Content Marketing, Social Media Measurement, Blogging and Content Creation, Social Media ROI

Calculate Your Blogging ROI in 9 Steps

Blogging isn’t free. Creating and sustaining a good blog for yourself or your company is a highly labor-intensive proposition. The people (maybe you) working on the blog could be doing something else that helps the company make money, save money, or both. Thus, blogging presents a serious opportunity cost to the company. Smart organizations methodically calculate the impact of blogging on the bottom line, making it easier to justify (or not) the resources allocated to the task.

Here’s how you might start to figure it out:

Blogging Expense Calculation

A. How many staff hours does it take per month to write, edit, track, manage the blog?
Let’s assume it’s 36 per month (3 posts per week at an average of 3 hours per post).

B. What do those hours cost the company in salary?
Let’s assume Susan spends 10 hours per month managing the blog, and her salary is $50,000. Paul spends 8 hours per month writing blog posts at a salary of $75,000. Shashi also spends 8 hours at a salary of $95,000. Warren spends 5 hours at a salary of $150,000. Olivier spends 5 hours at a salary of $40,000.

Divide each salary by 2000 (hours worked per year based on a 40-hour work week and two week’s vacation) to get average hourly salary compensation. In our example, it’s $25, $37.50, $47.50, $75, and $20, respectively. Multiply the hourly compensation by the number of hours devoted to determine the monthly salary expense (10 X $25 + 8 X $37.50 + 8 X $47.50 + 5 X $75 + 5 X $20 = $1405)

C. What do those hours cost the company in overhead and benefits?
Take your monthly salary costs figure ($1405) and multiply it by your company’s standard overhead calculation. This includes benefits, rent on a per-person basis, etc. Your accountant or CFO will know this number if you do not, and it’s typically 40% – 50%. We’ll use 45%, so the overhead and benefits cost of the blog labor is $632 ($1405 X 45%).

The total labor cost for your blog per month is $2037 ($1405 + $632).

D. What does the blog cost in design and technology fees?
If you built the blog internally, use the method above to calculate the labor/benefits cost of the blog’s creation. Or, if you had a third party create the blog, find out how much you paid. Divide either internal or external costs (or a combination) by 24 to find a monthly expense. (This is a two year amortization schedule for blog creation. Given that blogging continues to evolve and redesigns are common, I’m not comfortable stretching beyond 24 months).

Let’s assume that you had a Web development firm create your blog for $7,500. You did a slight update three months later for $1,000, making your total costs $8,500, and your amortized monthly cost $354 ($8,500 divided by 24).

E. What does the blog cost in hosting, maintenance, and app fees?
Let’s assume your monthly blog hosting is $19, and you spend $19 per month on Inbound Writer to help with you blog’s SEO, and you spend $19 per month on Formstack to create and manage landing pages to convince people to download your white paper. (both Inbound Writer and Formstack are awesome, by the way)

Your hosting, maintenance, and app fees are thus $57 per month.

Your total blogging cost per month is ($1405 + $632 + $354 + $57 = $2,448)

Blogging Revenue Calculation

Is that $2448 per month worth it? Let’s find out.

A. What revenue-oriented behaviors does the blog create?
How to Create a Following for Your Brand Formstack Blog e1311446932941 Calculate Your Blogging ROI in 9 StepsUnless you’re selling ads on your blog, your blog’s value will primarily be derived in its ability to cause behavior among readers that leads to revenue. That often takes the form of lead generation, especially in B2B circumstances. This part of the process can differ quite a bit depending upon what type of company you are, whether you sell online, etc.

But, let’s assume you are the aforementioned Formstack, a provider of drag-and-drop online forms and landing pages (and a Convince & Convert sponsor).

On their blog, I’ve highlighted in orange three actions that can potentially create instantaneous leads or sales (in orange), and three other actions that might create leads or sales (in red). We’ll only concern ourselves with the more immediate potential in this analysis.

B. How many revenue-oriented actions are created?
Let’s assume that after visiting the blog, 30 people per month either call Formstack and sign up, subscribe using the “sign up now” button, or subscribe after visiting the Contact Us page. (this is not a real number, I’m using it for illustration purposes only)

To ensure that the blog had more than a middling role in driving those behaviors, you could set your Web analytics software (Google Analytics, for example) to only count people who have been on the blog more than 3 times, or have spent more than 3 minutes on the blog before clicking “Sign up Now” or any other attribute that indicates the blog was persuasive. For telephone sales, you might need to verbally inquire about the blog’s role unless you use a special tracking phone number than only appears on the blog (which would be a best practice).

C. What is the value of each behavior?
In Formstack’s case, it’s easier because customers can sign up directly online. They just need to know what the average lifetime value of a customer is (although this may require some guesswork for newer companies with less history). Let’s assume (again, not real numbers) that the average new customer spends $25 per month with Formstack, and remains a customer for 12 months. That makes the average lifetime value of a new customer $300 ($25 X 12).

