In episode 66 of The Content Strategy Experts podcast, Kaitlyn Heath and Sarah O’Keefe discuss measuring content value based on accounting principles.
Kaitlyn Heath: Welcome to The Content Strategy Experts podcast brought to you by Scriptorium. Since 1997, Scriptorium has helped companies manage, structure, organize and distribute content in an efficient way. In part one of the content accounting podcast, we talk about measuring content value based on accounting principles. Hi, I’m Kaitlyn Heath.
Sarah O’Keefe: And I’m Sarah O’Keefe.
KH: And today we’re going to look at measuring your company’s content value. So I want to start by identifying what type of content we’re talking about when we’re talking about content value.
SO: Well in my mind we’re talking about customer facing content, whether it’s technical product content, high-value content, like technical reports or membership information that you present to your customers and or marketing and sales content.
KH: So what type of value does this content generally have for your company?
SO: Well, that is the question.
KH: That is the question.
SO: And it actually… it turns out to be a really hard question because there have been actually a lot of attempts at this. How do we calculate content value? And you’ll see a lot of stuff around, “Oh well we got this many impressions,” or “Our tweet got this many retweets,” or “We got this many hits on our website,” or “This many people click the yes this piece of technical information in my knowledge base was helpful,” right? But value, what’s the value of that content? We have some ideas about metrics.
KH: Right, so user feedback type of stuff.
SO: Yeah, or sheer volume, the volume of people that are looking at something. And so-
KH: But does that necessarily translate to value?
SO: …right. We don’t really know. And so that was… I wrote this white paper talking about the concept of content accounting and I’m not the first one to kind of touch on this. There’ve been a couple of other papers out there where people have tried to kind of address content value, but in this specific white paper, what I did was I tried to take accounting itself as a framework for thinking about content. So for those of you that are not accountants, which I suppose is…
KH: Not me.
SO: …perhaps a lot of our listening audience, you’re probably familiar with the idea of a profit and loss statement and maybe less familiar with the concept of a balance sheet. But those are kind of the two basic documents that you see in accounting used to calculate the value of things, the value of a company the… What the performance of your company really. So I thought, “Well, all right, can we do content based accounting? Can we do accounting that uses a profit and loss, a P&L, and also a balance sheet but looks at content related aspects to try and figure out how to value information.”
KH: Right, so what might that look like? What does this profit and loss sheet look like for content accounting?
SO: So a P&L for content accounting. If you’re somebody like Netflix, then it’s pretty straight forward, right? Because as Netflix, you know that you have your streaming income and you know that your subscribers are paying you $8 or $10 or 15 or whatever they’ve bumped it to these days for access to your content, right? Because your content is directly your product. So in a very simplified way your income is your streaming money or the money people are paying you for your content. And if you think about a book publisher or something, same thing, people pay the money to get their hands on books or movies or other kinds of content. On the L, profit and loss, on the L side, on the expense side, you have the cost of creating or perhaps licensing that content. How much does it cost to make a Netflix series? How much does it cost to license a series from an existing TV network?
SO: How much does it cost to get an author to write a technical book about computer subjects that you’re then selling in the bookstore online or whatever. How much does it cost to produce an eLearning course that you then sell people? So if you’re a publishing company, if you’re a content company, then you know that this is all pretty straight forward, right? Because you have your cost of producing content and you have your income from content.
KH: Absolutely. So then how does this change when we start talking about marketing content and then technical content?
SO: So now it gets obnoxious. So you set aside the content companies and you start thinking about, “Okay, well I’m a software company and I produce content that is important to my customers,” or “I make consumer electronics,” or “I make anything else in the world that’s not directly selling a book or a movie or a piece of content, a piece of intellectual property to your customers.” What you have now is you have a product like piece of software or a piece of roof rack, a car, whatever. Alright, how do you pick which car to buy, right? You probably do some research and you say, “Hey, I like this one. Well I can’t afford it, moving on.” You sort of go through this process of I want a vehicle that has these features or you know, “Hey, I could get to my office by moped, ’cause it’s pretty close except there’s a really narrow road so I’d probably die, so maybe not that.”
SO: But you kind of work through what you need from the product that you’re going to buy and then you go looking for the product that meets those aspects. And that’s where the customer facing content from the company starts to come in. If you’re in the market to buy something, you’re looking for information on which product meets my requirements. Is it fuel efficient enough? Is it electric or not, as the case may be. Does it have enough cargo space for your dogs and cats and gerbils and kittens and giraffe or whatever that you have as a pet?
