More marketers are investing in video than ever before. According to Wyzowl, 85% of video marketers plan to maintain or increase spending on video in 2024. This means creative teams can create more video than ever, but a bigger production budget also means increased expectation to demonstrate a video’s efficacy. And to do that, you need to know the return on investment on the videos you create for your business or organization. But how do you measure and calculate video ROI?
In this post, we’ll go over the primary metrics you need to pay attention to in order to make sure your video marketing efforts are getting the most bang for your buck. If you’re already measuring your video ROI and want to find ways to get even more out of your budget, download our free guide, “How to maximize ROI on your videos.”
What is video marketing ROI?
Return on investment in video boils down to whether the monetary value a piece of content generates exceeds the cost of producing it. Depending on your goals, different key performance indicators (KPIs) will indicate success or failure from an ROI standpoint.
For instance, if a video’s goal is to generate awareness, an increase in views and impressions or website visits are measures of success. If your goal is conversions, KPIs like conversion rate and cost per conversion will help you calculate your ROI. Measuring is key to determining ROI in video, but you first have to align what you’re measuring with your goals.
Why measure return on investment?
Even with video production budgets on the rise, you’ll still have to prove the value of the content you’re creating if you want the money to keep flowing. Measuring ROI gives creators and production team leaders the receipts that showcase the impact of their video marketing efforts. The more teams can demonstrate ROI, the more video production budget they’ll have to play around with.
Metrics to use when measuring ROI
Measuring ROI effectively requires knowing what you’re actually measuring and why. This changes depending on your goals for each video, so make sure you’re actually looking at the data that matters when making a case for video ROI. A video getting a million views sounds like a big win, but it doesn’t necessarily tell the whole story. If the purpose of that video was to generate sales leads and it led to very few, that video failed from an ROI standpoint despite the huge audience.
That’s why it’s essential to narrow the metrics down to the ones you actually need to demonstrate their value, including:
Engagement metrics
These are metrics that show how viewers are interacting with your video content. This includes stats like view count, watch time, and audience retention rate. For example, engagement metrics are useful for determining video ROI of an ad that has a goal of increasing awareness. If your goal is to make more people aware of your brand, a high view count and watch time is a great indicator of success.
Conversion metrics
This refers to data that measure the effectiveness of your videos in driving audiences to take a desired action, like clicking on a link or buying a product. These can include click-through rate (CTR), conversion rate, and lead generation. Conversion metrics are great for ads targeting users lower in the marketing funnel and are further along in their sales journey. From a video marketing ROI standpoint, conversion metrics are the easiest to understand because there’s a dollar figure already attached to each conversion.
Audience insights
Audience insights metrics help you better understand the characteristics and preferences of your target audience. The key insights here include data like demographic info, geographic location, and viewer behavior. If you’re launching a new product or just getting your business started, audience insights are a good goal to better understand who your target audience is. Video marketers who understand their audiences are better equipped to target campaigns more effectively. Looking at audience insights also helps you make the case for allocating more budget towards reaching people in new geographies.
Social sharing
These are data points that show a video’s reach and engagement on specific platforms, primarily social media, such as shares, likes, and comments. This can be tremendously valuable information for social media marketers, who can leverage these insights to create more targeted campaigns. It’s also a great way to know if your content is falling short or doing particularly well on one platform or another. Looking at social sharing data also reveals how often various interactions with a piece of content result in a sale.
How to calculate ROI
We’ve talked about how important it is to start any video initiative with clear and specific goals, as well as which metrics to look at depending on those goals. To actually calculate video ROI, you must then match your metrics to your goals.
Once you’ve done this, you’re better able to convert each metric to its monetary value for the business. Some are more straightforward, such as a video for driving sales, where the ROI is profits per sale, minus video production costs. But videos higher in the sales funnel require calculating ROI differently.
Take a video intended to drive user registrations as an example. Your metric will be the number of new registrations, which you can assign a monetary value to based on the projected value of that user relationship over time. That value, minus production costs, gives you your ROI.
When calculating video ROI, the most important figures to consider are production costs, distribution expenses, and revenue generated. Once you’ve tallied everything up, you’ll end up with a reliable and realistic ROI based on real, observable data.
Final thoughts
When it comes down to it, how you measure return on investment with your videos will depend on your goals. But there’s always ways to improve your video ROI and get more out of them. Download “How to maximize ROI on your videos” to learn how to get even more return on investment for your videos through every step of the video production process, complete with industry-specific advice.
