THE OPPORTUNITY COST OF CONTENT MARKETING
Why Cost of Inaction (COI) matters more than ROI
Updated 04 May 2021
Written by Omneya Nabil
Content Alchemist & Brand Storyteller
We marketers love collecting data, crunching numbers, and graphing correlations. We love planning and speculating – at least some of us do. We are so meticulous and objective to the extent that we measure the Return on Investment (ROI) of every activity we pursue.
So it’s only natural that we start embracing a similarly interesting metric: and that’s the Cost of Inaction (COI). And when it comes to content marketing, the Cost of Inaction matters more than the Return on Investment.
The Opportunity Cost of Inaction
When I was a kid, I couldn’t comprehend the concept of opportunity cost or believe it actually exists. I was a spoiled first child who could get (or bully her way into getting) what she wanted. I had to learn about it the hard way, but that’s another story for another day.
So back to content marketing – you need to be clear about how you want to measure opportunity cost. You can choose to assess the opportunity cost of action or the opportunity cost of inaction, each with its own results and repercussions.
Investopedia defines opportunity cost as “the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.”
Let’s rephrase this into context: if content marketing is the only tool you’re using today, you might want to consider the opportunity cost of this action.
And if you’re not using content marketing at all, you would need to (seriously) consider the opportunity cost of inaction.
I’m not suggesting that you forego your other marketing or advertising activities in favour of content marketing. I’m simply stating that you can’t completely ignore content marketing or choose not to assess its potential impact on the bottom-line of your business. That’s where the business world is headed towards, anyways.
Defining Content Marketing
A lot of companies are actually using content marketing without knowing that they are. Think of your social media posts, the videos you share, and the information you provide about your products/services. That’s all considered content – without a clear content marketing strategy – but it still counts.
Impact has simplified the concept of content marketing, defining it as a “strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience – and, ultimately, to drive profitable customer action.”
Although you might be providing content, it can only be considered content marketing if:
- It follows a clear strategy
- It offers information that’s not only valuable, but also relevant
- It’s an on-going activity – consistency is key here
- It drives profitability – ultimately and not immediately
Regularly scheduled social media posts and advertising campaigns that offer information and value to your target audience is – yes – content marketing. There’s a huge difference between a marketing and a content marketing strategy, but no marketer works without a strategy so you get extra points anyways.
Justifying Your Return on Investment (ROI)
For the marketing folks who prefer to measure return on investment, content marketing does produce higher ROI than most other marketing activities. However, it gains traction with time and needs some patience before you can start earning (unquestionably colossal) leads and profit.
If you’re using traditional marketing to primarily generate leads rather than profit, you’ll be most interested in Lead Acquisition Cost (LAC) and not ROI.
Lead Acquisition Cost = Marketing Costs / Leads Acquired
Otherwise, you can go ahead and plug in your numbers to measure the success and ROI of your marketing activities using this formula.
ROI = (Sales Growth – Marketing Cost) / Marketing Cost
Investing in Content Marketing
A considerable number of marketers I’ve worked with had initially believed content marketing to be an “expense” – a hefty investment with no clear or justifiable ROI. But, contrary to common belief, content marketing is actually a “profitable” activity. Let me explain how it works.
While the initial investment in content marketing might be substantially high, once the up-front costs are established you’ll find that it’s relatively inexpensive to maintain than any other marketing activity. Soon enough – precisely when market interest picks up – you’ll reap a larger-than-expected return on your investment.
The Real Value of Content Marketing
Thought leadership, qualified leads, competitive advantage, customer loyalty, and consumer share of mind are what you can expect from content marketing. But here are a few more reasons why it’s a great way to grow your business and market share. Content marketing:
- Answers customer questions
- Builds customer trust
- Generates leads
- Converts leads to customers
- Grows website traffic
- Promotes re-purchase
- Reduces the cost of lead/customer acquisition
- Provides in-depth information (vs posts or ads)
Since more than 70% of consumers don’t trust a brand that doesn’t provide promotion-free information, I put that first on the list. You might also want to consider how other marketers view the practice of content marketing in terms of its outcome:
Hubspot’s State of Inbound report shows that the top two priorities of companies across the globe in 2018 were to convert their contacts/leads to customers and grow traffic to their websites (at 69% and 54%, respectively). Proving ROI was also important – but at 42% it obviously isn’t marketers’ main concern.
Combining these findings, we can see how the benefits of content marketing perfectly match the objectives of most global marketers today.
Your Stance on Content Marketing
There are several reasons why marketers are hesitant about using content marketing at first, including feeling safer with conformity, their human nature of resisting change, or unwelcoming the idea of challenging the status quo or taking a risk when things seem to work out well.
If you’re still not wholeheartedly persuaded to jump on the content marketing bandwagon, just know that you’re not alone. That doesn’t mean you belong to the majority party, either.
The Content Marketing Institute reported that 89% of B2B companies use content marketing, and that 52% of the remaining 11% (yes, that probably includes you) will be using it within a year. This also indicates that the 89% have realised the opportunity cost of using or acting upon content marketing.
Now going back to the cost of inaction concept, I’d like to share a few repercussions (and lost opportunities) of not using content marketing:
- Thought leadership and online presence – which can be lost to competition
- A deeper understanding of and connection with your customers
- Lower investment (lead acquisition cost) and on-going expenses
- Higher profitability on the long-run
- Higher traffic and engagement, leading to more qualified leads and social proof
Conclusion
Content marketing may not be for everyone – it depends on your business, industry, target audience, and objectives. It also comes down to whether you’re the short- or long-term kind of marketer, whether you prefer to invest in profits or leads, and whether you’re interested in converting your audience into purchasing customers or brand ambassadors.
If you’re a marketer who’s considering incorporating content marketing into your marketing strategy, then I hope that this post helps you understand the benefits and opportunity cost of your action or inaction.
And finally, remember that ordinary marketers measure ROI and outstanding marketers measure COI.