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ROI from video marketing: essential, but often forgotten

Everything used to be different. Or at least a lot. Take marketing for example: you advertised on TV, radio and in newspapers and hoped for the best. Because measuring was difficult. Online marketing turned advertising completely upside down. Thanks to data, you can see exactly what campaigns cost and yield. What visitors do on your site. And how much profit each invested euro yields. At least… if you do the math. But that turns out to be more difficult said than done. Because how do you calculate the ROI of video marketing, for example?

Why calculating marketing ROI is crucial

It is estimated that only 25% of US companies calculate the Return On Investment (ROI) of their marketing budget. This is probably not very different in the Netherlands. By calculating the ROI you get a grip on your expenses. How much profit does a new customer bring in? And how much can you spend to acquire a customer? If you know that, you can use your marketing budget in a targeted and measurable way.

ROI from video marketing? Don’t be blinded by vanity stats

The production of video content is becoming increasingly interesting for online marketing. You convince people of your benefits faster and retain them longer. Videos are also increasingly prominent on social media platforms. And Google regularly shows them above the ‘regular’ success results. Do you use video to acquire new customers? Then don’t be blinded by vanity statistics. Like the number of views of a clip. It’s nice when a lot of people watch your videos. But if you want to sell an aircraft, 1 viewer can be enough. Determine in advance what and who you want to reach and continuously calculate the ROI of video. Then you know for sure how well the medium works for you.

How do you calculate the ROI of video marketing?

To calculate the ROI of video you need to know 2 terms.

Lifetime Value (LTV)

The LTV is the amount of profit that an average customer brings you over the time he or she is a customer.

CPA: cost per acquisition

The CPA is the amount you can spend to turn a prospect into a paying customer.

A fictitious example makes it even clearer. Suppose you sell a subscription and these are the numbers.

Income per month: 100 euros

Average net profit: 20 euros

x 12 months per year: 240 euros

Average lifetime customer: 3 years

Customer Lifetime Value: 720 euros

An acceptable cost per acquisition is 5% of the lifetime value. In this example that is 5% of 720 euros. This means that you can spend 36 euros per customer to generate 720 euros in income over the next 3 years. You can do something for that amount.

Not every prospect becomes a lead or customer

You can, however, make some comments about the above calculation. Not every viewer naturally becomes a prospect, lead and ultimately customer. I wish it was true.

This makes it extra important to properly measure how you spend your money and what it yields. So ask these questions:

  • How many viewers to your video did you get for your budget?
  • How many of them clicked through to your site or landing page?
  • How many prospects and leads did that yield?
  • How many eventually became customers?

The answers determine how successful the campaign was. How much money did you end up paying on average for acquiring a customer? So what was the ROI of this video marketing campaign.

More essential video marketing stats

With data you can objectively assess marketing campaigns. The same goes for video marketing. These are valuable statistics.

Number of viewers

How many people watched your videos? This says nothing about the return on your efforts, but it does say something about your popularity. Do your videos appeal to the people you want to reach?

Interaction

How long do people watch your videos, leave comments, and click through to your site? YouTube, among others, shares valuable statistics and insights.

Conversion Rates

Measures major and minor conversions. A large conversion immediately changes your operating result, such as a sale. A small conversion is an intermediate step, such as a click to a product or sales page. Measure and analyze it.

social sharing

How attractive is the video people share it via social media? Also look at comments and thumbs up. It will not give you direct income, but it will indicate whether you are on the right track.

Total costs of marketing activities

Keep a close eye on what your marketing activities cost. Also count the time invested, because you can only do one thing at a time. You cannot acquire a customer the moment you make a video.

Increase returns with interactive videos

With a program like Google Analytics you can see exactly what a visitor does on your website. For example, on which page do they arrive, what do they view and where do they drop out? With video that is a lot more difficult, but the developments are moving fast. More and more companies are developing software that makes videos more interactive. For example, add a clickable button to your clip. Then you can see exactly how many people click on it. With the software you can also easily add pop-ups, forms or order buttons. You then analyze the results via a dashboard. How successful are your videos really?

Spott is one of the providers of interactive video software. See how it works and try the software for free.

This is how you increase the ROI of video marketing

With the tips mentioned you get a clear picture of the result of video marketing. Of course you want to optimize the success. You do that as follows.

Make a series of videos

For example, on a topic that really matters to targeted customers. If you record the videos in succession, you immediately save on production costs. There are several popular video series that are commonly made by companies.

Make videos for different groups of people

The word ‘target group’ implies that you only want to reach a group of people. In reality, that is rarely the case. Therefore, map out who comes into contact with your products and services, and get to know them as well as possible. Then you can create valuable and targeted videos for each group.

Use retargeting

With retargeting you show ads to people who are demonstrably interested in your offer. For example, people who watched a video of you or clicked through to your landing page. Retargeting is relatively cheap and yields a lot of returns. The intrinsic motivation is already there.

Take a critical look at the Customer Journey

People rarely buy a product or service directly. They need to get to know you and consider you before taking action. Create optimized videos for each phase of the Customer Journey.

Tell an emotional story with storytelling

Emotion beats promotion. Try to hit viewers in their heads and hearts before you sell ‘flat’. Video is ideal for this.

Grab the attention of viewers right away

Most people are impatient online. Grab the attention immediately in a video, for example with this intro:

Before: outline the current, undesirable situation

After: outline the desired situation

Bridge: tell the viewer how from Before to After. For example with the sentence: “Discover in this video how you…”

If the problem is recognizable, you can be sure that people will keep looking. Because everyone is curious about your solution.

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