How To Measure the Value of Your Audience (in Real Money)

How To Measure the Value of Your Audience (in Real Money)

Audience building is one of the hottest topics in marketing today. That’s why you hear so many software vendors claim their product will help you build, engage, measure, and convert “owned audiences.”

I prefer the term “addressable audiences,” as it indicates that the people in this group have given you permission to deliver content directly to them (without relying on a social media algorithm or media outlet).

You’ll hear many people say that audience building is the goal of content marketing.

If building an addressable audience is the goal, how do you measure it? You can count the number of people in it, but that tells you nothing about the value of the audience.

What is an audience member worth to the business in dollars and cents? Is an audience member worth the same as a lead or opportunity? Probably not. Are they worth more the longer they stay engaged? Probably. But how do we calculate that increased investment value?

I’ve developed a framework to help businesses answer these questions.

Let’s explore.

What is an audience in marketing (and why does it matter)?

Any dictionary provides a simple definition of audience: An audience is a group of people who gather to view or listen to performances or consume or admire content — a book, art, or other media.

Here’s an even simpler definition of what it means in marketing: Audience refers to the collection of people who want to consume the content you create.

Assigning a financial value to each person in your audience who wants to consume your content is anything but simple. But doing so will help you justify the expense of content initiatives.

Let’s be honest: If you measure content marketing only as a replacement for advertising, you’ll find that the content-driven approach costs more. However, the multiple lines of value content provides across the business justifies the added investment.

Here’s the thing, though: The business isn’t investing in content. It’s investing in what the content produces — a subscribed audience.

So, how do you show the business the value that investment created? You start with the basics.

What’s a subscriber worth?

What defines a subscriber? What makes that subscriber valuable?

A subscriber is someone who desires future content from you and has told you where to deliver it (that’s what makes them addressable). You know they want to consume your content because they asked to receive it.

Broadcast television audiences, social media followers, and even people who download your white papers aren’t addressable audiences. You might have someone’s email address (from the white paper download, for example). But you can’t assume they’ve given you that information to make sure they don’t miss your future content — you can only be sure they want that one piece.

A social media follower, on the other hand, might want future content from you. After all, they’ve followed you to have a reasonable chance of seeing what else you post. But you can’t deliver it directly to them, and you’ll have no idea whether the social platform shows it to them.

Still, it would be silly to think that only addressable audiences have value. There’s value in reaching people with your content, even if they don’t ask to receive it in their inbox or mailbox. Said another way, there’s value in creating content fans even if they don’t sign up to receive your content directly.

Let’s look at how to segment all these audiences and assign a value to each.

Understanding audience types

Don’t fall into the trap of measuring audience value only by conversions to customers. You can get value from audiences over time, even if they don’t buy from you.

First, you have to understand the different kinds of audiences.

  • The anticipated (or desired) audience is the entire audience you’re designing content for (i.e., the group of people your business goals identify as a priority to reach). In marketing speak, you’d call this the “total addressable market.” It includes the entire population of people that you’d love to attract with your content.   
  • The actual audience includes people who engage with your content in some way. You can see that they visited an owned property or shared or downloaded something. But you don’t necessarily know who they are (beyond an IP address or a social media username). You hope this audience is relevant to your business goals, but you don’t know for sure. They may be fans you can’t identify or distractions that skew your measurement (e.g., competitors look at everything you publish). Over time, studying the trends in this audience provides insight into the possible value of other anticipated audiences you hadn’t counted on before. In other words, you might discover that your actual audience is much different than your anticipated audience. If so, you can then decide whether you’re creating the wrong content or whether your content attracted a valuable audience you hadn’t considered trying to get.    
  • The addressable audience includes people you can identify and measure as subscribers because they’ve asked for your content. Just like in the actual audience, not everyone in this group will be helpful to your business. Just because you can identify someone doesn’t mean they’re part of your target. Some may be irrelevant to your goals. However, these audience members can help you identify new trends, opportunities, or changes (just as the unexpected people in your actual audience can).

Put these three audiences together in a Venn diagram, and the overlaps create four additional audience segments.

