calculating the roi of video - 522 productions...value of a customer is useful for roi. tip 4:...

522CALCULATINGTHE ROI OFVIDEO

TABLE OFCONTENTSWho is this Ebook For? 3

Purpose of the Guide 4

About 522 Productions 5

Background 6

Chapter 1: Establishing a Foundation for Metrics 7

Chapter 2: Metrics That Matter 10

Chapter 3: Models for ROI of Video Campaigns 15

Chapter 4: Business Cases in Determining the ROI of Video 21

Chapter 5: How to Communicate ROI 32

Summary: So How Much is Video Worth? 36

Sources 37

3WWW.522PRODUCTIONS.COM

We created this eBook to help internal marketing directors, business owners, training professionals, advertising agencies and video production companies determine the ROI – return on investment – of their videos.

Calculating the ROI for video is very challenging. Unlike other types of content, there are var-ious angles to consider when monitoring the success of a video. Throughout this eBook, we will cover various models and business cases to help you understand how to calculate the ROI of video.

After reading through this guide, you’ll find that videos are more than just views. The impact of a single video can improve click-through rates, increase leads and generate revenue.

Who is this Ebook For?

http://WWW.522PRODUCTIONS.COM


Purpose of the Guide

Content marketing and creation has evolved quite a bit over the last few years. Ten years ago, companies flirted with content marketing. In today’s environment, content marketing is imperative to acquiring, nurturing and converting customers. According to a study issued by the Content Marketing Institute, 86% of B2C customers use content marketing whereas 91% of B2B marketers use content marketing.

Despite the widespread use of content, average content isn’t enough. Content can no longer be limited to articles and written documents (PDFs, etc.). Today, items such as podcasts, slide presentations, eBooks, and blog posts are all vital components of content creation. It is in-creasingly important to provide prospects and existing customers with a variety of resources…in a number of interactive formats.

One of the most interactive forms of content is video. As a result, more and more organiza-tions have turned to videos to build their brand and tell their story. Videos, in the form of web content, have changed the way companies communicate and share information with their audience.

Despite the engagement video offers, many marketers find it difficult to quantify how much of an impact video has on a marketing investment. In fact, thousands of dollars can be spent to create an engaging video, yet very few know whether the investment paid off. Whether you’ve created video content or are considering embarking on a video campaign, it’s important to be able to define the success of your video.



Who is 522?

In 2004, Chad Vossen and I decided we were done with the traditional 9 to 5 lifestyle. We took a risk and established a small studio in Old Town, Alexandria. Since then, the risk has paid off, and 522 Productions has grown to be one of the leading production companies in the Washington, DC metropolitan area.

Unlike many video production companies, 522 Productions does more than just post-production. We relish the process of developing a concept and bringing it to fruition. Since our concept development, filming, and editing are done in-house, we have the opportunity to maintain incredible control over the quality of videos that we produce.

Our team is dedicated to storytelling through video. We firmly believe t hat every b usiness and organization has a story worth telling and that video is the best medium to showcase that story.

As we’ve grown in our industry, we’ve been shocked to learn that most don’t know how to calculate the ROI of a video. Even professional video production companies are uncertain of how to measure video success. At 522 Productions, we’re so passionate about helping tell your story to the world that we want to ensure you know how to measure its impact. We realize that your story and your resources are important, so we want to help you calculate and evaluate the ROI of video.

Chad VossenCo-founder & Chief Creative Officer

Featured Clients:



Background

First of all, what Is Return on Investment? Return on Invest-ment (ROI) is the measure used to evaluate the performance or efficiency of an investment. In short, it’s what you get back for what you’ve put in.

Traditionally, marketing projects are not treated as investments and are viewed as expenses. As long as a business is growing and increasing revenue, then marketing tactics are supported. How-ever, as soon as business results turn south, companies often look to make cuts in spending to save money and improve the bottom line. Sadly, marketing is often thrown into the discussion.

We strongly feel marketing needs to be viewed as an investment. By viewing marketing initiatives as investments, an organization can focus on growth instead of just “surviving.”

