KPIs and ROI models are vital to getting buy-in from internal stakeholders as they can demonstrate a project will ultimately be successful at generating growth and profit. Yet measuring the success of localization can be tricky. To help, we’ve put together this guide to setting up an ROI model to measure or prove the value of media localization.

What is ROI?

Return on investment is a way of quickly seeing how much profit you’ve made on a service. You might get a great response to a social media campaign and gain thousands of dollars in new user revenue. However, if you spent hundreds of thousands of dollars to get it started, you would still make a loss. An ROI model can help you predict a campaign outcome and ensures you take a balanced look at the whole picture.

The simplest way to calculate ROI is:

 ROI = (Revenue from initiative) – (Cost of initiative)

Social Media Content Distribution‍

There are several reasons you might choose to distribute content on social media. Chief among these are increasing brand or product awareness and reaching a larger audience. Your social media content might be free to distribute and even offer the potential for direct revenue through ad insertion (a model favored by platforms like YouTube). Alternatively, you might be paying to push your content to audiences as part of a digital marketing campaign on a site like Facebook. 

In either use case, the desired outcome is high user engagement. To improve your chances of success, you might have decided to localize your content. Localized videos can improve information retention and allow you to speak to tailored audiences and niches. They can even open up target markets previously inaccessible due to language barriers. However, unless your target market was completely unreachable without localization, isolating the revenue acquired from localization can be tricky due to the number of variables. 

Determining your Localization Revenue

You will need to build a model that considers specific KPIs relevant to the aims of your content. For social media distribution, you might measure success in terms of overall reach (impressions) or profit from CPMs (cost per mile - the price for every 1,000 advertisement impressions) for monetized content.

If you are launching localized content in an existing target market, compare your engagement figures for localized and non-localized content. Make sure you check for other significant variations in the content quality or subject matter that might influence your results. In general, you can take the difference between the two figures as the impact investing in localization has had. To determine your localization revenue, you can multiply this increase in your number of impressions due to localization by the value of each impression (the CPM).

When launching in a new market that requires localization for entry, your calculation is even simpler because, without localization, any revenue from this audience would have been impossible.

Calculating the cost of localization

The simplest way to calculate the cost of localization is to multiply the per-minute cost of localizing content by the number of minutes required.

Cost of localization = Minutes of localization required x Per-minute cost of localization

Localization services or partners typically provide their per-minute cost upfront. However, it can be trickier to calculate this figure if you use a hybrid model or localize with an in-house team. Avoid surprising expenditures by factoring in ongoing costs, quality assurance, and in-house salaries. Be as comprehensive as possible, and you won't get tripped down the line. 

Sky News and YouTube

Sky News noticed strong engagement from Spanish-speaking viewers and hired Papercup to localize the content for a brand new Spanish YouTube channel.  

The new channel gained 26 million views and 96,000 subscribers in the first 12 months. If Sky wanted to model their revenue, they could multiply these engagement figures by the value of each impression and subtract this figure from the cost of localizing through Papercup. Alternatively, they could divide this revenue figure by the localization cost to determine their ROI as a percentage. 

We now can get more bang for our buck using our existing content [...] And it doesn’t stop with news; it can expand to sports, entertainment and educational content. - Jonny Keogh, Audience and Partnerships Manager at Sky News

Now that you know how to create an ROI model to calculate the success of your content distribution, you can go forth and conquer! Concretely evidencing your margins and potential gains will increase stakeholder confidence and ensure buy-in to this and future localization projects. If your ROI is high, this suggests a great opportunity and an area in which you might want to continue expanding. However, even if it’s low or negative, you'll at least know early - giving you a chance to explore what is happening.