If there’s one thing that’s true about marketing, it’s this: it’s a gamble. You expect a positive return when you set out on spending for a new marketing campaign. But more often than not, it’s not showing where it counts—your revenue.
Now you’re looking to pivot; play the long game and see how it works out. You see content marketing as a viable option. But, you know it will require constant spending. Naturally, you’re on the fence. As a prudent entrepreneur, you have to ask: will this be just another expense, or can this be an asset?
You can answer this question by learning the concept of content marketing ROI. But before we get into that, let’s explore content marketing returns from an accounting perspective. First, we’ll tread the surface of what content marketing is about. Then we’ll dive deeper into how it can be an asset and how accountants and bookkeepers can help pave the way for a return on your investment.
What Content Marketing Is All About
Content marketing is like advertising, but with no overt advertisement motive. Instead, it relies on information authority to influence potential buyers.
Think about yourself as a consumer. Most of the time, uncalled popup ads and 30-second unskippable commercials annoy rather than inform you. While they are effective in brand awareness and product recall, the impact on you as an audience can be unpleasant.
That’s what content marketing deviates from. By creating valuable content, consumers take an active interest in engaging with it. Trust is built through consistency, and over time, the demonstration of authority and know-how will be the influencing factor.
Content marketing can take on different forms.
Blogs are awesome trust-building mediums for content marketing. The tone of each blog piece takes a relaxed, conversational tone that connects with the audience. It’s like talking to a friend.
An individual or a small group usually runs this written form of content marketing. It delivers the business’s offerings in a short, informative, and non-aggressive manner.
Education is the intent behind the creation of an ebook. This form of content marketing comprehensively tackles a topic. Typically, an ebook shares detailed technical information and goes in-depth in explaining a particular subject. This is to ensure all bases are covered and the reader leaves feeling closer to expert-level knowledge.
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Normally, an electronic book is given away in exchange for a customer’s information, such as an email address. And the content of such ebooks gives the readers tools to understand their problems and the products that can help them solve them.
How-to guides and other ‘definitive’ articles of 3,000 words or longer belong in long format. This works similarly to a blog, except the aim of most long format articles is to elaborate a little further on a particular topic.
As an example, a blog can talk about the benefits of hiring a bookkeeper, but a long format guide will elaborate on the functions of a bookkeeper, where to go to find and hire one, and the tools and resources that can aid you and your bookkeeper in the accounting process.
Infographics are excellent examples of image content marketing. This targets visual users who want to consume information as a reference quickly.
Information graphics are abundant on social media sites and can be accompanied by a written article link. This content entices the audience to engage with more elaborate content from your site.
Some of your audience are auditory-inclined. Meaning they learn better by hearing what is being discussed. Hence, audio content.
Podcasts and audiobooks are several examples of audio content. Each has a different approach: the former being more relaxed and the latter more formal. Podcasts engage in a way that relates to the audience as if they’re part of a discussion, while audiobooks serve as storytelling tools that can keep audiences engaged passively.
Video is perhaps the most engaging of all options. It’s a combination of visual and auditory content. It can be anywhere from 2 to 10 minutes or even longer at 30 minutes and beyond. But this format is loaded with information that stimulates the senses and keeps audiences engaged.
This type of content can be a challenge to produce. But if executed well, it can result in hitting a lot of marketing goals on the list.
Reasons Why Ecommerce Businesses Use Content Marketing
Content marketing is attractive for ecommerce businesses because it is a non-invasive way to sell products and services. Brands approach this type of marketing from a place of helpfulness. As a result, prospective customers see the value behind what is offered and are left to choose for themselves.
This type of marketing is a slow and passive process, but if done well and consistently, the result brings more than just revenue. So let’s break down the common reasons why content marketing makes sense.
Helps Potential Customers Know the Brand
Many brands out there with a name and a logo hardly get noticed. So if you want to gain any advantage, your brand needs to communicate why it’s in business.
Content allows your prospects to dig deeper into your brand. By giving them information that informs, educates, or solves a minor problem, you encourage them to check out what you offer that will help make their lives easier.
Establishes Trust and Authority
In most cases, content marketing aims to help. So if potential buyers act on the information your business provides, it can result in having their problems solved. This leads to them trusting your business and may elevate your brand’s status as an authority when it comes to the issue you aim to tackle.
Trust and authority can also come from other things, such as demonstrating good brand values. One good example is ethical marketing. This, if combined with content marketing, can be a force for building trust and authority. If you want to know more about how this is done, you can read more on ethical marketing here.