Video has the ability to enhance the value of each and every marketing investment. Video increas-es conversions, generates leads and turns website visitors into customers. By studying statistics such as how many times your video is viewed, average visit duration, conversion percentages or the number of social media interactions, you can begin to delve into the ROI of your video



Chapter 1: Establishing a Foundation for Metrics

One of the biggest reasons organizations cannot determine the ROI of vid-

eo, or any marketing investment, is because it’s impossible. Well, it’s “impos-

sible” because the infrastructure is not in place. In order to determine the

ROI of video, you need to have a solid foundation in two key areas:

1) Technical and 2) Financial.



Technical

TIP 1:Google Analytics is free and provides most of the high-level data a market-er needs to determine the engagement of web-site visitors.

TIP 2:Video hosting platformslike Vidyard and Wistiaprovide specific infor-mation about each video (minutes watched, unique views, geography)

In order to determine the actions of website visitors, you’re going to need a solid foundation of analytics. The actual setup of analytics is beyond the scope of this eBook. However, the models referenced in this document rely upon relatively basic functionality offered withinGoogle Analytics. Here’s a breakdown of what most organizations should have in place, at a minimum:

Website Analytics.

Google Analytics is free and provides most of the high-level data a mar-keter needs to determine the engagement of website visitors. The solu-tion doesn’t provide data on specific users, but it does give an aggregate view. Other than Google Analytics, you can opt to go with Clicky or Mint.

Video Analytics.

In conjunction with website analytics, it’s important to have detailed information on your video content. Video hosting platforms like Vidy-ard and Wistia provide specific information about each video (minutes watched, unique views, region). YouTube and Vimeo also provide basic statistics if you elect to use these sites for hosting videos.

In addition to these tools, there are more integrated systems available to organizations. Solutions like Hubspot, Infusionsoft, Optify and Act On provide organizations with an integrated suite of reporting and analytics.


TIP 3:Calculating the lifetimevalue of a customer isuseful for ROI.

TIP 4:Understand your over-head and the value of your time. Expenses are important for determin-ing ROI.

FinancialThe ROI of any investment cannot be determined without financial data. After all, the financial results are what really determines the impact of an investment. Here’s a snapshot of the minimum financial elements you’ll need before setting out and measuring ROI:

Revenue.

Yes, all organizations keep track of revenue. However, it is important to be able to track total revenue over a period of time (monitor trends, etc.).

Revenue per customer.

For more advanced ROI calculations, metrics such as the customer life-time value are useful. By tracking revenue for each client, you can learn about the value of a customer over time.

Expenses.

Understand your overhead and the value of your time. Expenses are a key component to understanding the true value of any investment. If you’re spending time on a campaign or investing in advertising, make sure you keep track of the data.

Gross profit margin.

Identifying your average gross profit margin is useful for determining ROI. The gross profit margin can be calculated from basic financial re-ports (Gross Profit / Revenue).


Chapter 2:Metrics That Matter

There are four major categories of metrics to consider while analyzing the

success of your video campaign:

1) Video, 2) Social, 3) Lead Generation and 4) Revenue.



Video Metrics

TIP 1:If your video has 100,000total views but only 70,000 unique viewers,then you know that someof the viewers watched itmore than once.

TIP 2:Monitor CTR to de-termine if the video is placed in a good spot on the page or if you need a more enticing preview/thumbnail.

Unique video views.

How many unique viewers did your video have? A video with 100,000 unique views will be viewed much more favorably than a video with 3,000. Even YouTube offers this data for your video content.

Total video views.

The total views tells you how many times the video has been watched. This is slightly different from unique views. The total views statistic will show you the total number of views regardless of whether a visitor is unique or not. For instance, if your video has 100,000 total views but only 70,000 unique viewers, then you know that some of the viewers watched it more than once. This means that a large portion of the audi-ence was engaged or entertained by the video. The more engaged the viewer is, the more successful the video.

Click-through rate.

