Guide on Quantifying the Profit Generated by Your Explanatory Video (Detailed Instructions for Assuring Effective Results)
In the digital marketing landscape, understanding the Return on Investment (ROI) of explainer videos is crucial for businesses seeking to justify investments, optimize future efforts, drive growth, and gain a competitive edge.
A high-quality explainer video, when strategically planned, produced, and promoted, can deliver measurable returns. By diligently tracking the right metrics and applying the ROI calculation, the value of the video can be clearly demonstrated and optimized for sustained business growth.
Calculating ROI
To calculate ROI, the primary objective of the explainer video must be identified, such as increasing sales or generating leads. Metrics aligned with these objectives should be used, with revenue uplift and number of orders attributed to the video for sales goals, and new leads generated for lead generation.
Key video engagement metrics, such as watch time, completion rate, engagement rate, and click-through rate on calls-to-action, indicate viewer interest and the video’s influence on user behavior. The ROI is calculated by comparing the revenue or measurable outcomes the video generates against the total investment (production cost plus promotion).
Improving ROI
Optimizing video length and format, focusing on compelling storytelling and clear calls-to-action, leveraging SEO strategies, and continuously analyzing video analytics are key strategies to enhance ROI. Controlling production costs by carefully selecting video style and vendors is also essential.
Real-world Example
The success of explainer videos is evident in real-world examples. Medvector, a medical device company, secured $3.5 million in investments with an investment of $10,000 for each of their two high-quality explainer videos.
Avoiding Common Pitfalls
Common pitfalls to avoid in explainer video ROI measurement include ignoring the "full cost" of the video, focusing only on views, lack of clear goals, poor attribution, and one-and-done thinking.
Measuring ROI and Key Metrics
Essential tools for measuring explainer video ROI include video hosting analytics, Google Analytics, CRM systems, marketing automation platforms, and A/B testing tools. The attribution model used to attribute conversions to the video can be "first touch," "last touch," "linear," or multi-touch models in the analytics platform.
Engagement Metrics
Engagement metrics help measure video captivation, while conversion metrics measure the video's impact on driving desired actions. Support & efficiency metrics measure the video's impact on reducing support and sales costs, and brand metrics measure the video's impact on brand perception.
In summary, the key is to link video metrics directly to business outcomes, continuously optimize content and promotion based on analytics, and manage production costs to maximize return on investment for explainer videos in digital marketing.
Leveraging technology and finance, businesses can use video hosting analytics, Google Analytics, CRM systems, marketing automation platforms, and A/B testing tools to accurately measure the ROI of their explainer videos, helping to optimize future content and drive business growth. By identifying clear goals, applying the ROI calculation to metrics such as revenue uplift, new leads generated, watch time, completion rate, engagement rate, and click-through rate, businesses can demonstrate the value of their investment in explainer videos and improve their return.
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