Content has always been an important component of marketing, but increasingly business leaders are beginning to see the value of content as an asset that can drive longer term and more sustainable engagement, acquisition and retention. But, while it's popular today to talk about treating content as an asset, the actuality of doing so, managing content as an asset, building measurable economic value through content, is less clear.
Why manage content as an asset?
Quite simply, it's about using content to secure more value and revenue at the least possible incremental increase in cost or investment. This is especially true in knowledge based businesses that are able to exploit rising returns as they scale, that is where each incremental sale drives more revenue at little or no additional cost, the bigger the market, the bigger the opportunity, and so the greater the potential relative gain.
Increasingly, it matters to decide why to measure and, what to measure as well as how to measure it. It matters because companies need to think about the value of the resources they have, their productivity, performance and fitness for purpose. Relative investment in different disciplines, capabilities and assets that create most value depends on having a system in place to direct and evaluate that investment. At the moment measurement systems tend toward myopic, increasingly tactical measurement of smaller and smaller proportions of an organisations market value.
What is content, what is an asset?
Before we go any further it might be useful to think about what content actually is. Perhaps the simplest way to think about content is as information, distribution of knowledge, a use-based or functional perspective. Another way to think about it is, content as an experience, with a purpose or outcome in mind, engagement or entertainment. Content can be expressed in a variety of formats: text, images, video, audio. It can appear as marketing copy, reports, photos, poetry, presentations, white papers, blogs. Content marketing, is also worth defining, it can be seen as the strategy, governance, creation, curation, management, distribution, optimisation and improvement of content.
For anything to be considered an asset it must qualify as something that has positive economic value and is useful to the business. For example, something like a building or property, where potential sale value exceeds any mortgage secured against it. Anything with negative economic value would be a liability or negative equity. Or, it could be something intangible like brand equity or goodwill, the premium that may be paid beyond the book value of the assets, which whilst not necessarily the most accurate measure, is a reasonable way to explain what an intangible asset is. Other, better measures are available that eliminate variability in market value, like: Calculated Intangible Value or CIV.
What does managing content as asset actually mean?
Generally accepted accounting principles (GAAP), recognise two types of assets: tangible and intangible. These accounting principles provide some guidance to determine what assets can be considered financial assets. However, one of the main challenges in treating content as an asset is that many organisations treat internally generated assets like content as operating expense, being recorded in the Profit and Loss and don't record the assets as having any value.
One of the first principles to be established, therefore, is to recognise content as an asset not an operational expense. Another primary principle is to establish clear policies to evaluate and monetise intellectual property and intellectual capital. This means shifting strategic thinking from being focused on 'impact on earnings' to generating incremental value and future cash flows from investment in content portfolios.
What value does content actually have?
Content may be seen to have tangible value through some of the physical medium in which it appears, (books, reports, photographs, original art works) that could be considered physical 'content stock'. This isn't strictly a content asset, it's arguably a channel asset or liability, a reflection of channel management capability to distribute and dispose of stock.
Content is predominantly an intangible asset which includes value associated with specific media, art, stories, video, photographs, brochures, reports, blogs and films. This might include patents, licences or rights associated with the content. There's inherent value of content for customers and consumers, entertainment value, shareablility, engagement and more compelling experiences. Then there's content marketing capability, which includes: people that generate, manage and distribute content, storytelling, ongoing narrative, process, policies, procedures, leadership, customer relationships and connections. Finally, there's content portfolio management that can offer additional economic value attributed to internal ease of use, re-use, efficient and effective distribution.
Content as asset or commodity?
There is a lot of talk about treating content as an asset or a commodity. The fact is that commodities can be considered assets, perhaps just less valuable ones. Utility or commodity content may be less valuable than premium content proven to have high re-use, longevity or impact in the market but it can still be uniquely creative, high quality and engaging and therefore still have value.
What's perhaps more significant, is the inference that content as a commodity is less useful, less impactful and perhaps less important. It's highly likely that in managing a portfolio of content there will be a mixture of high value signature assets, as well as commodity assets. High value and commodity assets both have their place and purpose in the content portfolio. Content needs to be developed to suit the needs of specific customers, channels and touch-points. Inevitably this requires a range of assets, some which are almost 'disposable' and have short life spans, others that are more significant, require greater investment and are expected to generate greater returns.
What's important here is not whether content is an asset or a commodity, but how to use a portfolio of content assets to greatest effect and maximise their collective value to the business.
How can content marketing value be measured?
Just like other intangible assets content value is notoriously difficult to measure as its value depends on the organisations ability to use content and identify the specific economic value associated with it. Some of the valuation approaches that could be used for specific content assets include:
Cost based valuation - an approach based on costs of creating similar intangible assets, the only option if income based or market based valuations are not possible.
Income based valuation - an approach based on income and expenses associated with specific assets. The next best option if income and expense can be clearly attributed to the asset.
Market based valuation - an approach based on the market value of similar assets. Perhaps the best option beyond cost based and income based approaches where there are opportunities for relative competitive valuation of similar content, such as content production agencies, content markets or content stockists like iStock and Shutterstock.
Measuring the value of content marketing capability is also challenging. It demands clearly communicated strategies, processes, roles, responsibilities and well developed operating models and frameworks for systematic performance improvement and valuations like Adaptomy's Marketing DNA. Two methods of measurement lend themselves to this kind of capability based asset:
Direct intellectual capital measures - an approach where estimated value of intangible assets is identified by attaching value to specific components. Normally done through diagnostics that assess responses to specific questions regarding management of intellectual capital.