The CTR tells you the percentage of visitors who watched the video (“clicked play”). Since video increases conversions, it is important that the visitor actually watches the video once arriving to your website or landing page. Monitor CTR to determine if the video is placed in a good spot on the page or if you need a more enticing preview/thumbnail. The CTR can be calculated by taking the unique video views and dividing by the unique page views.

Average attention span.

The average attention span identifies how long a typical viewer watch-es a video. This metric provides further detail on how engaged visitors were with the video. Solutions such as Vidyard and Wistia can provide this data for each of your videos.


TIP 3:Analyze specific statis-tics such as the number of shares, tweets, likes, and gained subscribers.

Social MetricsTweets, shares, likes.

Social metrics measure how the video was shared on social media. This is a crucial aspect because many of today’s viral videos gain exposure on social media sites like Facebook or Twitter. You’ll want to analyze spe-cific statistics such as the number of shares, tweets, likes, and gained subscribers. Furthermore, did the video do better in one social media site than another? If so, why the difference? Asking deeper questions like these will help you fully understand the ROI of your video.

Email forwards.

Typically monitored within an email delivery system (Constant Contact, MailChimp, etc.), email forwards allow you to see who shared an email referencing your video. Email forwards are sometimes forgotten in the world of social media, but are a key element to reaching a larger audience.

Brand searches.

Both businesses and nonprofit organizations can benefit from video marketing by establishing and spreading their brand. Ultimately, a video should be part of a greater effort to improve your brand’s visibility online. Are more people searching for your brand on Google and other search en-gines after the release of your video? If so, then it successfully contributed to the overarching goal of building your brand! Increased brand searches add to a video’s “value.”


TIP 4:By setting up a specificlanding page and as-sociating a goal, you can identify the rate of visitors who become leads (i.e., fill out a form or make a phone call).

Lead GenerationMetricsLeads.

Many video campaigns are focused on acquiring sales leads. After all, leads are what eventually turn into paying customers. More often than not, you’d include a form or other call-to-action (CTA) to entice customers

to take you up on an offer.

Lead conversion rate.

This metric determines the rate of viewers who became a lead. By setting up a specific landing page and associating a goal, you can identify the rate of visitors who become leads (i.e., fill out a form or make a phone call). If you don’t know your lead conversion rate before a campaign, it can be helpful to use some industry guides to get a general idea.


TIP 5:Remember, the internet is permanent. Even if a “campaign” has ended, it is still interesting to ana-lyze the long-term effects of a video.

TIP 6:A successful video campaign builds trust with your audience and builds loyal customers. Building consumer con-fidence through a video campaign increases the average sale.

Revenue MetricsTotal revenue.

This measures the potential overall effect that a video had on your sales. If you’re a business owner and your video only promoted one product, it’s still important to analyze your total sales during the video campaign. This is important because the video could have brought visitors to your business who purchased something different than what the video pro-moted. For instance, if you linked to your website at the end of the video, a viewer might have browsed your website for something else completely unrelated to the content of the video. However, even if the consumer pur-chases something unrelated, he or she would never have made it to the site without the video. Thus, the total potential reach of the video must be considered. This can partly be deduced from your total revenue.

Campaign revenue.

Unlike total revenue, this is the total income specific to the video cam-paign. If the video promoted a specific product or fundraiser, then you will want to analyze the revenue raised from those items during the cam-paign. Remember, the internet is permanent. Even if a “campaign” has ended, it is still interesting to analyze the long-term effects of a video. Can a video still generate leads even if it isn’t being promoted?

Average sale.

You will want to determine the average value of sales being made. A suc-cessful video campaign builds trust with your audience and builds loyal customers. Building consumer confidence through a video campaign in-creases the average sale.


Chapter 3:Models for ROI ofVideo Campaigns

Depending on the size of your business/organization or the intensity of the

video campaign, there are various models available to determine the ROI of

video. Here’s a summary of three primary methods:



Simple ROI Method

TIP 1:Focus on a few keymetrics. Most often,basic metrics such as video views, page views and average attention span are indicators of success.

