The Drum opinion article 'Brand publishers should learn quality versus quantity and shut up', which ran earlier this week, opens with this question: “If content marketing is so wonderful, then why is the largest company that is best known for selling, using and advocating the practice losing more than $40m every year?”
The column takes content marketing to task, referring specifically to an article that originated on the Content Marketing Institute website. The author, Samuel Scott, draws three conclusions:
- Content marketing is, at best, “a minor supplement to advertising campaigns” and, at worst, “a complete waste of money.”
- “Brands will never be effective and neutral publishers because they are two entirely different models.”
- “If your ‘content’ is not marketing collateral that specifically relates to one of the tactics of the promotion mix – advertising, direct response, PR, or SEO – then it is a waste of time and money.”
On the surface, good arguments can be made for all but one of these points. (Spoiler alert: It’s the third one.) Unfortunately, this article’s logic in arriving at its conclusions is flawed.
As a practitioner of content marketing, a marketer for more than 30 years, and chief strategy advisor for the Content Marketing Institute, I’d like to clarify a few things.
Intel and soap operas
Let’s take the author’s first argument, the one I have the most agreement with. Content marketing is, indeed, a supplement to other marketing.
The Drum author takes to task an article that we published entitled How to Stop Acting Like a Marketer and Start Acting Like a Publisher. In it, we tell the story of Intel’s digital magazine iQ, a content marketing platform meant to reach consumers directly.
The Drum author points out that Intel evolved from its origins building a brand through traditional marketing and advertising “long before doing ‘content marketing.’” Then he points out that consumer packaged goods company Procter & Gamble – while creating and producing soap operas (long noted as an early type of content marketing) – spent money on advertising well before soap operas came along. Based on the “evidence” of the Intel and P&G examples, because of how little or how long these companies have been doing it, he concludes that content marketing is “at best a supplement … and at worst a complete waste of money.”
As Luke Skywalker recently said, “Every word of that sentence is wrong.”
Let’s get the logic straight. Just because a company didn’t start doing content marketing until long after it had started advertising, that doesn’t invalidate the practice. And just because content marketing isn’t the only kind of marketing a company does, that doesn’t invalidate the practice.
You might as well argue that because P&G didn’t start in the 1830s with email and a website, digital marketing is a big fat failure.
The author and I agree on the fundamental point. Content marketing is a component of an integrated marketing and communications strategy. It always has been. If the author had read a few other articles on the CMI site, he would have seen that this is something we say a lot.
No one with any strategic intelligence has suggested that content marketing should completely replace other marketing approaches. Since day one, we have been positioning content marketing as an opportunity to make all the other approaches of integrated marketing – including advertising, PR, SEO, sales collateral, and direct response marketing – more effective.
Look at the Michelin Guide. Look at John Deere’s The Furrow magazine. Look at Sainsbury’s Magazine, the most popular food magazine in the UK. The creation of content for purposes other than direct advertising, SEO, or direct response has been around for hundreds of years.
Those are all examples of content marketing.
Of course, some companies use content marketing as a significant portion of their strategy, placing primary marketing effort on the creation of media. Red Bull (also mentioned in The Drum article) is a good example. Red Bull Media House doesn’t just throw guys out of space ships as a PR stunt. It also produces TV shows, a magazine, movies, books and music. And it is paid for those pieces of content marketing.
The origins, for example, of Red Bulletin – Red Bull’s magazine – came from the marketing team looking to create interesting content to give to exiting fans of Formula 1 races that the brand was sponsoring. As soon as the race was over, the team would quickly print the results and distribute the magazines to attendees as they were leaving the race – an amazing feat done in record time. Two years later, Red Bull decided to evolve that magazine into a men’s lifestyle magazine, and it became what is now Red Bulletin. Today, the magazine is published in five languages and is distributed in 10 countries. It prints and distributes over two million copies each month, including 550,000 mailed to paid subscribers.
As Red Bull CEO Dietrich Mateschitz said five years ago, choosing between media company and brand “is not either or, it is as well as. Both communicate ‘The World of Red Bull.’ Since the beginning it has been a brand philosophy and how to look upon the world, rather than pure marketing for consumer goods.”
Other companies, Intel for example, uses content marketing as a small piece of an integrated strategy. In many ways, the iQ by Intel magazine is a continuation of Intel’s “ingredient branding” that made the Intel Inside campaign – the campaign that made consumers care about what was inside their computers – a quintessential business case study. The whole idea of iQ is that it provides a way to reach consumers directly. It reinforces Intel’s reputation as a forward-leaning technology company.
