Video Marketing : Realizing A Faster Return On Your Investments

This article discusses the video marketing return on investment concept and how it can be used to justify spending on marketing investments.
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Yes! Businesses and brands spend money on video marketing, but do we really understand how video marketing and marketing investment works and how to recoup investment costs?

The key is to understand better how to make sense of your video marketing thrusts, learn the ropes on return on assets, and realize those investment returns – the sooner, the better. 

A vital component of marketing campaigns is evaluating the performance, impact, and profit through a brand’s marketing efforts to determine whether the actions and hard work help support the company’s goals to enhance and improve the brand. 

Insights learned from marketing exercises such as these can drive future, innovative, and data-driven strategies. 

Hence, businesses and brands are prepared and fully equipped for more intelligent decision-making situations that can make or break their ultimate goals.

Let’s discuss video marketing and how brands and businesses can use this powerful content vehicle.

But wait a minute, video marketing costs money, right? 

Yes, that is correct. But it is essential to put this matter in the proper context and, mind you, it is not all about spending. 

Instead, consider it as an investment that can generate returns when done correctly and strategically. 

But first, let us go through the basic concept of return on investment (ROI) in the marketing sphere, especially when it comes to video marketing:

What is ROI in video marketing?

The core definition of marketing return on investment (ROI) deals with determining profit and revenue growth relative to the effects and impacts of marketing campaigns and initiatives

By computing the return on marketing investment, businesses can determine the degree to which their marketing efforts – either as a whole or on a per campaign basis – contribute to revenue growth.

Video marketing ROI is typically used to justify spending and budget allocation for ongoing and future campaigns and initiatives. 

For example, you are going to promote your brand on YouTube, and you need to produce video content. 

To have the most audience impact on your published brand awareness video content, you commission a video editing service to ensure that you get your online content mileage in the bag, guiding your audience through your sales funnel, thus, generating revenues.

Thus, your ROI is realized through the sales generated by your video promotions.   

How businesses use Marketing ROI?

From a business standpoint, calculating ROI on marketing investment can help guide critical business decisions and optimize marketing targets and efforts

When it comes to video marketing, understanding the ROI generated by a marketing campaign determines the following:

As a result, brands can justify spending on marketing. 

When brands allocate resources and budgets for their marketing efforts, they need to secure funding and resources for those campaigns. Therefore, it is crucial to justify current marketing spending and budget at key leadership levels. 

If your goal for your video marketing is to generate sales for your products or services, then the sales generated through your funnel will help accurately determine your marketing ROI for your business.

Thus, the sales outcomes through the video marketing efforts are a strong indicator of how marketers can justify the benefits of their marketing spend and have proof of its returns for the business.   

Better distribution of marketing budgets

Businesses can take full advantage of all online and offline marketing channels, which can exist in various combinations or as a standalone marketing campaign. 

Nonetheless, all campaign initiatives require budget and funding to make them work. 

This is primarily why determining and understanding which online and offline marketing efforts drive the most revenue is critical for the strategic and effective allocation of video marketing spending and budget.

Measures success and creates benchmarks. 

The success of every marketing campaign and the creation of baselines can only be determined based on the outcome and impacts of any marketing campaign. 

Thus, the marketing ROI as a primary indicator will be the key metric to identify it.

By doing so, marketers can better identify the right mix of offline and online campaign efforts by understanding the outcomes of those individual campaigns on overall revenue growth for the brand or business.

It will also allow marketers to establish baselines to gauge their success and adjust actions accordingly to maximize the outcomes.

Competitor study and analysis

By monitoring the marketing ROI of competitors, marketers can better understand how their organization is performing in the market. 

For instance, marketers publicly monitoring and tracking available financial data can estimate their competitor’s ROI and realign baselines to mirror their estimates to help keep their marketing efforts consistently competitive. 

Computing for marketing ROI

Understanding how to compute ROI is critical, and the core formula used to determine its marketing impact at a high level is relatively straightforward:

(Sales Growth – Marketing Cost) / Marketing Cost = Marketing ROI 

Generally, this formula assumes all sales growth is related to marketing efforts. Thus, marketers need to account for organic sales to establish a more realistic perspective of marketing impact and ROI.

(Sales Growth – Organic Sales Growth – Marketing Cost) / Marketing Cost = Marketing ROI 

Also, when using marketing ROI formulas, it’s crucial to determine the total ROI the marketing efforts have generated. 

Do note that an actionable “return” can vary based on the marketing strategy, campaign efforts, and general overhead costs related to implementing the campaigns. 

Here are the key elements when factoring your marketing ROI calculations:

Total Revenue

This represents a sale’s gross income that gives marketers a clear overview of their efforts from a particular campaign. 

Measuring this versus the marketing efforts and spending is ideal for strategic media and content planning, budgeting, and overall projected marketing outcomes.

Gross Profit

This is net of revenues minus the overhead and helps marketers understand the total revenue their marketing efforts generate in terms of the cost of production and the price for the delivery of goods and services. 

Net Profit

By calculating this, marketers can determine the impact of their marketing efforts on net profit simply by incorporating the following into their formula Net Profit = (Gross profit – additional expenses).

Consistently defining the profit/expenditures and overall ROI of the marketing team will be vital in determining marketing ROI measurement efforts, which are not limited to the following;

> Overhead and internal expenses

> Agency fees

> Creative assets

> Media spending

> Professional services 

What is a good ROI?

Now that you know the basics of marketing ROI, perhaps the next question would be,

“Is video marketing worth it?”

Research proves that it is. 

In a 2020 study by online media company Wyzowl, they found that:

95% of video marketers want to increase their video marketing spending by the end of 2022.

89% say video has indeed provided them a good marketing ROI.

87% maintain that video was responsible for increasing their website traffic.

83% say video has boosted their lead generation efforts.

80% insist that video has directly helped increase sales.

And finally, 91% of marketers claim they are satisfied with their video marketing ROI on social media.

If marketers found video marketing to be highly beneficial, how can you not believe what they have to say and the proof of how the process works?

So, who uses video marketing? 

More specifically, almost everyone does businesses and marketers who have greatly benefited from using video content for brand awareness.

Still not convinced? Let’s take it from those who genuinely believe it works simply because they have experienced it.

According to marketers, no less than 85% of businesses use video as a potent marketing tool.

The number goes higher, as 96% of marketers have embraced ad placements using videos.

Based on similar findings from The Content Marketing Institute, both its B2B and B2C research found that:

71% of B2B (business-to-business) marketers are into video marketing.

Additionally, 66% of B2C (business-to-consumer) marketers have adopted video marketing.

Improving your Video Marketing ROI

Now that you’re finally aware of marketing ROI and what a good ROI is, the following steps will provide critical insights for future marketing efforts and optimize performance. 

Let’s take a look at how to improve ROI for long-term marketing success:

Establish and communicate clear goals

Marketers must realize that they should establish clear goals to indicate the external factors that make up their ROI and how these unique factors measure it accurately.

Determine the Costs from successful campaigns

Establishing your video marketing costs like creative development, professional services, agency fees, and overhead, among others, must be carefully documented and referenced to formulate their marketing ROI strategies and identify which metrics to include in their ROI computations. 

Produce superb quality video marketing content

Let’s face it, and high-quality video boosts brand image. 

A professionally-produced and superb quality video impresses viewers that the brand is more successful and reliable. Viewers are also likely to watch the entire length of the video.

Consequently, low-quality content adversely impacts brand reputation since poorly crafted video material can turn viewers away from your brand.

Without the right equipment, your video ad material will never reach the premium quality levels of professionally produced content. 

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