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Builds a Following
When you solve a prospect’s problem, an expectation is created—they will think you can solve other related problems in the future. This is where prospects become followers. They will tune in for any other content you offer that may help them better understand their problems and how to solve them.
At this point, you have to pave the way for them to transition to a follower. So give them a chance to subscribe to your content.
Influences Purchasing Behavior
Content is also a way for your potential buyers to know how the business’s products or services fit into their lives. By demonstrating through content that what you offer can solve their problem, they’ll be more likely to purchase it.
Of course, influencing buying behavior is a longer process than it seems. But if you build your content in a way that helps your business gain trust and following, a purchase is eventually around the corner.
Is Content Marketing an Asset or an Expense?
Being new to content marketing, it’s understandable to have some reservations. While the concept looks good from a marketing perspective, you can’t help but think about how it will translate into your financial statements. So it’s important to ask whether content marketing is an asset or an expense.
The short answer is: it is an expense. At least based on what is commonly accepted. Any money you put out for content marketing endeavors should be part of your income statement. To further explain, it’s because of the nature of a content marketing activity that’s shown below.
Your Business Undertakes It
Content marketing that’s done internally can be recognized as part of your business’s regular expenses. As such, it makes sense to treat it as part of the nominal accounts of an income statement.
Since the resulting content production is meant to be read, listened to, or viewed, it is deemed intangible. So unlike your business’s furniture, equipment, or investment vehicles, the benefits or lifespan of content marketing may not be easily measured.
It Can Neither Be Bought nor Sold
Perhaps one of the strongest factors that make content marketing an expense is that this endeavor is not something your customers can buy, and you also may not sell it. So there is no direct link between expenses and revenue, such as when producing a product or service for sale.
Why It Should Matter to You
Content marketing is a long game. While selling a product or service is still a goal, it takes the passenger seat, and lets trust-building and influence take over as the primary aim. These are worthy yet unmeasurable business goals. In the long run, if your content marketing isn’t viewed under the lens of accounting, it can result in the following.
Affecting Budgeting and Spending Decisions
You’ll have more cash flow directed to operational activities. This takes away from other business endeavors such as paying short and long-term debt or investing in other profitable ventures.
Lowering Your Net Profits
As content marketing spending continues, it adds up and may even take a large portion of your income statement expenses. As a result, you’ll get a lower net profit if the effort continues without return.
Discouraging Any Future Marketing Efforts
If marketing efforts negatively impact your spending and profits, sooner or later, you’ll have to discontinue the campaign and reallocate your business’s resources.
Can It Be Turned Into an Asset?
So far, we’ve only viewed content marketing as an expense because it’s not sold, and the results it produces, while excellent, are hard to measure.
But what if there’s a way to make it an asset?
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Content marketing is accepted as an expense, yet it also fits the definition of an asset. Your business shells out money, which is an expense in its own right, yet the business also expects a future benefit from the endeavor.
Therefore, it is possible to turn it into an asset and have its rightful place in your balance sheet and investing activities. However, here are some of the conditions it has to meet to cross over.
It Must Have an Expected Monetary Return
Content marketing’s benefits are powerful. Things like trust and influence will do wonders for your business. But you must put numbers on your objectives if you want to turn it into an asset.
When you map out your content marketing plan, include sales and revenue goals. Things like “how much revenue do you expect to get from content marketing” or “how many products do you aim to sell while content marketing is ongoing” are enough to justify that there’s a financial goal behind your efforts.
It Must Be Quantifiable
Set a specific target and express it in monetary terms. Content marketing can be recognized as an asset if you can quantify the current or future value. So expressing your revenue goals in dollar amounts will help measure how much you sell as a result of your efforts.
Revenue Must Be Linked to the Content Marketing Activity
Content marketing must be directly associated with the revenue it generates. Therefore, you should have the means to trace a sale back to any content marketing activity.
The reason is to determine whether it really did bring a return on investment (ROI). That way, you can calculate your content marketing ROI. If it yields a positive return and you want to keep it going, it may be treated as an asset.
Content Marketing ROI: A Bridge from Expense to Asset?
Content marketing ROI is a vital tool when proving the value of your content marketing efforts. That’s because it gives an overview of how your content performed. Thus, it acts as a bridge that turns marketing expenses into an asset. Here’s how it works.
The Content Marketing ROI Formula
To make the formula work, we’ll switch our treatment of content marketing from expenses to investment. To calculate ROI, you’ll need to follow the formula below.
Content Marketing ROI = [ ( Revenue – Investment) / Investment] x 100
Revenue – This means the monetary values that are directly associated with your content marketing efforts.