TIP 2:For lower budgets andlimited risk, focus on oneor two key metrics.

The Simple Method is the most basic of the ROI models. Essentially, itconsiders the high-level statistics and determines whether video hadan impact.

Key Attributes

Focuses on a few key metrics. Most often, basic metrics such as video views, page views and average attention span are indicators of success.

Identifies a high-level correlation with leads or sales. By simply calculating the revenue generated from a video (or a campaign involving video), one can make a high-level assumption of its effec-tiveness.

Other key successes – or “easy wins” – aside from hard sales are increased page views not only on your website, but on your social media sites as well. More likes on Facebook and followers on Twit-ter are recurring advertising opportunities, especially if you utilize social media to its full potential.

Who is it for?

The simple method of analysis is particularly good for those with lower budgets and less risk. Since the campaign isn’t massive, there aren’t as many statistics and possibilities to consider.

Sometimes large companies and organizations use a video cam-paign as a “toe in the water” for larger goals. If the campaign was successful, then it would be worth considering moving forward with a larger campaign strategy.


IntermediateROI Method

TIP 3:For more advanced ROIcalculations, it is import-ant to identify correla-tions between video and a specific metric.

The Intermediate ROI Method takes analysis to another level. By estab-lishing a very clear objective up-front and analyzing data, one can make a more detailed conclusion on the impact of video.

Key Attributes

Establishes a clear objective and goal. If you determine this from the beginning, then once the analytics are studied, they can be compared to the starting goals to determine whether or not the-campaign was successful.

Defines the “metric” of performance. Here is where you determine your success. Are you looking for increased sales? More leads? How about increased brand awareness? Again, these metrics should be part of the goals that are set.

Ensures basic analytics are properly implemented. You will want to be sure you can gather basic data such as page views, click-through rates, average attention span, etc.

For the most part, this method tries to pinpoint a correlation be-tween the video and another metric. For example, did the video increase the amount of revenue?

This method also factors in the general expenses associated with a video. How much did it cost to create the video? What were the total campaign costs?


Who is it for?

Includes good reporting to management. For those in larger businesses and organizations, these statistics will be brought to management to determine the fate of future campaigns as well as review the performance and ROI of the video.

Ideal for those who are more serious about video marketing. Whereas the simple method is good to test the waters or for those with smaller budgets, the Intermediate ROI Method is perfect for small business owners, internal marketing directors and others seeking to benefit from a serious video marketing campaign.


Pro-MarketerROI Method

TIP 4:To get a true sense of ROI, it’s important to compare every penny spent against every pen-ny earned.

TIP 5:Use the metrics from pri-or marketing campaigns to determine the successof video.

The Pro-Marketer ROI Method is a more involved analysis. This meth-od considers specific “value metrics” defined by the organization and considers all aspects of the investment (operational costs, production costs, etc.).

Key Attributes

In this method, each investment is measured and analyzed. Every penny spent on creating and marketing the video will be compared against every penny earned. This will also take into account any time spent by employees of the company. This factors operational costs and management.

The Pro-Marketer method requires the organization to understand the value of prior marketing campaigns. For example, it is import-ant for the organization to have an understanding of the “value of a lead” or the “lifetime value of a customer”. These elements need to be identified before a campaign begins and are used as a baseline when analyzing the impact of video.

Competitive analysis will be done to compare the success of this video campaign to competitors in your industry. Were the stan-dards exceeded or did the video fall short? Has the rest of the in-dustry ventured into video marketing or are we ahead of the curve?


Who is it for?

This method is particularly good for reporting to management, as it is the most detailed and holistic review of the ROI of the video. Agencies and firms that specialize in video will want to take advan-tage of this method.

The Pro-Marketer method is also useful for those looking to im-prove their campaigns. If you’ve been developing video content on a consistent basis, this method helps you determine what areas need improvement or what areas are really thriving.

TIP 6:Use this method to communicate with management and show a holistic view of a video campaign.


