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Compounding Returns: 5 Financial Analogies that Explain Good Content Marketing

Compounding Returns 5 Financial Analogies that Explain How Good Content Marketing Works

The idea behind long-term investing is straightforward:  put a percentage of your earnings aside consistently over time and leave it alone.  This allows interest, dividends and other capitals gains to be re-invested again and again so that it grows with a compounding effect.

There are many examples of how this works, but one I stumbled upon recently by a financial advisory firm looks to me to be a good illustration.  The graphic shows how one dollar invested in small cap stocks in 1926 was worth more than $27,000 by 2014.  That’s a pretty good take – a 12% compounding return where inflation hovered around 3% during the same period according to the data.

This compounding effect is analogous to some aspects of content marketing, especially in audience growth.  An audience that grows and shares in turn attracts an audience that grows and shares.

It’s important to note in this context, content marketing means something very specific: developing useful and relevant content consistently over time, on an owned media platform, in order to attract and grow an audience.

In the process, the business earns trust, transforms some parts of the audience into subscribers and weaves in some savvy opportunities for subscribers to become customers.  It’s a long-term and strategic approach to marketing that grows and achieves results in a way that can be likened to investing.

When a business thinks about marketing as an investment, it works in a similar fashion, especially for business-to-business (B2B) organizations. Here are several financial and investment analogies and the relationship to content marketing.

1)  You must make deposits before you can withdraw

Ever been to a networking event where someone you just met was selling you hard? You seem to fit in their buyer persona and they are determined to close a deal before the event ends.  This rarely works and is prone to cause people to avoid you.

However, people do like to do business with other people they know, like and trust, so you’ve got put some effort into developing that first.  The author Daniel Goleman is where I believe I first heard someone liken networking relationships to a bank account.  He said you have to make some deposits before you can make a withdrawal.

Content marketing is a powerful way for potential customers get to know your business if you have to give them a reason to like and trust your brand.

2) You have to invest for the long run

By definition, an investment is an allocation of money today in the anticipation of a return in future.  If you withdraw the investment too soon, it does not have a chance to compound.

Content marketing also compounds over time.  If you expect a return in the short-term, you’ll probably wind up disappointed. There are directional measures of success you should monitor along the way, so you know you are going the right way.


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3) Focus to build wealth…

We hear ‘building wealth requires focus’ on both a personal and business level.  A small amount of money well concentrated may have a better shot at growth than the same amount being spread out broadly. Startups, for example, are often advised to focus on solving one problem rather than to try to be all things to all people.

Content marketing has the same requirement. Concentrate this effort around building a single content hub that your company owns.  Keep the content narrow around a defined set of topics related to your market space.

4) …diversify to defend wealth

If you focus to build wealth, you diversify it to defend it.  The basics of risk management demand diversification and content marketing isn’t much different.  In the book Killing Marketing, one of the authors describes three pillars of across a) digital b) print and c) events.  He was, in my view, describing an approach to diversification, once you’ve gained some momentum.

When you built an audience, there are other things this empowers you to do.  Expanding into other channels is one that enables brands to parlay the hard work and investment over time into other areas, and perhaps even those that may help subsidize the efforts.

If there’s an analogy from investing that’s most appropriate for marketing, it’s the discipline it takes to consistently invest through the ups and downs of the market. Marketing is the same way with so many competing priorities and influences both inside and outside the business.

5) Growing an audience by acquisition

Business leaders tend to like mergers and acquisitions (M&A) because these transactions accelerate growth.  In technology circles, there are typically three reasons one business buys another:  to acquire a technology, to acquire customers, or to kill the competition.

A similar approach can be followed in content marketing because you can build an audience…or you can buy one.

PR professionals might recall the Bulldog Reporter started in the late ‘70’s.  It was a staple trade publication in PR for decades.  In what seemed out of the blue to many readers, the publication announced it would shutter in 2014.

Then just as suddenly, Media Miser, a vendor that develop PR tools stepped in and acquired the newsletter portion of the Bulldog Reporter.    Media Miser’s parent company went on to acquire another PR vendor called Agility from PR Newswire and then rebranded the whole entity as Agility PR.

Today, Bulldog Reporter lives on under the Agility brand, publishing useful and relevant content related to the PR community.   This was a brilliant move from a content marketing perspective.  Instead of building an audience, this vendor went out and bought one.

* * *

If there’s an analogy from investing that’s most appropriate for marketing, it’s the discipline it takes to consistently invest through the ups and downs of the market.  Marketing is the same way with so many competing priorities and influences both inside and outside the business.  It’s useful to hire professional advice in investing, and I’d submit to you that’s true for content marketing as well.


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Photo credit: Unsplash

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