What value could iQ have if it doesn’t “produce a lead” or “sell Intel”? Today, it’s the data. Intel iQ gives the company an audience that it can ask for its preferences, understand which technology (eg AI vs drones vs internet of things) most resonates with its audience. It can use this data to serve better, more targeted advertising. In short: access to an audience makes them better marketers.
Content marketing programs are built to support an integrated marketing and communications strategy.
Let’s look at the author’s second argument – that content marketing is ultimately an unprofitable approach.
Where integrated marketing starts and stops
The main part of The Drum article goes after software startup HubSpot’s latest financial results. The author equates HubSpot’s operating losses as proof that a focus on content marketing is doomed.
Let’s put aside the author’s personal investment strategy, the numerous analysts that have rated HubSpot either a “buy” or a “hold,” and the fact that the stock price has nearly tripled over the last 24 months. Instead, let’s focus on the main argument in the article that HubSpot’s customer-cost-per-acquisition has risen to $16,000, and that this is the evidence that content marketing is a flawed approach.
Let’s first look at the flaw of looking at total customer acquisition costs in a vacuum. The way to measure the health of acquisition is to examine the total customer acquisition costs as a ratio to the customer lifetime value. This is especially important in a software-as-a-service company, where you might also add in churn rate. Yes, overall, we want acquisition costs to go down – but rather as a ratio of how much value we are getting from the customer over time.
In other words, I could spend $1 to get $2, or I could spend $50 to get $200. My acquisition cost is much better in the second case, even though the hard dollar amount is higher. Again, this is an incredibly important aspect of measuring a subscription-based business like HubSpot.
To be fair, I didn’t actually run the churn numbers vs the lifetime value of customers of HubSpot for the last quarter – though I did notice its average subscription revenue per customer was up 10% in at least two quarters of last year.
The more important conclusion here is that it’s silly to say HubSpot’s increase in customer acquisition costs are due solely (or at all, really) to its focus on content marketing as a primary piece of its marketing strategy.
First of all, HubSpot has added new products over the last 12 months as it has pivoted to move upstream into the enterprise. Could it be that the bigger the company, the higher the acquisition cost? Yes. Could it be that retention or upsell efforts of new products through direct marketing methods (such as advertising and sales calls) have increased that cost? Yes. Could it be that the acquisition cost would be even higher without the content marketing approach? Yes.
The point is, you and I don’t know. Neither does the author of The Drum article.
Let’s move on to the author’s final point.
Brands as informational outlets
As a former journalist, the author of the article seems take umbrage at the prospect of brands playing the role of hard-hitting, gumshoe reporters. I get that. But there’s no reason for him to slide to the bottom of the slippery slope. I know of no one who’s arguing for brands to replace The Guardian or Washington Post, performing investigative journalism to uncover society’s unjust or politically corrupt activities.
Nor, by the way, does anyone argue for content marketing to devolve into vapid listicles and cat videos.
Are we to believe that the Red Bull model is a unicorn, and that brands and publishers should always remain separate businesses, never to intertwine or merge models? Are we to believe that an online bookstore can’t integrate originally produced entertainment media to create reasons to subscribe to their shipping service? If so, someone should tell Amazon to give back the Golden Globe Awards that it earned by virtue of its content.
Are we to believe that a computer hardware manufacturer shouldn’t create its own content to entice people to buy more of its devices? If so, someone might want to inform Apple. It is investing a billion dollars into new programming.
Are we to believe that brands should never acquire media companies so as to better understand their audience and make their marketing and advertising better? If so, someone should tell Johnson and Johnson so it can stop investing in BabyCenter.com – a content marketing platform that gives it insight and data to serve better advertising to moms.
Are we to believe that the world is better off if product brands allow an entire industry of trade journals and educational magazines to die under the management of media companies because the content is simply too niche to attract advertisers? If so, someone should tell Arrow Electronics. They have spent the last 18 months acquiring over 50 trade journals and magazines to keep these publications viable so that they can preserve their total addressable market. This is content marketing on a grand scale, requiring an entire media arm within the company.
Are we to believe that a brand can’t deliver editorial content in a way that helps customers to align thought leadership with the brand? If so, someone should tell Adobe. Its CMO.com platform is one of its more valuable marketing engines.
I believe the companies noted above, and many others, are doing more than tilting at windmills with their content marketing efforts. No, content marketing is not easy. No, it’s not a cure-all. No, it’s not for everybody. No, it’s not a replacement for all other kinds of marketing.
And yes, it can work. It can make a spectacular difference for brands while enhancing people’s lives.
That’s something worth speaking out for.
Robert Rose is the founder and chief strategy officer of The Content Advisory – the consulting and advisory group of The Content Marketing Institute. Follow him on Twitter @Robert_Rose