Chapter 4: Business Cases in Determining

the ROI of Video

Creating an online video campaign and analyzing its success will vary from

industry to industry. There is no basic standard. Similar to the different meth-

ods used to analyze the ROI of video, there are different types of business

strategies for using and analyzing video success.

For this eBook, we wanted to actually apply the different ROI models to spe-

cific scenarios. The following section outlines ROI calculations for various

types of video projects.



Small Accounting Firm

TIP 1:Video helps establish apersonal connection withthe audience. This per-sonal connection drives revenue.

Service-based businesses can use video in a variety of ways. First of all,video helps establish a personal connection with the audience. If view-ers can hear from the employees within a company, then they can start to trust that the company will deliver. In addition, video is effective whenhighlighting case studies or specific projects. Let’s explore how a localaccounting firm would implement the Simple ROI Method for determin-ing the value of video.

Scenario:

Small Accountants, LLP is a local accounting firm. The organization specializes in providing tax and accounting consulting services to small businesses within their region. The organization is looking to create an introductory video for its homepage and for placement on YouTube.

Objective:

As a result of creating the video, the organization is looking to increase traffic to its website and increase revenue. ROI Method & Rationale: At this point, Small Accountants, LLP is just getting started with video. The introductory video is the first on the company’s YouTube channel and is the primary video on the organization’s homepage. Since Small Ac-countants, LLP is looking for high-level success factors, the Simple ROI Method is used.

The Simple ROI Method requires basic analytics to be installed on the company’s website. For video metrics, the company can rely upon You-Tube’s analytics.


TIP 2:Video is conversationaland this helps improvethe user experience forwebsite visitors.

Overview of Video:

The video features a brief interview from the company’s President. The video is designed to provide an introduction of Small Accountants, LLP and make the website visitor feel more comfortable. Because the gen-eral nature of accounting and taxes is a bland subject, it really helps to appear conversational when visitors arrive to the website.

Results:

After launching the video on YouTube and embedding on the company’s website at the start of the calendar year, Small Accountants, LLP gath-ered the following data over a period of three months:

Video views: 792Website visitors: 1,968Total revenue: $52,850

ROI Calculations:

In this case, the Simple ROI Method requires a marketer to analyze basic metrics. For Small Accountants, LLP, it is helpful to compare the website visitors during this 3-month span versus the previous 3-month span. In addition, Small Accountants, LLP can compare the 3-month revenue in this year versus the 3-month revenue of the previous year. Here’s a breakdown:

METRIC THIS PERIOD

LAST PERIOD RESULTS

Video Views 0 792

Positive result in views since the previous 3-months did not feature a video on YouTube or homepage.

Website Views 1,750 1,968

12.4% increase in visitors com-pared to the same months last year.

Total Revenue $47,543.00 $52,850.00 $5,307.00 increase in revenue

(11.2%)


Summary:

Some marketers may argue that the entire positive return should not be attributed to the video. This may be the case; however, in order to further delineate the impact of the video, a marketer can advance into a Pro-Marketer ROI calculation where other factors are considered. Ulti-mately, in this scenario, the ROI calculation demonstrates that the vid-eo had a positive impact and met the objective established before the campaign launched.


TechnologyServices Firm

TIP 3:Video enhances a cam-paign and improves conversions.

One of the major ways technology services firms use video content is to enhance a campaign that is promoting a specific service or business line. So, let’s explore how a firm would apply the Intermediate ROI Meth-od to an eight-month Pay-per-click campaign.

Scenario:

ABC Technology, Inc. is a regional technology services company. The or-ganization specializes in providing consulting services for major Enter-prise Resource Planning (ERP) projects. The organization is looking to increase exposure in the region by implementing a Pay-per-click (PPC) campaign.

Although a PPC campaign drives immediate traffic, the organization does experience a 4-month sales cycle for this particular service line. So, the organization plans to implement the campaign over an 8-month period to fully gauge the results.

