Content & Cash: The Economics of Content


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Presentation by Melissa Rach at Confab and CS Forum.

Dinero. Dosh. Dough. Dollabills. Like it or not, money plays a role in every content strategy project. As content strategists or practitioners, we need to be prepared to answer questions like:

- How much does a content strategy “cost”?
- Why should I fund this content strategy project?
- How do you define the value of content for an organisation or client?
- Can you prove ROI for content or content strategy?

In this session, we’ll discuss the complicated relationship between content and cash. Then we’ll focus specifically on the conversations you need to have to scope, price, and prove the value of content strategy work. Cha-ching.

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  • NameTitleAuthorColumnist
  • Talking about money is awkward and uncomfortable in most situations It’s even harder when you’re trying to pin dollars to something as amorphous as contentMoney is an important part of any industry—we need to eat
  • People aren’t asking us for this stuff to be jerkfacesThey’re asking because they think that is the way business is “supposed to be done”
  • Let’s face it. This stuff was never the content person’s forte. Two things I didn’t think I’d ever use computers and economics. Gross.
  • Everybody wants to fix this problem, solve this puzzle – we’re all problem solversYou are in just as good of a position as anyone else to do it Most people are economically illiterate -- 7 out 10 execs I’m not saying it’s going to be easy. Or quick. It’s not. But content is important. And it’s our jobs to figure out the question.
  • Cue Johnny picture
  • But we can learn from Johnny’s attitude He knew he didn’t fit the mold, and he knew he couldn’t play by the rules Yet, he went on to become one of the most successful performers of his generation He did it by being equalparts genuine, wiley, and rebel He figured out how the system worked, and he then he used it to his advantage We can be rebels Getting educated about economics We can rebel against the conventional concepts economicsWe can find work-arounds
  • People and businesses want to “maximize utility”: Make themselves as well off as possible Maximize pleasure/comfortMinimize risk Trade offs – being a poor grad student so you can have a better life later Doing this talk because content is important Also want to keep my job, sell books, get clients There is short term and long term utility It might feel great to flip off the client, like Johnny Cash, but the long-term utility is not a good trade off
  • They have to trade off things they already have and like, or things they wished for – when the frig breaks down, your new tv plans are gone…MoneyOther ops: If I spend time on this, what else am I missing? Time: Waste time on this project and could be farther behind Professional rep: You hired these people, you’re responsibleEmotional anguish: Don’t want the whole thing to be painful
  • People guess based on: Rules of thumb/short cuts ExperienceCommon sense We do this all the time Looking at the sky for the weatherFlying vs. motorcyclesPlay it safe -- McDonalds, late, screaming child in the back
  • Dorky kid, we musicians were starting to need polish Grew up in the cotton field Mom made his clothes Had an ok voice, but not greatGot a $5 guitar in the army
  • Perfect storm of economics crappiness
  • People have no idea what we doHave nothing to compare us to No past experience to draw on
  • Numbers:Business runs on numbersShortcut for the brain – hot outside vs. it’s 80 degrees All sort of arbitrary 14C/60F It doesn’t need to be exact, in fact, it hardly ever is New Coke Most people prefer new Coke to old Coke5 out of 6 people prefer new Coke to old Coke83.3% of respondents prefer new Coke to old Coke Whoops
  • It’s not about us against them, as long as procurement isn’t involved It takes: Listening Sharing TimeDon’t start with money. Give a big ballpark range.
  • Do you need a plumber or a pipe Why do you care? Because they are valued differently Let’s say you have a pipe burst in your house The pipe itself is worth $2The work of the plumber who fixes the leak is worth a lot more even though you can’t quantify piece of mindAnd buyers expect different amounts of information during the serviceGoods are just the price of the manufacturing, and the profit margin Pricing services are hard
  • I am often ready to spend extra money for convenienceThe value of a content strategy -- depending on the combination of these qualities. You want it fast, alleviate all the pain? Different from a long time line and focusing on one pain point
  • This is about storytelling
  • So the real questions are: Value of what? What’s a benefit? What’s a cost? Let’s look at the comparatively easy one
  • Are you estimating or measuring progress?
  • ChallengesProjecting the market value of the product (price people willing to pay or do without) Remembering all of the steps in the content creation process
  • Calculated by hourly rates , percentage of time spent on this task, and time saved during the yearDon’t forget approvers
  • Price changes depending on the circumstance, not just in content but for everything A personal trainer is worth $100 per hour to Becky, by $40 an hour to Brian If you are walking through a desert and you see a guy selling water for $20 are you getting ripped off? Vending machines that automatically raise prices in hot weather But still, we’ve had prospects get upset because I won’t give them the magic equation. So, here it is – the big reveal of the magic equation for the value of content
  • Cost – how much does the work cost us to do + profitCompetition—based on competition, higher or lowerDemand– value = benefits-costs
  • The market is amoralDiamonds are a luxury and they are expensive, water is cheap but is a necessity We know content is good, but price: Isn’t related to it’s social valueIs related to scarcity Don’t make a soap box, make your service or content scarce.
  • If you give a client a slap and the face and estimate and he complains about the slap, your price is to low If the client asks you why your price is so high, don’t cave – it’s an opportunity to sell yourself20 % resistance is good. 10% will always haggle, 10% will have budgets that you’ve exceededWorld champions in baseball only have to win 57% of games
  • But we can learn from Johnny’s attitude He knew he didn’t fit the mold, and he knew he couldn’t play by the rules Yet, he went on to become one of the most successful performers of his generation He did it by being equalparts genuine, wiley, and rebel He figured out how the system worked, and he then he used it to his advantage We can be rebels Getting educated about economics We can rebel against the conventional concepts economicsWe can find work-arounds
  • Content & Cash: The Economics of Content

