How to Build an ROI Case for Video MarketingFrame of reference is important to consider in any discussion or debate. The frame of reference simply means that different people view the same thing in different ways based on their past experiences.
Most marketers will know well the scenario where you research and put together a water-tight business case for your new strategy only for the boss to take the seemingly irrational stance of throwing it out the window.
You go home scratching your head with thoughts that your boss may actually be prematurely suffering from senility and wondering how you could have better explained your plan to someone who is obviously bordering on insanity.
Video marketing often suffers this kind of a death because in the minds of the boss it carries too many risks. The thing is that their fears are rational – unless video is done well it will not work. But on the other hand this is not a good reason to not do something – if you conduct a poor sales pitch then you will not win a new client and if your newspaper ad is full of typos your phone is unlikely to ring much as a result.
Do not fear, today is your lucky day. In this article I am going to give you what you need to convince your boss that your video marketing ideas are exactly what they need.
For newcomers to video, it can seem like a daunting task. There is a fear of spending too much and achieving little return. Then there is the fear of spending too little and getting poor results. Even for those who have read the reports that people are watching an average of 14.8 hours of online video a week (Comscore 2012), video is scary. Dipping a toe in the pool of video has to feel like a calculated risk, which is why we support our clients to build an ROI (return on investment) case for video.
Building an ROI case for video marketing
If you want to convince your boss that online video will make a difference to your business, you first have to convince yourself.
Here are some pointers for developing an ROI case for video:
Know your goals
How can you measure success if you don’t know what you were trying to achieve? Why do you want to use video? Here are some of the goals that clients come to us with:
- raise awareness of their brand
- increase online sales
- improve the number of sign ups to mailing list
- increase the conversions e.g. completion of online enquiry form
- improve upgrade rate with online sales
Know how you will measure success
Once you know what you want to achieve, think about how you will measure success once your videos are in place. If your goal is to raise brand awareness, you may want to measure how many views your YouTube video achieves and how much interaction it gets (e.g. likes, shares and comments). If your goal is to improve sales, you will want to compare pre-video data with post-video data so that you can see the impact of the video.
Analytics tools for measuring success
Demonstrate to your boss how exactly you will be measuring the performance of your videos and their impact on your bottom line.
YouTube Analytics is an extremely useful tool for analyzing how viewers are interacting with videos that you host on YouTube. Audience Retention is an example of one powerful feature that enables to see which parts of your video are performing well and which parts are causing viewers to switch off. All very valuable information if you want to consistently improve upon what you are doing.
YouTube Analytics can also offer detailed demographic information. It can also tell you the devices that people are using to watch your videos.
Google Analytics and Optimizely
There are other tools that can be utilized to measure more complex performance factors. Google Analytics is a free tool and you can use it to set up ‘goals’. Common goals include leads, sign ups and sales. By setting up a ‘goal’ in Google Analytics you can track the performance in these areas. To set up a goal you basically need to know that page (e.g. a confirmation or thank you page) that users are directed to after completing your goal. Analytics can then count the times you achieve this goal.
Optimizely is a great tool for A/B testing pages. It enables you manage A/B testing and provides the necessary features to enable you to analyse the results. It allows tracking of engagement, with handy custom goal setting.
The content strategy must fit the brand and the broader business aims
The holy grail of any kind of content marketing is to create a piece if content that inspires people to share it, more on that here, and at the same time perfectly synchs with the company mission.
The best example of a brand achieving this is Will it Blend:
They have a fun, entertaining series of videos that at the same time display the quality of their blenders
Many companies compromise on the alignment of these two needs in favour of the first one. The closer you get to aligning the two the greater the impact on the business.
Financial return on investment for Video Marketing
You will always need to show a sensible financial plan that outlines the business benefit of using video marketing.
To calculate the ROI of a potential video project you need to follow this process:
a) How much is one ‘unit’ worth to you in financial terms (e.g. a unit as the sale of one product) – for the sake of this exercise let’s say a unit is worth £50.
b) You now need to make an estimate regarding how much of an impact the video will have. You can make conservative and liberal estimates so that you can demonstrate the difference to your boss.
c) Calculate your conservative estimate – say 20 extra sales per month. 20 x £50 = £1000 per month.
d) Calculate a more liberal estimate – say 40 extra sales per month.
40 x £50 = £2000 per month
e) By now, you should have established how much it might cost you to execute a video production. For the sake of this exercise, let’s say that you have decided to produce a video on location, with a presenter, for £3,000.
f) Based on your conservative estimate, it would take you three months to achieve a full financial return on your investment. Based on your liberal estimate, it would take approximately six weeks.
Remember to always have answers for why your estimates are what they are and break down the detail as much as possible.
For example, how will you get each of those 20 sales per month? Where will they come from? What is the marketing communication plan behind the video/s?
Here is another post that we did on creating a budget for an online video.
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