Measuring the Return on Investment (ROI) of Your Explanatory Video: A Detailed Guide for Guaranteed Results
In today's digital landscape, businesses are increasingly turning to explainer videos to enhance their onboarding, education, and marketing efforts. But how can you measure the success of these videos and determine their return on investment (ROI)? Here's a step-by-step guide to help you calculate the ROI for your explainer videos.
**1. Define Clear, Measurable Goals**
Begin by identifying what you want your explainer video to achieve. Whether it's driving sales, increasing brand awareness, generating leads, or improving customer education, set specific, quantifiable targets tied to business outcomes. For example, aim to increase conversions by 10% or generate 50 new leads per month.
**2. Identify All Investment Costs**
Calculate every expense involved in creating and distributing the video. This includes production costs such as equipment, software, studio rental, voice talent, editing, animation, and graphics. Additionally, consider promotion costs like paid ads, influencer outreach, and social media promotion. Don't forget to account for indirect costs such as salaried time for internal teams, project management, and distribution efforts.
**3. Track Returns from the Video**
Measure the value generated by the video. This can include direct revenue from sales or sign-ups traced directly to the video, lead value if the goal is lead generation, and other benefits such as quantitative brand lift, increased website traffic, or higher engagement rates.
**4. Choose and Measure Relevant KPIs**
Select key performance indicators that align with your goals. Common metrics for explainer videos include view count and watch time, click-through rate, conversion rate, and engagement metrics like comments, shares, and likes.
**5. Use Attribution Tools to Link Outcomes to the Video**
Use tools like UTM parameters, CRM integration, and platform analytics to link video views to business outcomes. This helps you attribute conversions, sales, and leads to the video and understand its impact on your business.
**6. Calculate ROI**
Use the standard ROI formula:
\[ \text{ROI} = \frac{\text{(Return – Investment)}}{\text{Investment}} \times 100\% \]
If your returns are non-monetary (e.g., brand awareness), assign an estimated value or use proxy metrics (e.g., cost per lead, cost per view).
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**Essential Tools for Measurement**
To accurately calculate the ROI of an explainer video, key tools include video analytics, web analytics, CRM systems, marketing automation platforms, A/B testing tools, and strategic placement tools. Examples of these tools include YouTube Studio, Google Analytics, HubSpot, Salesforce, Google’s Campaign URL Builder, Hotjar, TubeBuddy, and VidIQ.
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**Example Calculation**
Suppose your explainer video cost $5,000 to produce and promote, and it directly generated $20,000 in sales traceable to the video:
\[ \text{ROI} = \frac{($20,000 - $5,000)}{$5,000} \times 100\% = 300\% \]
This means you earned $3 for every $1 invested.
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By following these steps and using the right tools, you can accurately assess the value of your video content and optimize future video marketing efforts. A well-made explainer video is an investment, not just an expense, delivering measurable returns when strategically planned, produced, and promoted.
In the process of calculating the return on investment (ROI) for an explainer video used in marketing efforts, it's important to not only identify upfront costs like production, promotion, and salaries, but also consider indirect costs such as project management and internal team time. Additionally, selecting relevant key performance indicators (KPIs) like view count, watch time, and conversion rate will help gauge the success of the video in achieving its set goals, such as driving sales or increasing brand awareness.
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