However, not all of that $25 per month is net revenue to the company. Formstack has costs to provide the services to their customers, including technology, hosting, support, and other expenses. Most companies know (or can calculate) their true revenue after these expenses have been deducted (make sure you’re not double counting blogging expenses). In this example, let’s assume the true revenue after expenses per customer, per month is $19. That makes the actual lifetime customer value $228.

D. What is the total value of the behaviors?
In this example, Formstack would be generating $6,840 from the blog each month (30 sales driven by the blog X $228 average value = $6,840)

Calculating Blogging ROI

There is no debate about this last part. ROI stands for “return on investment” and not “return on influence” or “return on ignominy” or “rabbit on interstate”. The formula for calculating ROI is always essentially the same (with a couple of variations for finance geeks). The formula is:

REVENUE MINUS INVESTMENT, DIVIDED BY INVESTMENT (expressed as a percentage)

In this case, the monthly revenue is $6,840, and the investment is $2448. ($6,840 – $2,448 = $4,392. $4,392 divided by $2,448 = 179%) The monthly ROI of this blogging program is 179%.

How can you use this type of equation in your company?

  • jkcallas

    @CzarinaCleo

    • CzarinaCleo

      @jkcallas hello there :)

      • jkcallas

        @CzarinaCleo Hello, how are you doing? Thks for following !

        • CzarinaCleo

          @jkcallas lol likewise

  • nrobins1

    Love the no-bs nature of this post. Really useful stuff! So formstack is obviously compatible with WordPress?

    • http://www.convinceandconvert.com JayBaer

      @nrobins1 I’m always no b.s. That’s my trademark. ;)

    • chris_c_lucas

      @nrobins1 Yes, Formstack is compatible with WordPress. You can contact us for more detail

  • jagadeeshmp

    @SusieBlackmon Why do Google list lower Page Rank site higher at SERP’s in comparison to high Page Rank site? http://t.co/AIOCYp0 #SEO #Tips

  • WilsonVA

    Jay, I appreciated your real-world examples in this post. I’ll use these 9 steps to calculate ROI on my own (and my clients’) blogs. Thanks!

    • http://www.convinceandconvert.com JayBaer

      @WilsonVA Thanks! I appreciate you taking the time to comment.

  • TrafficColeman

    You have to know what your getting in return. Is it gaining you money are putting you in the poor house.

    “Black Seo Guy “Signing Off”

  • cjtheisen

    @papaslingshot thanks sir. Good honest look at something is rare on these channels so I loved that cc: @jaybaer

  • http://b2bdigital.net/ Wittlake

    What, ROI isn’t followers, mentions or traffic? It has to tie to real business results?

    It is good to see a number of posts in the last week on tying business results to marketing and speaking the language of business. Marketing has lost credibility with business in large part because so many have forgotten how to do this (if they ever knew).

    Now, my former business and finance hat comes on and I have to point out one thing. You are using something closer to gross margin than revenue. It is a far better calculation than revenue, and comes much closer to approximating real return, which is incremental income or profit, not merely revenue. If revenue was the basis for ROI, Groupon would have fewer detractors.

    Thanks for sharing, a good logical framework!

    • http://www.convinceandconvert.com JayBaer

      @Wittlake Thanks Eric. Indeed, I always try to (if I can) use margin as a basis for these metrics, whether I’m calculating SEM, email, banners, or social. You don’t keep every dollar of every customer purchase, and as you point out, if we calculate ROI using only top-line revenue, your numbers are skewed considerably.

  • jaybaer

    @debbieweil Thanks Debbie!

  • CaraDafforn

    hearing that I met the @michaelreynolds @Lushin. Learned you need to be direct and brief in your encounters with him. Noted!

    • michaelreynolds

      @caradafforn Haha, true. What is your style? I’m guessing high “C”?

      • CaraDafforn

        @michaelreynolds I am a #Green Gemini solving the chore of dinner. One crockpot at a time. #urelish What do you do?

        • michaelreynolds

          @caradafforn Sorry but I have no idea how that answers my question :)

        • CaraDafforn

          @michaelreynolds It has been different every time I have taken the test. Naturally adaptive my DISC style is neutral, Your turn for a ?

        • CaraDafforn

          @michaelreynolds What is your astrological sign or date of birth?
          Libra or Scorpio is my guess.

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  • vladex

    @msrasberryinc @jaybaer Read this book, it’s great ….http://t.co/xoWlgnV

  • JosephManna

    Excellent example, Jay. For our company, Infusionsoft, we closely monitor our LCV in addition or customer satisfaction, revenue, new sales, and cancels/churn. Love how you broke down this sometimes-cluttered explanation into just nine steps.

