How do you calculate the ROI of video content?
“How can I calculate the ROI on video content?”
It’s a great question! Many experts agree that video is one of the best sources of ROI in marketing, but the calculations can be a bit tricky. There are two categories for calculating the ROI that video (and all of your marketing) falls into: Immediate ROI and Brand Equity ROI.
Immediate ROI is the easiest to track. For example, if a customer clicks on a Facebook video ad for a product, goes to your website, and makes a purchase, that ROI can be measured simply by calculating the conversion rate.
How many people see the ad? Of that, how many click to get to the website? Once on the website, how many people make a purchase? What’s the average value of these purchases?
Once you have this information, it’s easy to compare your investment in the video content to the purchases made from your website through this funnel analysis.
Another use case for immediate ROI is training videos. How much are you spending training employees? If a video can accomplish some portion of that training, multiply the previous training cost per employee over the course of the lifespan of the video.
Brand Equity ROI is the value added to your brand, which is more challenging to calculate, though many argue more important.
Before looking at how video content builds brand equity, let's start by looking at what branding is. Marty Neumeier defines a brand as “a customer’s gut feeling about a product, service, or company.”
The brand lives in the mind of the consumer, not on paper, in a store, or even in a video. What do you think of when you think of Nike? It's not just about the product - it's a lifestyle mentality.
This is brand equity: the value of a brand as determined by customers.
While building brand equity can be difficult to tie to individual purchases, it is easy to tie to the overall success of a brand.
While only a small percentage of Apple products are sold in retail Apple stores, a vast majority of Apple’s consumers have visited an Apple store.
When evaluating the ROI of Apple retail stores, an Immediate ROI analysis would only show revenue from the products purchased or serviced in store. However, many customers test out products in Apple stores, and purchase them at a later date.
This Apple Store experience contributes to Apple’s brand equity, and likely provides a much larger (though less quantifiable) increase in Brand Equity ROI.
So, which form of investment should you focus on for your business?
Both! Apple and Nike run numerous different video campaigns, some focused on building brand equity through lifestyle content, and others directly focused on driving sales.
Most research shows that consumers need to see marketing material 7 times before they make a purchase, so both forms of content are critical to first establish your brand, promote sales, and then continue to support your brand values and identity.
What have you been doing to build your brand equity?