Objective:

As a result of implementing a PPC campaign, the organization is looking to increase revenue for their ERP support services.

ROI Method & Rationale:

Since ABC Technology, Inc. seeks to identify revenue generated from a specific campaign, the organization needs to use a more detailed ap-proach than the Simple ROI Method. In order to determine whether the video is effective, ABC Technology elects to use the Intermediate ROI Method.


TIP 4:By featuring interviewsfrom key employees, youcan provide an inside look into your organiza-tion.

In order to use this approach, the organization needs to ensure a few technical items have been implemented. First, ABC Technology plans to use a unique landing page for the campaign. The landing page is used to track the number of visitors and establish some baseline metrics (bounce rates, duration of visit, etc.). Most importantly, the page shall include a separate form to capture leads. The leads captured in the form will then be tracked accordingly within the organization’s CRM (Sales-force).

Overview of Video:

The video features a series of brief interviews from key members of the ABC Technology team (Director of ERP Support Services, etc.) and ul-timately reinforces the expertise offered by the organization. The video includes b-roll of the office environment and demonstrates what it’s like to work with the company. Ultimately, the video aims to build trust with those landing on the campaign’s webpage, lengthen the amount of time spent on the page and improve the overall conversion percentage.

Results:

After executing the campaign for eight months, the organization gath-ered the following data:

Impressions: 80,000Click through rate: 1%Visitors: 800Conversion rate: 3%Total leads: 24Cost-per-click: $11.25Total PPC investment: $9,000.00 = ($11.25 * 800)Total production costs for video: $15,400.00Total of landing page design and implementation: $2,600.00Total campaign investment: $27,000.00Total close rate: 7.8%Total customers acquired: 2Total revenue: 2 employees placed on a 4-week engagement (320 hours * $95 per hour) = $30,400.00


ROI Calculations:

In this case, the Intermediate ROI Method requires a marketer to an-alyze one key metric versus the cost of the campaign. Here’s a break-down of how this campaign’s ROI is calculated using total revenue as the primary measuring stick:

Total revenue - Total campaign investment = Return$30,400.00 - $27,000.00 = $3,400.00

Return / Total campaign investment = Return on Investment$3,400.00 / $30,400.00 = .1118Return on investment = 11.2%

Summary:

Some marketers may argue that the entire positive return should not be attributed to the video. This may be the case; however, in order to further delineate the impact of the video, a marketer can advance into a Pro-Marketer ROI calculation where other factors are considered (aver-age attention span, click-through rate, etc.). Ultimately, in this scenario, the ROI calculation demonstrates that the video had a positive impact and met the objective established before the campaign launched.

Additional Considerations:

This calculation gives an overall indication of the video’s impact, but there are some additional steps to take for follow-up projects. First of all, the lifetime value of the two new customers can be considered. You’ll notice that the revenue generated from the customers is just recognized immediately after the campaign. However, these customers can trans-late into more revenue as additional projects surface. Secondly, the or-ganization can look into the conversion rate of the campaign. Did video contribute to the 3% conversion rate? How did this compare with more traditional landing pages (without video)?

TIP 5:The Intermediate ROIMethod is useful forcompanies launchingspecific campaigns.


CommunicationsFirm

TIP 6:Video brings life to anycampaign.

For a communications firm, the stakes can be much higher. Since com-municating through a variety of mediums is their specialty, they have to work to ensure that their video is top quality. However, it must be remembered that video is not the only method in which communication firms operate. When hosting a campaign, a communications firm will use various methods to spread a message including brochures, emails, eBooks, presentations, webinars, and videos.

In this scenario, let’s review how a communications firm can identify the value of a video within the context of an overall campaign. For this situation, we’ll plan to use the Pro-Marketer ROI Method to calculate the value.

Scenario:

Communica8or is a large communications firm servicing regional cli-ents. The company traditionally works with government agencies and non-profit organizations. The company has over 40 employees, includ-ing a large network of subcontractors who contribute to their accounts.

