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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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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

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