    1. 1. CASHContentPhoto: © 1984 Betty Weinaug
    2. 2. I am two people.Johnny is the nice one.Cash causes all the trouble.—Johnny Cash2
    3. 3. Business expectationsTo make an investment, organizations expect:• To know exactly what our product is• Proof of competency/quality• Exactly how much it will cost• Provable value and ROIHard numbers. Right now.3
    4. 4. yikes.
    5. 5. We can do it• We know content work is valuable• We know content is a benefit, nay necessity, forbusinesses• And the business world is catching on, too5
    6. 6. Today• Selling and scoping• Estimating value/ROI• Pricing6
    7. 7. But first…some anger management
    8. 8. 1.It’s not (always)about disrespector even money.Photo: ©2012 John Alderman
    9. 9. Economics is making themost out of life.—Gary Becker9
    10. 10. Decision making is scaryInvesting in content:• Means NOT investing in other things• Might result in loss of:• Money• Time• Other opportunities• Professional reputation• Emotional anguish10
    11. 11. And hard…People:• Are limited by what they know• Latch on to things that are familiar• Take their best guess• Often play it safe• And then immediately start worrying that they’vemade the wrong decision11
    12. 12. 2. Content is aharder decisionthan mostPhoto: ©1980 Betty Weinaug
    13. 13. Content breaks all theeconomic rules• Things of value are usually• Exclusive• Transparent• Hard to replicate• Endless supply AND endless demand13
    14. 14. “Content strategy” is aservice• “New” industry• Very diverse• No obvious accreditation• Doesn’t fit nicely into a traditional business14
    15. 15. 3.Numbers don’tneed to be exact.Photo: ©1980 Betty Weinaug
    16. 16. As far as the laws ofmathematics refer toreality, they are not certain;and as far as they arecertain, they do not refer toreality.—Albert Einstein16
    17. 17. Measurement is…A set of observations that reduce uncertainty wherethe results are expressed as a quantity.17
    18. 18. Exacts are impossibleNumbers reduce uncertainty:• Approximate values• Shortcuts for the brain• Common vocabularyThink about numbers as a communication tool.18
    19. 19. Selling and scoping(building a relationship)Photo: © 1978 Betty Weinaug
    20. 20. 1. Do your homeworkGet all the information you can, find out:• What is the decision?• What impacts that decision?• What else do you need to know?• What experience do stakeholders have withcontent?• Is there a budget?20
    21. 21. The goal:Make a confident decision that’s beneficial toeveryone.21
    22. 22. 2. Narrow down the needWhat’s the buyer buying?• Good or service• Service• Strategy• Planning• Designing products or processes• Implementation• Creation22
    23. 23. 3. Make connections23 Photo: © 1980 Betty Weinaug
    24. 24. 4. Understand all benefitsand costs24Type Benefits CostsMonetary Profit or savings Cost of creationSensory Get satisfaction/alleviate painEndure extra pain orreduce satisfactionTemporal Save time Lose timeOpportunity-based Gain advantages Eliminate possibilitiesPsychological Reduce anxiety Add anxietySocial Increase stature Blamed for problemsConvenience-based Makes things easier Makes things moredifficult
    25. 25. 5. Tell a hopeful storyCreate a story that highlights key benefits, such as:• We can serve users better• We can be more efficient• We can beat the competitors• We can be more accurate25
    26. 26. Brand it, test it, believe it26The Content Efficiency InitiativeBetter for the front lineand the bottom lineBuy making our intranet content moreaccessible, we’ll save hundreds ofheadaches and hundreds ofthousands of dollars….
    27. 27. 6. Eliminate fear27• Discuss the details• Plug information gaps• Address concerns• Start small or do some proof of concept work• Provide references (services) or samples (goods)• Be patient
    28. 28. Estimating value and ROI(the magic formula)Photo: © 1980 Betty Weinaug
    29. 29. Value = Benefits-Costs
    30. 30. Value of what?Strategyor ServiceContent asproductContent asinfluenceEfficiencytool30
    31. 31. Strategyor ServiceContent asproductContent asinfluenceEfficiencytoolValue of what?31
