How to calculate your blog’s ROI

Although many people equate blogging to being merely an online version of a personal diary, blogs can actually mean big business when it comes to improving your advertising┬áROI. While many blogs may be personal or recreational in nature, companies large and small leverage the power of blogging to deliver informative content to their customers. Blogs can be used to provide product updates, news flashes, and even just simple advice that customers may find useful. Unfortunately, blogging isn’t free. Although blogging platforms like WordPress and Blogger tremendously reduce the cost of blogging, blog entries don’t exactly write themselves. Unless you’re a crack writer, you’ll need to hire someone who knows how to write and can write on a regular basis. Even if you can do the writing yourself, you’ll need to allocate time and expend effort doing the writing. You’re probably not blogging for JPL or Martin Marrieta, so your blog writing doesn’t have to be rocket science. Don’t be fooled, however, into thinking that blogging is easy. Blogging is extremely labor-intensive, presenting a serious opportunity cost to you and your organization. Like most things in life, there is not free lunch when it comes to blogging.

So what’s the best way to calculate the ROI on your blogging efforts? It’s pretty easy:

1. Determine all fixed costs and recurring costs for design and technology

Someone has to design your blog, and this costs money. Someone has to maintain the technological infrastructure of your blog, which also costs money. If you outsourced the design and hosting to an outside company, this is easy to compute. All you have to do is add up the bills they sent you for the initial design and the recurring monthly costs for hosting. Don’t forget to include any extra costs for purchasing platform software, custom artwork, and other intellectual assets.

2. Determine total cost required to create the blog

When calculating how many hours of effort are put into your blog, you must include all hours required to write, edit, analyze, and manage the blog. Writing and editing are easy tasks to understand. Analyzing includes reviewing content written to see if it is useful and compelling. It also includes any reviewing of analytics to determine the blogs performance, as a blog that receives no traffic is money wasted. Managing the blog includes other tasks such as the technical duties required to keep it running on your server, accounting tasks, and so forth. Many companies hire outside contractors or pay on a per-word basis, making cost calculations easy to do. You may need to do some additional calculations if you have in-house, salaried staff performing these duties to determine the effective hourly rate required to work on the blog.

3. Calculate fixed costs and recurring costs

While startup costs are fixed, you will most likely always have monthly costs for hosting, maintenance, and, of course, blog entry writing. The easiest way to determine how much your blog-based advertising campaign is costing you is to see what sort of revenue-oriented behaviors are being generated as a result of your blogging activities. The easiest way to do this is to judge these behaviors with respect to the monthly costs, but if you’re clever you can take the fixed costs into consideration as well (or pass that hot potato to your accountant).

4. Calculate total value generated

If you’re primary goal is to deliver ads from your blog (i.e., via Google AdSense), then you can see if the costs to make your blog are less than the money you generate in advertising commissions. For other types of business, the value of a blog will mostly derive from its ability to cause readers to provide you revenue by some other means. In the real world, this traditionally equates to lead generation. This is where performing analytics is critical. Determining statistics such as the following have a serious impact on how well you manage to calculate your blog’s ROI:

  • new visitors (referrals) to your website/blog
  • new user signups to your mailing list/newsletter
  • products/services purchased as a result of blog viewing
  • phone/email inquiries received as a result of blog viewing

It’s then up to you to put a dollar amount on each of these to determine an overall total value brought in from the blog.

5. Calculate total profit/loss from the blog

After you know how much your blogging endeavor costs you each month and how much value you received, it becomes a matter of simple subtraction to see what you really got out of it. Of course there are more involved ways of performing analysis, but those methods go beyond the scope of this article. You could at the very least try “amortizing” your initial fixed costs into the equation to get a better idea of the costs. The overall goal of this exercise, however, is just to see if your blogging activities are making you money. Remember, a blog is an advertising medium that provides valuable information to your clients. As is the case with any news source, if a blog provides your customers a valuable service, they will keep coming back for more.

What a better way to drive traffic to your site?

Jeff Gonzales
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