How to Calculate the ROI of Video Marketing
A question that I often hear is, "How can we calculate the ROI of our video marketing?" I like these types of questions. It means that they're looking to the future and not just checking off the box of "doing video marketing". If you’re able to quantify the ROI of a video, it’s more likely that you’ll want to do more of them when you see how successful they've been. More business for us filmmakers :)
Let's jump right in. To start with, you absolutely need two things: an idea of what success looks like and a way to measure it.
Let’s talk about success.
When you decide to jump into video marketing, what is it that you hope to achieve? It’s helpful to get pretty specific. Here are some reasons that I’ve heard from past clients:
Revenue generation: We are the first product of our kind on the market. And we’re quite complex. We want a way to simply explain what our product does and how it’s beneficial to our customer. They'll be interested and want to sign up.
Success is: more demos scheduled
Customer service and education: We provide amazing resources for our customers but they just aren’t reading them. We need to keep them engaged with the content we provide so they keep moving through the customer life cycle and become loyal repeat customers.
Success is: more engagement with the content (time and number of articles read)
Brand awareness and sentiment: We’re different from our competitors and we want to show our potential and current customers why we created this business and how we help them.
Success is: more website traffic, longer page visits
Once you lay out in detail what success will look like, it's much easier to analyze if you've reached that goal.
Let’s talk measurement.
The last thing you want to do after spending weeks producing a video is to just publish and hope for the best. Create an action plan of how you are going to be able to track views, clicks, shares, etc. Setting up Google Analytics to track your videos is pretty simple. There are also video hosting platforms, like Wistia, that have robust analytics and dashboards.
Once you define your goal, think about which metrics are contributing to this goal. Some common video metrics are:
• Time on landing page
• CTR on landing page
• The percentage of viewers who watch the whole video
• The percentage of viewers who respond to your CTA
• How many videos leads watch
• Which videos the converted leads are watching
So if your goal is revenue generation - the CTR on your "request a demo" button is a great metric that will tell you if your number of leads are increasing. More leads in the pipeline, more money in your pocket.
Also having a good idea of where you are at before implementing video as part of your marketing strategy is going to help you gauge how video is helping.
Finally the calculation.
Not all campaigns are going to be measured in terms of absolute numbers. If you already have a dollar assigned to a lead or website visitor, you can use that to estimate your ROI with this calculation:
ROI = (campaign revenue - video cost) / video cost
You might calculate campaign revenue as a gross profit or perhaps as a lifetime value.
But when measuring less tangible metrics like brand sentiment and awareness, you may have to think outside the box and get creative. Perhaps looking at your NPS score or volume reduction in support tickets are more valuable measurements of success for your company.
Tell us how you measure ROI of your video marketing in the comments section.