Score cards or performance management measures - and approach we're specific indicators and indices are generated or monitored as score cards and KPI's, indicating relative increase or decrease in capability. This approach may provide more insight into the health of content marketing than purely financial metrics and consequently, offers better measures of content marketing capability as an asset.
There are other approaches which are also useful to look at, like Economic Value Added (EVA). Skandia Navigator, or Total Value Creation (TVC) and Accounting For The Future (AFTF) which both use discounted projected cash flows. There are many others. This demonstrates that there is growing interest and development of intellectually robust methods that can perhaps soon, help determine the true value of content and content marketing.
What about the analysis?
There are two main components to analyse: content (intangible asset) and content marketing (intellectual capital).
Perhaps the main objective of any campaign is to engage prospects and customers, connect with them to generate continued dialogue (engagement, acquisition and retention). To support this specific content, is pushed or pulled through 'preferred' channels or touch-points that maximise interaction, consumption and onward distribution. We'd argue that analytics here focus on interactions between customers and specific content and the 'next customer action' that takes place - the connection (causation and correlation), the behaviour. That's not really news, but it can be the basis for further analysis that leads to measuring incremental cash flows (Discounted Cash Flows - DCF) and Net Present Value (NPV) - not commonly adopted by marketing. This is a way to calibrate asset value of content and provide a better proxy for campaign and channel performance than less useful metrics like campaign ROI.
The focus of analytics above provides some measure of current asset value. It does not give any indication of the sustainability of the asset or cash flows. This is where analysis of intellectual capital matters. Analysing and bench-marking key strategic processes like campaign management, channel management and content management using diagnostics, performance improvement and capability building road-maps provides some insight into the sustainability of assets the capability of the business to deliver more effectively in the future. Adaptomy offer a range of Rapid Diagnostics embedded in marketing DNA to help improve performance, build capability and measure intellectual capital embedded in strategic processes.
Why is content portfolio management so important?
Managing a portfolio of content is not the same as Digital Asset Management (DAM), or librarianship, although it is clearly related. It's about managing the collective asset called content, all content to maximise cumulative asset value and economic return for the organisation.
This includes managing content currency, relevancy and poignancy, ensuring the narrative remains clear, consistent and aligned to the brand. It means facilitating the introduction and distribution of new content, refreshing old content, archiving, improving accessibility and availability, finding ways to amplify the value of content, manage value accumulation and deterioration, amortisation and residual value. It means developing specific policies to manage value of signature content and commodity content. It's an important facet of marketing let alone, content marketing, just like managing a brand or product portfolio.
Content portfolio management generates value through efficient and effective access to content, supporting better content awareness and distribution but more importantly by aligning all content with one objective: generate incremental value and future cash flow from investment in content.
Just because content and content marketing may be difficult to measure does not mean that they shouldn't be managed as assets, intangible, intellectual assets. It is likely that the need to measure intangible assets and intellectual capital like content will become more important as accountants, investors, business leaders and regulators seek to quantify current and future business value.
Managing content as an asset is a more progressive, longer term strategy that encourages content managers to focus on value generation and future cash flows driven by effective management of content portfolios. It helps eliminate unnecessary short term bias in investment strategy, ensuring precious resource is allocated to activities that generate sustained long term value. If you plan to manage content as an assets there a few important, relatively simple steps to take:
Recognise content as an asset, not an operational expense and shift thinking from being focused on 'impact on earnings' to generating incremental value and future cash flows from content customers want to consume
Make sure you know why your creating specific content, what it's expected to do, who it's targeted at and the context in which it's got to be delivered and consumed.
Make sure you have crystal clear processes, roles and responsibilities with effective execution standards and KPI's for content marketing and content portfolio management.
Start developing metrics and measures that are aligned to business, marketing and customer objectives that contribute to understanding content as an asset: capability, capacity, credibility, consistency, reputation, relationships and market impact. Make sure you measure what matters most and that you have adequate insight into consumers and their behaviours (leads, acquisition, retention, referrals, relevance, reach, sentiment, shares, preferences).
Get the analysis right, focus on measuring DCF and NPV of content rather than ROI, analyse intellectual capital of strategic processes to help determine the sustainability of asset values.
Build operating models to improve content marketing process and operations based on performance analysis of processes and key metrics and measure you have developed.
In the end analysis, this is all about managing the levers of growth, the systematic management of strategic disciplines that drive asset value for the organisation, building balance sheet and generating more sustainable, longer term returns. Effective content marketing is one of those levers. For knowledge based companies in particular, on a journey to own less 'physical assets' and, at the same time generate much more value, effective management of intangibles like content and content marketing will become more important as the greater proportion of business value is tied up in intellectual capital.
Note: Economic Value Added (EVA), Skandia Navigator, Total Value Creation (TVC) and Accounting For The Future (AFTF) are approaches and methods developed by: Stern Stewart, Edvinsson and Malone, Anderson & McLean and Nash, respectively.
Adaptomy Marketing DNA is a proprietary integrated road-map to systematically focus, connect, process and optimise: strategy, brand, marketing and sales capability and operations. It is supported by detailed process models and diagnostics that can help assess intellectual capital in organisations.
Other references and articles:
Forbes: How intangible assets are affecting company value in the stock market
Forbes: Most leaders fail at capital allocation
CIMA: Understanding corporate value - managing and reporting intellectual capital
University of Insbruck: The 3 M's of intellectual capital - measuring, monitoring and managing
IRFS - IAS 38 Intangible assets
ICAEW: Introduction to the use of DCF and NPV