Venn diagram showing how three audiences overlapping create four additional audience segments.
  • The audience asset (the sweet spot) is the overlap of all three segments, as shown in the diagram. They’re in your ideal group, they’ve engaged with your content (so you know you’ve reached them), and they’ve asked to get more of it (they’ve subscribed).
  • The modeled audience (the overlap of anticipated and addressable audiences) gives you the ability to forecast how changing the makeup of the audience, growth or churn rates, or even the amount of data you know about the audience affects the value. In turn, this can help you create the business case for strategies to increase the value of that audience.
  • The audited audience contains both your audience asset and other subscribers who might not fit your audience criteria. It provides the data and insight to evaluate your strategies for acquiring subscribers. After auditing your complete list of subscribers, you can better understand how well you’re attracting your target audience, increasing engagement, and improving the level and quality of data you’re amassing. It can even help you apply these values for lead scoring.
  • The targeted audience helps you understand the ratio of who you’re actually reaching vs. the universe of who you want (anticipated). These numbers help you determine whether you’re promoting your content in the right ways or places to attract the desired audience.

An audience valuation framework in action

So, the goal of this framework is to provide a tool for you to determine an estimated value of the various audiences that can show progress toward our content marketing business goals. We can begin to look at the current people in our audience asset vs. other audiences to help us understand how and when we start to assign them value.

Let’s look at an example: 

I recently worked with a B2B technology company that sells solutions to marketers. Over the last four years, the company has built an addressable audience of over 8,500 subscribers to an email newsletter. The owned media property where they built this audience is an online resource center of white papers and research coupled with a blog.

However, not every one of those 8,500 people belongs to the audience asset category. Some of these are part of the audited audience — they’re actual and addressable audiences but aren’t part of the target. Many are, some are competitors keeping tabs, some are employees, etc. Some names came from trade show visits, and a few even came from purchased lists. So, even if they’re part of the target audience, they aren’t really subscribers.  

After a complete audit of the names in the audience, a few things showed up:

  • The total anticipated audience for their content includes about 100,000 people.
  • The actual audience (those they consistently reach through content programs) numbers roughly 25,000 new people each year.
  • About 65% of the 8,500 subscribers (or ~ 5,500) qualified as part of the audience asset. By the team’s definitions, that means they added themselves to the list (organically or through paid campaigns) and are newer than 18 months. Those 5,000 are worth the most to the company.

The second phase of the audit involved measuring the audience asset against the business goals (net new opportunities), organic evangelism (high-level leads from influencers), and the cost of acquiring addressable audiences compared to acquiring leads.

I won’t belabor the details of the conversion rates, average sales price, and cost-per-lead here. Suffice it to say the team came up with these valuations (assumptions and generalizations are built in):

  • $150 per anticipated audience member (that’s the total ceiling of “perfect” value for new anticipated audience members given other marketing metrics such as how audience member value decays as the audience ages over time vs. their level of engagement)
  • $138 per current audience asset member (what they’re actually realizing in value — again taking into account the subscriber’s age and engagement levels)
  • $73 per addressable audience member (the value of the total addressable audience, including the audited audience members that are not part of the target)

If you do the calculation, this means that their current audience asset (in total) is worth approximately $759,000 (which is $138 x 5,500). To measure the health of that audience (meaning every member is new or engaging as frequently as a new member) — you’d multiply 8,500 by $150 to get a value of approximately $1.2 million.

If you calculate the total value of the anticipated audience, you’d get $15 million ($150 x 100,000). So the company’s audience asset “valuation” is about 57% of what it could be — and it’s attracted about half a percent of the total anticipated audience.

What does all that mean? These numbers help companies assign monetary goals for improving both the quantity and quality of the audience built through content marketing. The key is coming up with both the cost basis and the revenue basis of the audience asset.

In addition, having this valuation also gives the company a sense of:

  • How much they should spend to acquire new addressable people
  • How much the difference is between those that are simply addressable vs. those that are part of their audience asset

That gives them the ability to model for the future:

  • If the team can grow its audience asset by a net gain of 2.5% (or 125 true new audience asset members), it increases the value of the audience by a little more than $18,000 (125 x $150).
  • If the team focuses on getting the aging audience asset members to engage more frequently with the content — that will get them closer to the $150 per audience asset value. 

As you can see, these scenarios make a case for various directions for this company.

Proving what audience building does for businesses

A television executive once said, “I can’t think of another business that makes one product but sells a different product. We make programs and put them on the air. We are not selling the programs; we are selling the people who watch the programs.”

But all businesses are in the audience business these days. You’re all working to build trust, generate valuable data to optimize business performance and monetize audience relationships (in ways that go beyond selling more products).

Audience building through content lets you bypass third parties (like media companies) by establishing direct relationships with proprietary audiences. You’re doing what marketers have done for 100 years.

You’re creating your own market.

It’s your story. Tell it (to your own audience) well.

Updated from an August 2017 article.

Want Robert’s help figuring out the value of your audience? Drop him a line to set up a time to talk.

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 Cover image by Joseph Kalinowski/Content Marketing Institute   


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