If we’re truly going to pitch content marketing as an excellent investment for a brand, we need to start treating it like a true investment. Specifically, we need to use established risk management concepts to maximize overall investment return.
The purpose of this article is to demonstrate how we can apply traditional investment risk management used in real estate and portfolio management to our goals and projects as content marketers.
When considering the types of risk we face in content marketing, I think it’s valuable to make 2 analogies.
- The first is that the risks incurred in our ongoing content marketing initiatives can be compared to the risks we see in an investment portfolio.
- The second is that the risks we face in a “big content” project can be compared to the risks we face in a real estate development project, such as building a skyscraper.
I’m going to first cover a few introductions to risk management concepts, so we know what kinds of tools we have at our disposal. Then I’ll go into specific on Risk Management for Ongoing Content Marketing and Risk Management for Big Content Projects.
Introduction to Risk Management Concepts:
The concepts in the following section are paraphrased from an article called “Risk Management Is More Than Just Risk Mitigation” by Jim Haughwout. I’d highly recommend reading it if you want to learn more about risk management concepts.
The Magnitude & Nature Of A Risk Determine The Appropriate Way To Manage It:
We measure the magnitude of a risk in two ways:
- the likelihood that it could happen
- the potential damage if it did happen
Each of those factors plays in to how the following management methods are deployed:
There Are 4 Ways To Manage Risk:
1) Risk Avoidance
- What It Is: Avoiding risk is the act of reducing the likelihood that it could happen.
- Content Marketing Example: We could avoid the risk that a piece of content doesn’t earn any links by reaching out to media in advance and gauging interest in that piece of content before we begin creating it.
- When To Use It: Risk avoidance is preferable when it’s not cost prohibitive, and is the first option to consider when deciding how to handle a risk.
2) Risk Mitigation
- What It Is: Mitigating risk is the act of reducing the potential damage if it does happen.
- Content Marketing Example: In content marketing, we can reduce the risk that an individual piece of content fails by building campaigns around multiple pieces of content with different focuses. By hedging our bets across multiple pieces of content, we reduce the risk of the overall campaign failing. This concept is called diversification and is the primary concept behind modern portfolio theory.
- When To Use It: Risk mitigation is best used when risk avoidance is cost-prohibitive and the potential damage of a risk is substantial.
3) Risk Transfer
- What It Is: Transferring risk is something most of us are familiar with – giving the risk to a 3rd party, the way we do with home owner’s insurance, health insurance, car insurance, etc. Risk can be transferred intentionally through the use of a contract or insurance – or it can be transferred unintentionally or without the knowledge of both parties.
- Content Marketing Example: Let’s say a large company wants to test content marketing as part of their overall marketing strategy, but the Marketing Director is unwilling to stake their own job performance on what they believe is not a guaranteed success. That person may decide to hire an agency instead of building an in-house department. By doing so, they pass along some of the performance obligation to the agency, and they’ve made it easier to pull the plug if they feel that results aren’t justifying the costs after the contract is completed. Perhaps this isn’t the ideal way to begin a client/agency relationship, but it’s a very real possibility.
- When To Use It: As you may have noticed from the length and specificity of your homeowner’s insurance policy, risk transfer is primarily used when both parties can fairly comprehensively estimate the magnitude and circumstances of a risk.
4) Risk Acceptance
- What It Is: Accepting risk is straightforward as well – this is simply acknowledging that the risk exists, and accepting the consequences if it occurs.
- Content Marketing Example: There is a risk that a team member quits during a large content project. We can mitigate some of that risk by working on employee retention and having other internal team members capable of stepping in to complete the job. Nevertheless, we also must accept some of that risk, and accept that we may need to work overtime to finish a project on time if it does occur.
- When To Use It: When the magnitude of a risk is small enough that it has a very low likelihood of occurrence, or if the potential damage of the risk is small enough for you to embrace if it does occur, that may be a good signal to accept that particular risk.
Types of Risk in Content Marketing
The first step in risk management is determining what risks we actually face. Some examples of risks we face in content marketing (and many other forms of marketing):
Upstream Risk From Suppliers & Employees:
- A sub contractor (such as a graphic designer or copywriter) may fail to send deliverables on time.
- Quality of a deliverable may be sub par.
- An employee could accidentally use copyrighted materials as part of a project, such as plagiarized copy or an unauthorized image in a blog post.
Downstream Risks From Stakeholders:
- An unknown stakeholder could veto a project in the final stages because they weren’t pulled into the project earlier.
Risk Management for Ongoing Content Initiatives:
The risk here is low if the value of the ongoing content is clear. You'll have plenty of opportunities to promote the content and pull in stakeholders and experts both internally and externally who can help spread the word.
Risk Management for “Big Content” Initiatives:
As mentioned earlier, risk management for big content projects can be compared to the risks of building a skyscraper.
You'd better spend a lot of time making sure you don't screw it up.
The biggest risk here is that the project is a flop, so the number one thing you should focus on is having multiple routes to success - and at least a few that are sure things.
If one or two success factors can make the project worthwhile and there are other potential wins as well, that's the minimum outcome I want to see to greenlight an enormous project.
Going over the typical elements of risk mitigation (largely borrowing from the wiki at https://en.wikipedia.org/wiki/Risk_management and other sources) and also delivering an analogy of real estate and investment portfolio risk management.
Building an investment portfolio is analogous to your overall content strategy and picking content types you’re going to focus on over time. The focus here is risk mitigation through diversification.
Building a skyscraper is analogous to big content projects. Obviously diversification is the best here, but, with the knowledge in mind that you don’t get to do many of these projects, what can we do to reduce risk of failure overall?
Concepts like building in an outreach component during concept generation, falling back on search volume in case you’re not able to produce early anticipated outreach results,
Types of Risk:
Here’s the slides from my presentation at LavaCon today on “Risk Management for Content Creation”.