Investment – These are the resources you’ve contributed to the content marketing efforts during the period. Production costs, labor, and distribution will form your investment. This must be expressed in monetary terms.
How It’s Done
Calculating content marketing ROI is pretty straightforward, but determining the revenue and investment can take some work. In most cases, you’ll need help from accounting and bookkeeping pros and other key people to put it together.
On your part as a business owner, it pays to understand how it’s done in simple terms. That way, you can step in and contribute what is needed should the occasion arise. So in summary, here’s how it’s done.
On the investment side:
- Gather financial data on cost based on the content. For example, if you’re producing a video, you’ll need a breakdown of things like fees paid to the scriptwriter, talent, and director.
- Employees working on content may have a different treatment depending on their nature of employment. However, as a general rule, if they are a regular employee with other functions, this must be treated as an expense.
- Distribution is commonly done online through social media and search engines. Thus, you’ll have to look into analytical tools within the platform to trace and collect these costs.
On the revenue side:
Since your online distribution channels will be your primary traffic source for your content, it makes sense to trace revenue generated using the distribution channel’s platform. For this to happen, you’ll need help from pay-per-click (PPC) specialists, search engine optimization (SEO) specialists, accountants, and bookkeepers.
Associating revenue with your marketing efforts is a whole different topic, but it is still part of the broader subject of content marketing ROI. If you want to dive deeper into the technical aspects, this article about measuring ROI will help.
How to Make Content Marketing an Asset
By now, you know there’s a possibility of turning content marketing into an asset. All you need is to measure the revenue it brings, then prove it by using a financial formula for content marketing ROI. If it yields a return, then it may be considered an asset.
Your next step is to pave the way for your content marketing efforts to produce the revenue you seek easily. Here are some ideas.
Link Your Products Directly to the Content
You have to link your product to your content through blogs or videos. For blogs, you can anchor your product link with a call to action (CTA) at the end of the article. For videos, the links can be placed in the description section.
This makes it easier to influence buying decisions and trace sales and revenue back to your content.
Support It with Other Marketing Efforts
Often, your content will need to be supplemented with other marketing efforts. For example, if you have a number of blogs, you can ask your followers to subscribe to get content. You can do this via email subscriptions.
In a way, this subscription process is email marketing. It engages your followers. Plus, it’s an opportunity to increase your content engagement, so if you want to know how to make this work for you, check out this article on how to boost your email marketing.
Consider Affiliate Marketing
In case you’re interested in using content marketing to sell other businesses products and services, you can consider affiliate marketing. It is a way to generate revenue in the form of commissions. If you think this is something you want, check out how affiliate marketing works here.
A surefire way to make an asset out of your content marketing efforts is to turn it into a business. You can set it up as a separate entity and have it operate like an enterprise. Then offer its services to clients.
In this case, your content marketing ROI will not be in the context of marketing efforts, but it will be treated as a business service offering.
As a caveat, this can be tricky, especially if you have an existing business that relies on your content marketing to increase revenue. So it’s best to talk to an accounting professional before considering this option.
Can Content Marketing Expenses Become a Tax Deductible?
Let’s go back to content marketing as an expense. What if your efforts led to no revenue? That means you now have to treat it as an expense. However, this can still give you an advantage, tax-wise.
Marketing efforts are valid deductibles because this activity is an ordinary part of the business. So coordinate with an accountant or a bookkeeper on how you can use your content marketing expense to gain a tax advantage.
Content Marketing Made Better with Excellent Bookkeeping and Accounting Services
In some circles, marketing and accounting are often seen as having a love-hate relationship. That’s because the former is about spending for revenue while the latter tends to budget for profit maximization. But the truth is, one is made better with the other.
In the case of content marketing, associating and measuring revenue is a problem. You may not have addressed this with just a pure marketing perspective. However, turning this marketing effort into an asset requires an accounting eye.
Luckily, there are excellent bookkeeping and accounting agencies that can help you. They can work with you in determining the accounting aspects of content marketing if you decide to jump in. By working with them, you’ll be confident that you will accurately record your content marketing efforts. Plus, you’ll better understand how your content marketing affects your entire business operations.
Reach out to a professional agency now, and get the ball rolling on your marketing efforts.
Mike Pignatelli is the CEO of Unloop Accounting – an agency created to cater to all accounting needs of e-commerce businesses today. He is an experienced financial controller, and has worked with numerous seven-figure inventory businesses. Mike, alongside his team, are the perfect accountants choice if you need to acquire reliable data in order to be able to make sound financial decisions.