrated than that, as over 60% of clicks are for the first 3 results.

 Is Content Marketing a Good Investment?

Indeed, sites that have the right content, in-bound links, and optimization, can perform very well on desired key words. This brings in “free” or “inexpensive” traffic. Many companies are seizing on the opportunity to excel in organic search through blogs and other content. Studies have shown that organic plus paid search reinforce each other, lifting each other’s performance.  Beyond search referrals, there are many possible benefits of this strategy, including enhancing your company’s credibility, building intellectual capital, enhancing user experience, and getting in-bound links that bring traffic and improve search rank.

If you chose to pursue a content marketing strategy, your major expenses will include article writing, article marketing, and general search engine optimization. While content marketing sounds exciting, and it was a part of our decision to launch our blog, you should do the math to decide if it’s a good investment.

The first step is to think about your current economics. How much does it currently cost for a referral, qualified lead, or conversion, and how much will it cost for the article (writing and marketing)? Some quick math can yield the number of organic search referrals that are necessary per article for breakeven. Below we have provided an illustration. For example, if your company currently pays $1 per referral and it will cost $500 to write and market the article, than you would need 500 referrals to breakeven. Of course not all referrals are created equally. You must consider whether article readers are more valuable or less valuable than the current customers that are being referred, and adjust the math accordingly.

You can take the analysis a step further to determine the ROI of your content efforts. For example, in the case where the value of a referral is $1, and the cost per article is $250, you would need to generate 250 referrals to breakeven. If you were able to generate 500 referrals, this would have a positive ROI of 100%.

We suggest looking at several metrics (value of referrals, leads, and conversions) to determine the potential ROI of a content marketing program. You might consider a test, keeping in mind that your efforts will build upon each other over time. If you only do a few articles for a few weeks, you are likely to fail to meet your ROI hurdles. Accordingly, you should have a plan that accounts for a program of at least 3 to 6 months, and ideally a year. This will give you

 Is Content Marketing a Good Investment?

sufficient time to refine the mix of content and adjust your marketing efforts so that you can truly evaluate the ROI of your efforts.

As you contemplate article marketing, you should also consider other factors.  For example, rich, intelligent content may create a more impressive experience for all your users and may help to increase your credibility and leadership in your category.  On the expense side, now is a great time to find a writer inexpensively, so you might be able to hold down expenses.  As we move into 2010 and beyond, we believe that creative marketing solutions such as content marketing and guerilla marketing are going to become more and more common.