9 Steps To Calculate Your Blogging ROI
Blogging is not free. Making and maintaining a blog for your own self or your company is an extremely labor-intensive proposition. The persons working on a blog may also be doing something else that helps the company (or you) make money, save money, or both. Blog is an opportunity cost to the company. Some organizations methodically calculate the affect of having a blog on the bottom line, which makes it easier to vindicate the allocating to resources to this work. ( Several Small Business Tips For The Freelancers )
Here is how you can calculate it:
Blogging Expense Calculation
1. How many staff hours are spent per month to write, edit, track, manage the blog?
Let’s presume it is 36 per month (3 posts/week at an average of 3 hours/post).
2. How much does the company pay for those hours?
Let’s presume Susan gives 10 hours/month managing the blog, and gets $50,000. Paul gives 8 hours/month writing blog posts and gets $75,000. Shashi also gives 8 hours/month and gets $95,000. Warren gives 5 hours/month and gets $150,000. Olivier gives 5 hours/month and gets $40,000.
Now divide each salary by 2000 (hours worked/year based on a 40-hour work week and 2 week’s holidays) to find out the average hourly salary compensation. In the example we gave above, it is $25, $37.50, $47.50, $75, and $20, respectively. Multiply the hourly compensation by the number of hours consecrated to find out the monthly salary expense (10 X $25 + 8 X $37.50 + 8 X $47.50 + 5 X $75 + 5 X $20 = $1405)
3. How much does it cost the company for those hours in overhead and benefits?
Multiply the company’s standard overhead calculation with the monthly salary figure i.e $1405. Benefits, rent on a per-person basis, etc are included in it. The accountant or CFO knows this number and it is about 40% – 50%. Here we are going to use 45% which will make the overhead and benefits cost of the blog labor about $632 ($1405 X 45%).
The overall labor cost of the blog/month = $2037 ($1405 + $632).
4. How much does the blog cost in design and technology fees?
If you created your blog internally then use the method given above for labor/benefits cost for creating your blog. But if you had a 3rd party build your blog then make sure how much you paid them and then devide the internal/external costs (or both) by 24 to make out the monthly cost.
(This is a 2 year amortization schedule for blog building.)
Let’s presume that a Web development firm created your blog for $7,500. You then updated 3 months later for $1,000, which makes the total expense $8,500, and the amortized monthly cost $354 ($8,500 divided by 24).
5. How much does the blog cost in hosting, maintenance, and app fees?
Let’s presume that you get blog hosting for $19. To help blog’s SEO you pay $19/month to Inbound Writer and $19/month on Formstack to make and handle landing pages to convince people to download your white paper.
All added up the hosting, maintenance, and app fees of your blog is $57/month
So the overall blogging expense per month is ($1405 + $632 + $354 + $57 = $2,448)
Blogging Revenue Calculation
Let’s check if that $2448 per month is even worth it?
1. What revenue-oriented behaviors does the blog make?
If you are not selling ads on your blog, its value will chiefly be in its ability to induce behavior amongst readers that leads to revenue. Most of the time it becomes lead generation, especially in B2B circumstances. It can be different in different cases, depending on what type of blog do you have, e.g a shop online blog etc. Let’s presume that your are a aforesaid Formstack, and you provide drag-and-drop online forms and landing pages.
On the blog, I have 3 actions in orange that have the potential to make instant leads or sales, and 3 other actions in red are those that may create leads or sales. In this analysis we will take the most immediate potential.
2. How many revenue-oriented actions are made?
Let’s suppose that 30 people/month call Formstack and sign up, subscribe from the “sign up now” button, or subscribe after visiting the Contact Us page, after visiting your blog.
To make sure that your blog is involved in more than just the middling role in driving those behaviors, you can set the Web analytics software (Google Analytics, for instance) to count only those people who have visited your blog more than 3 times or have spent more than 3 minutes on the blog before they clicked on the “Sign up Now” or any other attribute that shows that the blog was persuasive.
For telephone sales, you are required to verbally ask about the blog’s role if you don’t use a special tracking phone number than only shows on the blog.
3. Each behavior has what value?
On Formstack it is quite easy as the customers can sign up straight away online. All they have to know is the average lifetime value of a customer. Let’s suppose that $25/month with Formstack is spent by an average new customer and the customer stays for 12 months. So the average lifetime value of a customer is $300 ($25 X 12).
But the company will not get the whole $25/month as net revenue. Formstack has costs to give services like technology, hosting, support, and other expenses. Most of the companies calculate their revenue after subtracting these expenses. In the example that we are considering let’s presume that the revenue after subtracting the expenses/customer, per month is $19. This shows that the actual lifetime customer value $228.
4. How much value does these behaviors have overall?
In the example that we are considering, Formstack would be making $6,840 from the blog every month (30 sales driven by the blog X $228 average value = $6,840)
Calculating Blogging ROI
“Return on investment” is abbreviated as ROI. The formula that lets you calculate ROI is basically always the same (with a couple of alterations for finance geeks). The formula is:
REVENUE MINUS INVESTMENT, DIVIDED BY INVESTMENT (expressed as a percentage)
In this example, 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 blog is 179%.
How can you use this type of equation in your company?