SO: Those are the kinds of things that you need to think about. What features do you need in that? And the marketing material can be kind of persuasive and aspirational. People like you buy these kinds of cars and, “Ooh, don’t you want to be one of the cool kids that has this kind of a car?” I’m oversimplifying marketing, but to a certain extent marketing is about persuasion and saying this is the one you want to choose and here’s why, features and benefits. Your technical content though, if I know that I need to haul around a 150 pound dog, I’m get very interested in…
KH: You might be looking for specifications that are in the technical documentation.
SO: I might want a bigger car. Yes. So you’re looking for how much cargo space is there? Is there a roof rack? Not for the dog. We don’t do that in this state. But you look for those kinds of things. What are the exact specifications because you might decide, “Well I’m not even going to consider this car unless it’s like a hybrid.” Okay, well you can rule out a whole pile of stuff based on it not being a hybrid. And maybe you know a little bit more about that, and you’re pretty specific about what you want. You want batteries that are more easily replaceable or have been built in a way that’s more ecologically sound. So you can think-
KH: That stuff’s not usually in the marketing content.
SO: It’s usually not… Exactly, right? So you end up in the technical content. The research says that when buying, now this is consumer electronics, not cars, but when buying consumer electronics, something like 80% of people will look at the technical content before they buy. Because they’re looking for some little spec that’s in there. Okay, so back to your question, how do you quantify that?
KH: How do you quantify that?
SO: What is the value of a piece of content that says this is the cargo space and these are the specs for the battery that then leads somebody to say, “Oh wait, I want that car.”
KH: Yeah, how can we measure that?
SO: How do you measure that?
KH: How do you measure that?
SO: So that was the question I tried to tackle with perhaps varying degrees of success. And what I basically landed on was that you have these five aspects of income that content contributes to, and there’s a lovely pyramid drawing in the white paper, right?
KH: Which we’ll link to.
SO: Which we’ll link to. Item one which we haven’t actually talked about yet, is compliance. If you produce a product that is regulated, you must comply with the regulations or you don’t get to sell it. If you’re doing pharmaceuticals, you have to meet certain standards about drug labeling. If you’re selling a car, you have to meet certain standards around safety and discussing the safety equipment that you’re required to have in various markets. So compliance is one of these things. It’s very hard to quantify except that if you don’t do it…
KH: You can’t sell your product.
SO: You get zero revenue. So in a way it’s like that old ad from the credit card company, it’s priceless, right? Okay. So that’s one. Now the second one, kind of moving up the pyramid is cost avoidance. How do you make things cheaper and more efficient? If you look at your compliance content as this horrific cost of doing business? Well, how do I do compliance as efficiently, as inexpensively, as fast as possible?
KH: So what are some costs that you might be avoiding?
SO: Usually what we’re looking at here is efficiency. So don’t duplicate and triplicate your content and then have to change it in three places. Don’t make dumb mistakes because you copied and pasted out of the database and missed a number and then your numbers are wrong and now you’re in trouble with the FDA or the somebody, some regulatory body. So cost avoidance usually… And the interesting thing is this is where the focus has been for the last 10 or 15 years. Let’s automate the formatting. Let’s do a lot of reuse. Let’s automate our localization as much as we can and create these really efficient workflows that are better than sort of doing things by hand and that are more scalable.
SO: But cost avoidance, you have to be really careful because you don’t want to cost avoidance yourself out of a job or a mission, right? And so there’s a bunch of other stuff that you need to look at. So we have compliance and cost avoidance, which are kind of baseline, prereq, foundational, whatever. Revenue growth. If your content is really good, people might choose your stuff over the one that they looked at and they’re like, “I don’t know what these people are writing about, but I don’t understand it.”
KH: And I think that’s something that isn’t often talked about with technical documentation necessarily, about gaining revenue from your technical documentation.
SO: If you do a search on a particular feature that you’re looking for and you find it in product A but not competitor product B, you’re probably going to buy product A.
