Keeping track of your video marketing ROI can be the difference between a sustainable and a failing YouTube channel. Making videos is fun, but making videos that make money is even funner. Let’s make sure that you’re making as much money as you are having fun.
Calculating your video marketing simple ROI
This is the most basic way to calculate your video marketing ROI. When calculating simple ROI, you set the sales growth you get during the duration of the video marketing campaign against the costs of that campaign. The formula for this is:
ROI=(Sales growth-marketing costs)/marketing costs
Continuing with our example, let’s assume that your business sales increase by $3000 during the duration of the campaign. Calculating for the simple ROI:
You end up with a 28.9 percent sales growth in this example.
Campaign attributable ROI
Simple ROI assumes that all sales growth come solely from your video marketing. In reality, you are likely going to run it alongside other marketing campaigns which contribute to overall sales. To determine the impact of the video marketing campaign itself you have to set its gains against the average monthly sales growth.
This is referred to as the campaign attributable ROI and uses the following formula:
ROI=(sales growth-marketing cost)/marketing cost-average sales growth
Again, going with our example, assume that your business has an average monthly sales growth of 5 percent. Computing the campaign attributable ROI:
Thus, your video marketing campaign has resulted in an overall sales gain of 23.9 percent. This is a modest number but would still be something to be positive about, especially if it is within your video marketing campaign’s goals. Note that these are not the only means of determining your video Marketing ROI. You can also view the level of engagement as a return for your marketing efforts.
Also, a one-month sales growth is not always enough to determine the overall success of your campaign. For that, you have to keep track of your returns for several months. Depending on what your ROI trends show, adjust your marketing campaign accordingly.
Marketing channel FunnelBox provides a quick explanation of how these metrics all line up to help you assess the success of your video marketing campaign.
Tracking and measuring your ROI
The first thing you want to determine when calculating your video marketing ROI is the financial tipping point, or break even point. This is the point where your revenue finally starts earning a profit from your initial investment.
To calculate the number of sales you need to break even, use the following formula:
Break even=fixed cost/(unit price-variable cost)
Where the fixed cost is your video marketing cost, the unit price is the price of a single good or service you are offering, and the variable is the cost require to make a product.
In our example, the fixed cost would be $2342. Assume that the price per unit of your product is $30 and the cost to produce each unit is $20. Your break even point is then:
You need to sell 234 units of your products to get past the break-even point for your video marketing investment.
Tracking your sales
When tracking the sales generated by your video marketing campaign, you need to distinguish these from the other sales you make. One way you can do this is to by including links with your videos directing to specific product pages. You can then use web analytic tools to track the traffic coming from these links and compare them with those coming from other sources.
Social Media Examiner also says that you might also want to inflate your sales a little to get your ROI. This is to take into account those purchases made after people watched your videos or those done in non-traditional ways.
Aside from the more well-known analytic tools like YouTube Analytics, other tools you can use to track sales include:
You can either use these separately or combine them to get a better picture of your campaign’s performance.
Understanding video marketing ROI costs
To assess the financial gains you get from video marketing, you have to first know how much it will cost you. Marketing agency Hinge says that the actual cost largely depends on your needs. There are three factors, though, that affect the overall cost.
- Time: the longer you spend in the production of the video, the more the cost goes up. Furthermore, adding more people on the team working on the video will also make it cost more.
- Talent: while you can go and do a one-man show, getting people who are more familiar with the task will result in a better quality final product. What you pay these guys will depend on their level of expertise and the quality of the work.
- Equipment: if you are hiring a production company to work on your videos, equipment costs are usually calculated as part of the entire price quotation. But, if you are going with it by itself, you have to take into account the cost of each separate tool you use.
All of these will contribute to the bulk of your production costs. But, there are still other expenses that you have to take into account to come up with an appropriate budget for the project. Australian company Melbourne Video Productions goes into more details about these factors in this video.
Production cost can be categorized into five different levels depending on the quality of the final product.
- Amateur: You are doing all the work with your own equipment. The camera for filming can range from a $100 smartphone with a camera, to a $2000 professional DSLR camera. You will also need a computer for post-production work, which costs around $500 for a basic model. If you have these as personal belongings before the project, those costs become negligible.
- Semi-pro: Someone with more experience does the work for you. The equipment they will use could be yours or their own. Note that the level of talent for this varies a lot since they will typically be part-time. The overall costs for a 1-2 minute-long video would be around $1,500-$3,000.
- Professional: Getting a whole professional team to handle all the stages of the production and post-production work will help ensure good quality videos. They also bring in professional-level equipment and resources. Prices are around $5,000-$20,000 for a 1-2 minute video.
