This article is intended as practical guidance for businesses weighing up an investment in video marketing. Many businesses still do not invest in video marketing because it is a new arena for them; they are concerned about paying too much and not getting a decent return on their investment. They are also concerned about paying too little and being left with a sub-standard product.
There is no debate around the effectiveness of video marketing. Comscore released a report in 2012, which told us that people are watching an average of 14.8 hours of online video a week. We know that efforts are worth it. But for a newcomer to the world of online video, calculated risks are the only way to go.
Determining what to invest in video is therefore a process deserving of some time and consideration.
Have a clear goal for your video production
In order to measure any form of success, you need to know what you are trying to achieve when starting out. Here are some examples of the aims that businesses have when they embark on a video marketing strategy:
a) Raise brand awareness
b) Increase sales
c) Email newsletter sign ups
d) Completion of an online enquiry form
e) Upgrade an order (e.g. a standard class ticket to a first class ticket)
Measure your videos success
Comparing data to pre-video data
If we continue with the analogy that your goal is c) email newsletter sign ups, you need to establish what figures will constitute a success. For this example, let’s imagine that you have invested in a web presenter video on your sign up page. Obviously, the first measurement of success will be an improvement in sign up rate, compared to before you had your video in place.
Using web analytics tools
To measure success, it is important to use the analytics tools that are at your disposal. Tools such as Google Analytics enable you to see how visitors (to your website or YouTube channel) are interacting with your video e.g. how much of the video they watch, when they decide to switch off, demographics of your audience and also when people are sharing your video.
For measuring the impact of a web presenter video, you can analyse how long people are staying on your page and how they respond to your call to action.
It is worth remembering that return on investment doesn’t have to be measured solely in terms of financial reward. Social media interactions and the development of brand awareness are valuable bi-products of online video that should also be considered.
Financial return on investment
In terms of establishing a financial return on investment, you need to decide how much one unit (one sign up) is worth to you. If an email sign up is worth £10 to you, and you have estimated that the video can achieve 20 extra sign ups per month, then the video is worth a maximum of £200 per month. If you were to spend £1000 on an online video, it would therefore take you five months to get a full financial return on your initial investment, before your video starts making a profit for you.
Of course, there is an element of guesswork when estimating the initial number of sign ups. This is where it might be sensible to go with your most conservative prediction in terms of sign ups (then anything more is a bonus!).
Other factors to consider
Video shelf life
All videos have a shelf life. Also, any sensible video marketer understands the importance of evaluating the performance of a video, and developing it to maximise success.
There are ways that you can avoid ageing your video. Firstly, if possible, avoid mentioning dates and years e.g. “sign up before September 2013…” This will avoid your video losing any relevance by the time September 2013 has come along. Also, if you are promoting a product, think carefully about mentioning the price of the product in the video. This is a detail that could change over time and may cause customers to complain because of incorrect information.
Of course, no video has an infinite shelf life. If you are serious about video marketing, you should be thinking in terms of long-term strategy and therefore long term investment. This will depend on your business, but in terms of your goal being online mailing list sign up, you may need to refresh your video once every year or two years. It may be that a video seriously improves your sign up rate so that you consider using video more widely on your website.
Return on Investment ‘ROI’
A basic definition of ROI is that it is a performance measure, which is used to evaluate the efficiency of a particular investment. ROI is calculated by dividing the benefit of the investment by the cost of the investment and the result can be expressed as either a percentage or as a ratio.
It is obvious to see that this calculation can be manipulated by what you use to represent the cost of the investment and the benefit of the investment.
Let’s continue with the example of using a web presenter video to increase email sign ups. You could calculate the cost of the video production in terms of the obvious direct costs e.g. filming, presenter fee, and edit. However, you could also calculate the costs to include other resources that have contributed to the overall implementation e.g. staff time for planning, distribution, monitoring and evaluation.
The disadvantage of an ROI calculation is that it can be manipulated to suit an agenda. Be aware of this when calculating what you will invest in online video.
Here is an infographic to help you build a video production business case