ANonProfit.org is a national non-profit organization and is one of the larger accounts of Communica8or. Communica8or is responsible for managing the organization’s overall brand/messaging, website opera-tions and major marketing initiatives (print campaigns and online ad-vertising).


TIP 7:Use video to establishan emotional connectionwith the viewer.

Objective:

Communica8or is launching a seasonal campaign for ANonProfit.org. The objective of the campaign is to acquire 75 new donors.

ROI Method & Rationale:

As noted in the overview of the Pro-Marketer ROI Method, a variety of items need to be in place for an effective calculation. First of all, Com-munica8or needs to establish a separate “channel” for the video. By cre-ating a landing page for the campaign and installing Google Analytics, Communica8or can track donations separately. In addition to a separate landing page and analytics, Communica8or also gathers financial infor-mation from ANonProfit.org to determine the lifetime value of a donor.

Overview of Video:

The video created for the campaign is designed to establish an emotion-al connection with the audience. The video tells the story of a ANonProf-it.org client. The video ends with a simple call-to-action, encouraging visitors to take action by donating $25 immediately.

Results:

Communica8or organized the campaign in preparation for a major sea-sonal holiday. The campaign featured print ads and online advertising. For the online advertising, traffic to the landing page was generated through Facebook ads and banner ads. After the seasonal campaign ended, the following data was gathered from the online advertising por-tion of the campaign:

FACEBOOK BANNER ADS

DATA RESULTS DATA RESULTS

Impressions 125,000 Impressions 250,000

CTR (Clickthough Rate) 10.50% CTR (Click

though Rate) 1.45%


TIP 8:By understanding the lifetime value of a cus-tomer, you can realize the full return of a video.

In addition to the numbers above, we gathered the data on the produc-tion costs, operational costs and the lifetime value of a donor:

Total production costs for video: $8,400.00Design, development costs associated with campaign: $3,500.00Total number of employee hours (SomeNonProfit.org): 40Total cost of employee involvement (SomeNonProfit.org): $3,000.00(40 hours @ $75 per hour)Total cost of monthly retainer (Communica8or): $5,000.00Lifetime value of a donor: $127.00

ROI Calculations:

In this scenario, the Pro-Marketer ROI Methodbrequires a marketer to consider the total costs of the investment (campaign costs and em-ployee/internal costs). In addition, this approach requires the team to consider a value metric (lifetime value of a customer) to determine the true impact of the campaign.

Based on the data outlined above, let’s make some calculations.

Total production costs + total development costs + total advertising costs + total cost of monthly retainer + total cost of employee involve-ment = Total campaign investment$8,400.00 + $3,500.00 + $14,250.00 + $5,000.00 + $3,000.00 = $34,350.00

FACEBOOK BANNER ADS

DATA RESULTS DATA RESULTS

Visitors 13,125 Visitors 3,625

Conversion Rate 3.60% Conversion Rate 3.3%

New Donors(Conversions) 472 New Donors

(Conversions) 119

AverageDonation $50.00 Average

Donation $50.00

Total Ad Spend ($.80 CPC) $10,500.00 Total Ad Spend ($15 CPC)

$3,750.00

Revenue $23,600.00 Revenue $5,950.00


(Lifetime value of a donor * New Donors from Facebook) + (Lifetime val-ue of a donor * New Donors from Banner Ads) - Total Facebook Revenue - Total Banner Ad Revenue = Total Revenue($127.00 * 472) + ($127.00 * 119) - $23,600.00 - $5,950.00 = $45,507.00

Total revenue - Total campaign investment = Return$45,507.00 - $34,350.00 = $11,157.00

Return / Total campaign investment = Return on Investment$11,157.00 / $34,350.00 = .3248Return on investment = 32.48%

Summary:

Ultimately, the lifetime value of a donor provides a more indepth look into the value of the video campaign. By looking beyond the direct im-pact on short-term revenue, one can attribute additional success to the video. By considering long-term data elements, management can ap-preciate the investment even more.

