After attending a recent business blogging seminar, I realized that most business managers really want to build a business case for blogging. After all, blogging takes time away from other business activities and requires a good amount of effort, so wouldn’t it be helpful to calculate the return on investment (ROI) of a business blog?
When I’ve pitched business blogs in the past, the client nearly always asked what the benefits of a blog were. The reasons to maintain a business blog include creating a sense of community with your customers, getting feedback from your customers, generating fresh content for your web site, building company credibility and improving search engine visibility, just to name a few. That was always good enough for the client. I’ve never been asked to specify the ROI of a business blog. Eventually, someone will ask, though.
But is there a way to calculate a return on investment of a business blog? I turned to the web, thinking that someone had already answered the question. What I found out is that other attempts to calculate business blog ROI had been somewhat futile.
After some thought, I decided that it would be possible to calculate the monetary value of a business blog by applying ecommerce metrics. Treating your business blog as a sales channel allows you to quantify the monetary return.
Most internet retailers religiously follow many site metrics, including conversion rate (buyers/visitors) and revenue per visit (revenue/site visits). The higher these metrics, the more effective the site is at generating revenue. The same metrics can be applied to a business blog.
I’m making the broad assumption that your business blog follows sound blog effectiveness principles — you have a good web analytics solution in place, you provide links in your blog to products/services on your web site and you provide a way for customers to contact you directly from the blog.
If all of this is true, you can relate revenue back to your blog. Through path analysis, you can find out what pages customers visited. If the path included a look at your blog and later a purchase or a successful completion of a contact form, you can relate the revenue generated to the blog. For a service provider like me, I have the contact form tagged in such a way that I can distinguish blog contacts from regular web site contacts. If a contact becomes a client, the fees get associated to the blog or to the site (or to paid search, offline advertising, other online advertising, etc.).
actual revenue % of revenue Referrals Face-to-face networking Offline advertising Search engines Contacts from blog
Examining your web analytics will reveal how many visitors read the blog during the given time period, and this number is used to calculate your revenue per visit. The number of purchases or leads resulting from a path through the blog is used to calculate your conversion rate.
What you’ve now got is an apples-to-apples comparison between the blog and the web site. That’s not all, however. There are other benefits of the blog that are a bit less scientific, including search engine visibility. You can calculate the increase in traffic as a result of having the business blog by analyzing the referring sources of your traffic. You can make the assumption that a majority of visitors that find your business blog through search engines might not have otherwise found your site.
For those business managers who need a business case to blog, I hope this helps. I welcome your feedback if you have other ideas.
August 13th, 2006 at 5:17 am
BusinessBlogHive.com » Blog Archive » Blogtipping and Business Blog ROI says:
[...] I ran across this post by Rick Whittington: After attending a recent business blogging seminar, I realized that most business managers really want to build a business case for blogging. After all, blogging takes time away from other business activities and requires a good amount of effort, so wouldn‚Äôt it be helpful to calculate the return on investment (ROI) of a business blog?… Source: Rick Whittington’s Web Site Effectiveness Blog, 7/31/2006. [...]
October 26th, 2006 at 10:23 am
Business Blog Hive » Business Blog In The News - (10/1 - 10/7) says:
[...] BOTTOMLINE: Skip the above article. Instead, visit this article on how to measure success of a blog, incidentally one of the few links in this “Knock, knock..” article that actually provided any useful information. Check out this article mentioned back in August. And here are some others: Scoble on blog metrics and Corporate Blogs: Measure Their Value!. [...]
January 26th, 2007 at 10:57 am
I’m named in new Forrester research report on business blog ROI : Web site effectiveness blog: Rick Whittington Consulting says:
[...] After reading this, I posted some commentary on calculating business blog ROI here on my blog. Forrester read my post and asked for permission to use my post as a part of their research for an upcoming report on business blog ROI. [...]
February 28th, 2007 at 5:18 pm
Uncommon Knowledge. » Blog ROI and the murky future of blogs and feeds. says:
[...] For anyone looking to create a blog (whether that’s a CEO or just the average web user), that person is looking for some return on the investment of time and energy they are going to devote to a blog. Calculating that return is not always easy to do. [...]
May 15th, 2008 at 6:00 pm
27 Resources for Evaluating Blogging ROI - KoMarketing Associates says:
[...] Rick Whittington – Calculating business blog ROI, July 31, 2006 Selected Quote: When I?¢‚Ǩ‚Ñ¢ve pitched business blogs in the past, the client nearly [...]
July 22nd, 2009 at 1:54 pm
Ryan Jean says:
Let’s say a consumer comes in for a housing resource and talks to a staff for 30 minutes. A computer user comes to our site and views our housing page (we can see this by stats).
Obviously, it takes longer to type than to talk. Does 1 minute in person equal 1 minute on a page? How do we know the user is getting the same information online than they would in person? They could be away from the computer and left the page open. In person, the consumer is asking for resources from staff, who gets information from either online, over the phone, or other staff. Online, a user can find the information themselves; however, they may not know where to look or get the exact answer they are looking for. This is where social media comes in… Where users can get feedback. The problem still lies within the value of time. Using my example, if a user is on our housing page for 30 minutes, does that equal 30 minutes of “in-person” time?
There’s so many variables, such as if a consumer comes in and asks a housing question, the staff may ask a co-worker for advice (5 minutes), go online for research (15 minutes), and make a phone call for the consumer (10 minutes) to equal 30 minutes total. If the consumer went online themselves with social media, they could take maybe research 5 minutes online and make the 10 minute phone call to add up to 15 minutes total. Although this is just an example, using social media, we reduced the time in half. However, in person, our staff worked with the consumer for 30 minutes while online, the consumer would’ve used our resources for 5 minutes (excluding the phone call). Therefore, in this example, the ratio of “in-person” time to “online” time is 6:1. In other words, every minute online is equal to 6 minutes in real time. Do you agree? And any feedback on this?
I still haven’t covered comments, viewers, and followers.
July 30th, 2009 at 10:04 am
Ryan Jean says:
Our ROI is based on time spent working with our consumers. Therefore, how do we know how much time consumers spent on our site? Sure, we can look at the stats, but as I said, what if one walked away from the computer and left the page open? They only used our page for maybe 5 minutes but when we look at the stats, they were on it for an hour. We wouldn’t be able to tell.
July 30th, 2009 at 4:08 pm
Ryan Jean says:
Let me try to explain or give an analogy. Let’s say an organization gets paid by how much time they work with consumers. In other words, let’s say for every 15 minutes a staff works with a consumer, that staff gets $10. A lot like a seller in a store. If the seller works with the client for an hour, they will receive $40. Same idea for the organization. If the client went online and only took 15 minutes, the seller would only get $10. But, let’s say the client left the computer and kept the site up so that the stats read an hour instead of 15 minutes. The seller would assume they get $40 instead of $10. And it’s important to obtain the true time value. How do we achieve that?
Today, we live in a fast-paced world. We go in, get what we need, and get out. This also goes for the internet and social media. If we don’t see what we need, we move on. There are also those who linger. Using my example above, if a client came into the store just to linger or after purchasing an item, lingered, that client would not be serviced and therefore, the seller cannot receive any pay for that. The seller only gets paid if the client gets services. However, I am excluding the fact that the seller could be claiming pay if the client is actually looking at the seller’s products, which is a service. So, how can stats tell whether a consumer is actually getting services from a site or just lingering (such as being away from the computer and left the site up)?