    32. 32. Content as productWhat is the content product worth?• Benefit: Profit from the sale of the product• Cost: Cost to create the product32
    33. 33. Photo: © 1980 Betty Weinaug
    34. 34. Strategyor ServiceContent asproductContent asinfluenceEfficiencytoolValue of what?34
    35. 35. Content as influenceWhat is the piece of content worth?• Benefit: Increased profit as the result of an end-user behavior change• Cost: Cost to create the content35
    36. 36. Estimates, not exactsFigure out what you know; fill in the blanks with assumptions• The average Johnny Cash t-shirt costs $20• Analytics show that 50 people start the process of purchasing a t-shirt onlineevery day, but only 10 finish the process• User research shows that the instructions on the purchase pages are veryconfusing• We assume 5-10 people leave the purchasing process because of somethingunrelated to the site, and 5-10 leave the process when they see the shippingcosts• We assume the remaining 20-30 people would complete the purchasingprocess if the instructions were more helpful• Therefore, the value of the instructional content is likely around $144,000-216,000 per year ($20 x 20-30 people x 30 days X12)• The cost of fixing the content is approximately $5,00036
    37. 37. Strategyor ServiceContent asproductContent asinfluenceEfficiencytoolValue of what?37
    38. 38. Efficiency toolWhat is the tool worth?• Benefit: Cost savings as the result of employeebehavior change (or happiness)• Cost: Cost to create/maintain the tool and trainpeople to use it38
    39. 39. IntermissionPhoto: © 1982 Betty Weinaug
    40. 40. Strategyor ServiceContent asproductContent asinfluenceEfficiencytoolValue of what?40
    41. 41. Strategy (or service)What is the strategy worth?• Benefit: Combination of:• Savings/profit from:• Content as product• Content as influence• Tools• Sub-services• Value of non-monetary benefits• Cost: Cost to create/implement the strategy41
    42. 42. Pricing(you’re worth it)Photo: © 1977 Betty Weinaug
    43. 43. Everything is worth what thepurchaser will pay for it.—Publilius Syrus(1st century BCE)43
    44. 44. Ways to priceYou can base price on:• Cost• Competition• Demand/value44
    45. 45. There are a lot of goodeconomists, but there is onlyone Roger Clemens.—Robert Solow(1987 Nobel laureate)45
    46. 46. Estimating probable resultsBasic project information:• Maximum gain: $216,000• Maximum loss: $5,000• Chance for success: 70%Expected opportunity loss:• Risk of approved: $5,000 X 30% = $1,500• Risk if rejected: $216,000 X 70% = $151,20046
    47. 47. Pricing basics• Give ballpark estimates early• Estimate on time, price on value• Aim for a consumer surplus• Always provide numbers in person47
    48. 48. Price is like setting a screw. Alittle resistance is a good sign.—Harry Beckwith48
    49. 49. Photo: © 1977 Betty Weinaug
    50. 50. Our friend, Johnny…Stats50+ million albums soldCreated:96 studio albums63 compilation albums153 singlesHonors17 Grammy Awards9 CMA AwardsRock and Roll Hall of FameRockabilly Hall of FameSongwriters Hall of FameGospel Music Hall of FameCountry Music Hall of FameNashville Songwriters Hall of FameKennedy Center HonorsNational Medal of ArtsHollywood Walk of Fame50
    51. 51. Photo: ©2012 John Alderman
    52. 52. It’s aboutdecisionsnotdisrespect
    53. 53. It’s NOTus-against-themit’s aboutbuilding relationships
    54. 54. It’s aboutreaching understandingandreducing uncertainty
    55. 55. It’s aboutestimatesnotexacts
    56. 56. It’s nottraditionalbut it’sachievable
    57. 57. Go prove it.Your work is valuable.
    58. 58. Thanks!@melissarachmelissa@dialogstudios.comwww.contentstrategy.comwww.dialogstudios.com58 Photo: © 1981 BettyWeinaug
    59. 59. Want to know more?Content Strategy for the Web (second edition)Check out chapter 10By Kristina Halvorson and Melissa RachHow to Measure Anythingby Douglas W. HubbardMarketing Professional Servicesby Philip Kotler, Thomas Hayes, Paul N. BloomNaked Economics: Undressing the Dismal Scienceby Charles Wheelan59