Additional Considerations:

From this point forward, the organization can compare conversion rates and other metrics. By analyzing metrics from each campaign, the com-pany can focus on improvement. The bottom line, if you can isolate your objectives and results, you have the ability to really focus on the impact a video can have on a campaign.

TIP 9:Don’t forget that a videohas a long-term impact on revenue.


Chapter 5: How to Communicate ROI

Communication is key to success in the business world. When it comes to

accurately and tactfully communicating ROI, there are different strategies de-

pending on whom you are informing about your video’s ROI results.



Management

TIP 1:Aside from the monetaryvalue, showcase the growth that was expe-rienced in your social media presence as well as any increased traffic statistics on your site.

When communicating with management executives, it’s vital to keep in mind that these individuals think and analyze best with numbers. Show them hard statistics concerning the resources spent on the video and the revenue that the campaign generated. Aside from the monetary value, showcase the growth that was experienced in your social media pres-ence as well as any increased traffic statistics on your site.

Since management executives like focusing on budgets and where re-sources can be saved, be sure to highlight the places where resources were used creatively to improve the video. Also offer insight into what can be done more efficiently in a future video campaign should management decide to approve another one. In short, when communicating ROI to the executives, stress hard figures.


Internal Marketing Teams

TIP 2:Internal marketing teamsare part of the process ofcreating the video, theyshould be interested toknow about the resultsthat their work produced.

TIP 3:Remember that internalmarketing teams are a part of the process. They are interested to know if their work produced results.

Communicating ROI results to internal marketing teams is a much dif-ferent process. You must remember that these teams are usually filled with “creative types” of people who are consistently looking for ways to do their job better. To communicate ROI results, highlight the sta-tistics that show what worked and what didn’t work about the video. Since these internal marketing teams are part of the process of creat-ing the video, they are interested to know about the results that their work produced.

For instance, if a video had a strong CTA (call to action), it would be beneficial to inform the marketing team about whether the CTA worked, and make note if it did not. This will allow them to analyze what was and wasn’t effective in the video. Internal marketing teams will also be interested to know the overall ROI of the video and how their efforts played out. While numbers are certainly important, the team will be interested to know which of their methods were more effective than others.


SharingWith Clients

TIP 4:If clients can understand the return on their invest-ment, they’ll be likely to invest in future projects.

For those reporting to clients, it’s important to justify a project with clear numbers. If you follow our strategies above, hopefully it will be a positive report! Regardless, when communicating with a client, it’s vital to stress the bottom line. The client used the video as a marketing tool to promote a product and gain awareness for their brand. Show the client analytics such as leads that were generated from the video and the traffic being driven to their website. If the video resulted in more social media interactions, be sure to mention that as well.


Summary: So How Much is Video Worth?

At the end of the day, identifying the value of a video is largely dependent upon

the objective…and that’s what most people fail to do. If you implement these

plans and strategies into your video marketing campaigns, you will be able to

establish a goal from the outset and calculate the return on investment from

your efforts. The potential worth of video marketing can be exponential, es-

pecially as more and more purchase decisions result from social interactions

and other online forums.



Sources

http://www.522productions.com/checking-out-google-insights-for-search

http://wallopcreative.com/blog/2010/12/05/the-roi-of-video-on-websites/

http://socialmediatoday.com/marinarn/461625/how-measure-roi-online-video

http://www.youtube.com/watch?v=nRruI3De2Hk

http://www.cisco.com/en/US/solutions/ns1168/roi_video.html

http://previewnetworks.com/blog/leveraging-the-roi-of-video/

http://www.reelseo.com/defining-roi-video/

http://blog.hubspot.com/blog/tabid/6307/bid/33871/How-to-Calculate-the-Value-of-Your-So-cial-Media-Followers-CALCULATOR.aspx

http://www.cio.com/article/144451/IT_Value_Metrics_How_to_Communicate_ROI_to_the_Busi-ness

http://www.roico.com/clients.html

http://www.cxfocus.com/index.php/google-analytics-tips/start-working-brand-keywords-goo-gle-analytics/



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