The Economics of Content Marketing

Content marketing is clearly the new black. In a world where people live and die by search engine rankings, this seems to be the secret weapon. Sounds easy – just create lots of content, share it on social media, and you win the game. (Don’t share too much of other people’s content, just in case it looks like you’re copying). Bonus points are available if it goes viral.

That’s fine, until everyone starts doing it. It works for large organisations, where the size of their potential audience is roughly on the same scale as … well the number of users on the internet. For such global brands, your site better be up to the task of being interesting or useful to all those people. If you’re trying to find a plumber, it doesn’t really make a difference to me if they have 300,000 followers on Twitter. In fact I’d be slightly worried if they did! However the same set of rules seems to apply – create a website with DIY advice, get people talking about your site and reviewing your services. Spend less time plumbing and more time creating content? I’m not sure I’m hoping for the day when every tradesperson has their own website – that leads to a whole different set of problems. For the moment, however, tradies seem to be back in the dark ages and only have a mobile phone number and a hotmail address. The tech savvy have progressed to gmail.

For businesses without a global consumer target audience, the model seems ludicrous. Your business may be local, or it may target B2B customers. Either way, the metrics of social media mentions or incoming page links doesn’t seem appropriate. Like us on Facebook. Why, it’s a cake shop with same-day delivery to 5 suburbs in Austin? There is an economic argument that goes well with this scenario, called the Signalling-Efficiency Effect (Kyle Bagwell):

Such firms may enhance demand by advertising heavily, setting low prices and providing high quality; consequently, consumers may draw inferences as to the deal that a firm offers after observing its advertising.

This could be paraphrased in the SEO era as:

Such firms may enhance demand search ranking by advertising heavily, setting low prices and providing high quality content; consequently, consumers search engines may draw inferences as to the deal desirability that a firm offers after observing its advertising web content.

Taking the plumbing example further, there used to be value in paying for a larger advertisement in the Yellow Pages, not because it informed the consumer about the quality of the product (according to customers or Yellow Pages), but because a smaller player is unlikely to have the money to pay for the larger space. Quality is not so much implied by the words (OK, these are important too), but the overt and deliberate decision to spend more on advertising. The important thing is that it costs time and/or money to produce this signal. Owning a domain name used to be in this category, but that seems to have died very quickly as a mark of distinction. Content marketing is also a costly signal, although the validity of the signal is now weakened for two important reasons.

Firstly, the product is not necessarily appropriate for the entire internet. A plumber is only going to travel in their local area, and start ups like ideocial are only going to appeal to a particular subset of enterprises. Search engines just don’t allow for market segmentation, something marketing (and dare I say advertising) actually requires to function. The signal shouldn’t be measured on the scale of the internet, but instead on the scale of a smaller competitive landscape.

Secondly, the value of content seems to be permanently declining. The current trend is to shout a numeric buzzfeed-style headline and then pose a vague, open-ended question in the hope that this will look like ‘hype’ to a search engine. “17 Ways to Manage Your Time Better. What Do You Find Distracts You?” [As an aside, I wonder what a good outcome for this would be? 14,000 responses, no two of which are the same? 14,000 responses, all of which are “Facebook :)”?] Good luck to Google if it manages to figure out which conversations are content-rich (and which are self-interested rants), but in the meantime it’s just a crazy fight for content airtime. I don’t deny that this blog post is contributing to the problem rather than the solution, but there comes a point where content (almost for its own sake) becomes close to worthless. In fact, voluminous content may even devalue otherwise insightful thoughts.

Content marketing will one day lose its ability to signal quality, and in the meantime we can only wonder what the new way to climb the ranking ladder will be.