    Here’s another point to consider, but will vary on each company and their blog. We’ve tracked customers who signed up via our blog, they tend to have a higher LCV. My interpretation is that they are educated about our solution and have developed a sense of loyalty to the company from our updates on the blog. Tracking lead sources is very useful to determine if it’s the right “kind” of customer you want, and how they impact the business differently.

    Thanks for sharing this post and breaking it down!

  • edwardmba

    RT @BtoBSocialMedia Calculate Your Blogging ROI in 9 Steps http://t.co/qERREMJ via @jaybaer

  • jaybaer

    @oneill_colin Hey Colin. Thanks!

    • oneill_colin

      @jaybaer Sure, great post! As usual Eric said what I was going to say in the comments, but better and sooner.

      • jaybaer

        @oneill_colin that seems to be his M.O.

      • wittlake

        @oneill_colin Mark this day down. “The media guys said it better” said the creative. @jaybaer

        • oneill_colin

          @wittlake You weren’t supposed to see that!

        • wittlake

          @oneill_colin Analytics, analytics. My other (all-knowing) half.

  • sbellr

    Great breakdown. Thanks.

  • HeidiCohen

    Jay–Useful breakdown of blogging ROI that is straightforward. This calculation incorporates real people’s salaries, corporate overhead and variable costs of sales so that most CFOs should find it acceptable. Bravo. Happy marketing, Heidi Cohen

  • madison.bushell

    Jay- Thanks for the great article. I’m fresh out of college, didn’t major in marketing, but now it’s my profession ;) I appreciate your blog, especially this entry. What a great explanation and example- especially for a newbie – it’s hard to see the big picture when blogging, etc….

  • garious1

    Interesting how you took the time to make all these calculations. I guess, this is why many are outsourcing this type of work offshore, where cost is cheaper ( and the quality of work is… ? ) Just a thought.

  • adrianchira

    @violetaloredana Multumesc pentru retweet. O zi frumoasa!

  • http://www.WaxingUnLyrical.com/ Shonali

    This was just GREAT, Jay. Thank you. #thatisall

  • umbrasolutions

    Great, absolutely great!

  • jaybaer

    @dbvickery Thanks Brian.

  • philgerb

    Jay – this is SUPER helpful! Thank you very much for putting it together and sharing it with all of us. I have nothing to add, other than I’m a long time listener, first time commenter (I think), and I really enjoy your work!

  • ateegarden

    Wow intense post. Jay. I just saw this post because of @philgerb retweeting it and I have to say this is hugely valuable. I hate to just echo him but lie he said, this is a really excellent resource.

  • tim_baran

    RT @FollowtheLawyer Calculate Your Blogging ROI in 9 Steps http://t.co/Pzd5fev via @jaybaer

  • secretstomedia

    @FollowtheLawyer thanks for the retweet

  • perruci

    Wow…. good concept about blogging, we now that bogging is also our business, the way of thinking like you is very needed.

  • peterluit

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  • RandoRay

    @actoner Something wrong with my blogging ROI. No one paying me $150,000 :-)

    • actoner

      @randoray lol. Well, keep at it! You never know what can happen.

  • Optimize3point0

    Interesting approach. I’ve got a blog calculator that measures the revenue you can make from blogging.

    http://www.optimize3point0.com/blog-value-calculator

  • bizauthor

    Great info! Hope this doesn’t scare people away from blogging, though. It takes time to build your audience and see that return. I’ve also found that media coverage is something my blog has brought, which is a hard thing to put a price on but helps with brand-building, recognition, etc. Thanks!!

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  • miriamjayne

    @Socialologist whoa, that is intense…great perspective i haven’t seen yet, thanks loads! cc @askdebra @postalicia

  • askdebra

    @Socialologist Of COURSE you know @miriamjayne and @postalicia. How did we not make that connection be4? Great #jewish tweeps 2 learn from

  • askdebra

    @Socialologist Thx for the link to Jay Bauer’s ROI calculation. I began thinking about it here http://t.co/LZ8QeIGo @postalicia @miriamjayne

    • miriamjayne

      @askdebra that post is awesome! sharing, bookmarking, loving. :)

  • http://twitter.com/OMRookie Lillian Leon

    OMG… this is too scary. I’m way in negative territory here! Point taken. Thanks for sharing!

  • Grace OBrien

    Hi Jay, love the straight forward and easy to read blog post. I feel like sometimes when talking about ROI, the information can get lost in translation. However, yours was great, especially liked the real world examples. Will definitely have to use your method soon to calculate the ROI on my own blog! I wrote a similar blog on Cisco and their ROI in regards to social technologies, would love you to check it out at: http://graceobrien.com.au/blog/?p=85

    Look forward to reading more from you!
    -Grace