SO: Which implies that you need to pay attention to SEO and those kinds of things. So revenue growth, arguably a really great piece of marketing could drive your revenue because people read it or they see the ad or they read the white paper and they say, “Wow, this product sounds great. I should look into it some more. And then they end up buying it,” and conversely, really bad marketing and put it out there and you pay to get it out there to everybody. And they read it and they’re like, “I don’t think so.” So reach is not everything. Just reaching a lot of people isn’t necessarily going to help you with your sales if your message isn’t the right message. So revenue growth.
SO: Then we move up to competitive advantage. And this is sort of the idea of… Let’s say you have two products that are pretty comparable, but my product has this one extra feature that your product doesn’t have. You have some other feature. But what I want to do is I want to highlight my product’s extra feature and make sure that that is everywhere. And everybody knows about this extra special feature because why would you ever buy a product that doesn’t have my special feature? And so if you do a really good job with content and a really good job with providing technical information, people might understand more about your product and be willing to pay for that cool feature that they didn’t know they needed.
KH: And that sort of ties in nicely to the apex of the pyramid here.
SO: Yeah. So the top of it is branding. And you think about companies that have done a really good job with branding, companies that are known for having really great design, really great industrial design or software design, UX, UI experience. People are willing to pay a premium to get those products. Some people are willing to pay a premium to get those products, but your branding helps sell the product, right? It helps you get that sort of halo of goodness and people grab your product.
KH: Absolutely. So then what type of expenses are we talking about here?
SO: So on the expense side, you’re looking at the cost of producing the information largely. So what does that look like? You’ve got some staff that need to produce the information and you’ve got systems, whether it’s workflow or anything like that. And you’ve got localization in order to get everything rolled out to your markets, wherever those may be. So basically you’ve got the staff that actually creates authors, delivers the content. You’ve got the staff that does things like social media amplification, distribution, that kind of thing. You’ve got the software itself that you’re using to kind of produce the thing and then you’ve got some others, some ancillary things, they tend to be smaller potentially like overhead facilities, that kind of thing.
KH: Right. Okay. And then so when talking about expenses, how do we compare those expenses to the benefits that you’re getting in your content? So for example, how can we say, this piece of software that we’re buying, how is that going to then benefit our content and how is that going to add to the value of our content?
SO: So if you’re making an argument to invest in a piece of software or really anything, you have to prove that we’re going to spend X dollars and we’re going to get Y value and preferably Y value is greater than X dollars. That’s how you do a business case. I know the accountants right now are crying and I’m really sorry.
KH: It’s not me.
SO: Not you. But basically we’re going to invest X, we’re going to get Y where Y is greater than X. We can squeeze a lot out of efficiency and done that because it’s easy. It’s the low hanging fruit to a certain extent. But you also have to look at things like, well, if I put this information in a better system, in a better set of files, in a content management system as opposed to just managing a pile of files somewhere on my laptop, what does that buy me? I’m going to be able to produce the content better, be more accurate, do all these things, maybe produce it faster. I can be more consistent with my corporate identity branding. I can rebrand when the company rebrands weekly, monthly, whatever. Or you get acquired, it’s not your fault, but you get acquired and then they’re like, “Hey, you have to use our new branding.” And it’s like, “Ah, rebrand again.”
SO: So those are the kinds of things that you kind of look at. If I invest some time in writing a better product description, right? I mean I can write a really bad one in five minutes or I can take two hours and write one that’s actually really good. And maybe I’ve thought a little bit about search engines and keywords and those kinds of things. Well how much more valuable is that two hour description than the five minute description?
KH: And so I think that goes back to how are we measuring the benefits?
SO: How are we measuring the benefits? Right and so you have to… Essentially, you have to be able to prove that somewhere on that pyramid you’re adding value, whether it’s through revenue growth or branding or way down in efficiency, cost avoidance, compliance. If it’s something like writing a better product description, then you’re probably focused on revenue growth, right? Because you’re saying I’m going to write a better description. More people will read it, and then more people will buy.
KH: So that pretty much wraps up the profit and loss statement, right? Okay. So we’re just about out of time.
SO: Who knew you could talk about P&L’s for this long.
KH: Right. But the other important part of this is…
SO: The balance sheet.
KH: The balance sheet, right? Okay. So we’ll talk about that on the next podcast.
SO: In part two. Come back for more accounting concepts.
KH: Lovely. Well thank you Sarah.
SO: Thank you.
KH: Thank you for listening to the Content Strategy Experts podcast brought to you by Scriptorium. For more information, visit scriptorium.com or check the show notes for relevant links.