- Premium: This will include high-end equipment, and possibly a studio. You also get access to top-notched talent. This itself can lend some prestige to your video that you can leverage for promotions later. Such services cost $25,000-$50,000 for a 1-2 minute video.
- Hollywood: This category is pretty much reserved for the large companies with the big budgets. Think about the A-listers in the field of video and film production. You can expect cinema-quality output. The prices are a staggering $100,000-$1,000,000for a 1-2 minute video.
Which of these levels you will choose depends not only on the budget you have but also the goals you want to accomplish for the campaign. Keep your budget and goals in line with each other to avoid spending more than you should.
Promotional costs associated with video marketing ROI
Creating your video is just the first part of the video marketing equation. To get people to watch your videos and hopefully convince them to make the purchase, you have to promote your content.
YouTube is the most popular online video sharing site, with more than 1.3 billion people visiting it. This is where most people start their video marketing. Using the site to host your video is itself free. All you need to have is an account and you can upload as many videos as you need.
The costs come in when you make use of YouTube’s promotional tools. Video Creators’ Tim Schmoyer gives some useful advice on when you should start using these tools:
Ads are the most common means of promotion. There are a variety of ad types you can choose to draw viewer attention to your videos.
YouTube’s rates depend on the kind of audience targeting you set for your ads. The more specific the targeting is, such as focusing on a specific age group or location, the higher the rate is. Average rates are between $.10-$.30 per ad view. Your video ad is considered viewed when a user watches at least the first 30 seconds. For instance, if you have an ad rate of 4.20 for a video and that video manages to get 5,000 views, you will be charged $1000 by YouTube.
- Better quality videos: Uploaded videos on Vimeo don’t lose as much quality as YouTube. This is great if you want to provide the best viewing experience.
- Customizable players: Vimeo lets you tweak the look of the video player and add your brand’s logo for better visibility. You can also add more company information as you see fit.
- Custom URLs: Create more readily recalled URLs for your videos. This can also be used for further branding opportunities.
- Better privacy controls: You can limit video playback to only those coming from specific locations, such as your website.
All of these provide more focused attention from your audience. Branding also becomes less disruptive and feels more like a part of the whole viewing experience for the audience. The Lincoln Motor Company effectively used Vimeo’s branding features:
Unlike YouTube, Vimeo is ad-free, which means you don’t need to pay for advertising space. What you need to pay for is a membership to access the site’s advanced features:
Keep in mind that Vimeo Marketing tactics can be a bit different from YouTube.
Social media and other marketing costs
Outside of YouTube, the biggest place to market your videos is social media. Facebook, in particular, has more than 1.7 billion users, making it the largest promotional platform. One such example is the Taylor vs. Treadmill video done by Apple to promote their Apple Music service.
You can manage your social media accounts on your own without extra monetary cost. But this will eventually become too tedious when you have other aspects of the business to also manage. Hence, you should get a dedicated social media manager. Social Draft says that hiring one will cost you somewhere between $500 and $2000 a month, with the more established experts fetching even higher rates.
The number of views and likes your video gets also plays a large role its promotion. The more views people see, the more they are tempted to click and watch the video. Hence, you might also want to boost that count by buying views or likes. Rates vary from provider to provider. Devumi charges $12 for 2,000 views.
Additional promotional opportunities could also come offline, such as having your video content played at certain events. The cost for these will vary greatly and depend on what you can negotiate.
How much will everything cost you?
Assume that you go with the minimum for your video marketing campaign. You can expect the following breakdown of the estimated costs:
- Semi-pro production for a 2-minute video: $1,500
- YouTube ads at a rate of $.10 and targeting 1000 views: $100
- Vimeo Pro account: $17/month for 1 month
- Social media campaign with a dedicated manager: $500 for one month
- 5000 YouTube views: $37
These will give you $2129 for the total costs. But, as is with any other marketing effort, this initial estimate does not always come close to the actual costs you end up paying for. To cover these, you should add at least 10 percent of that amount. With that, your total investment budget for a single video marketing campaign would be around $2342.
Keep track of your video marketing ROI
As you have learned, video marketing is a great way to increase sales. But to know how successful your campaign is, properly measuring your ROI is important.
- Determine the costs. Your video marketing expenses can vary greatly depending on the scope, level of quality, and expected results you set.
- Consider your secondary promotional opportunities, such as purchasing views, or including a Twitter retweet package for your social shares.
- Track your returns. ROI is most often determined by sales, but you can also consider different metrics depending on your campaign goals.
- Study your ROI. These will give you a good picture of the campaign’s contribution to your business overall sales growth.
Once you have your ROI, you can then modify your campaign accordingly to increase its effectiveness. Don’t forget to keep track of your video marketing ROI regularly. This will help in making future plans for your business, and propel your different channels forward.