How to Track, Optimize, and Improve Your ROI from Video Marketing

Just about every marketer understands that video is a must for current marketing strategy. Creating videos is an investment of time and money, however, so you want to know that you’re getting actual results.

That’s why it’s so important to understand and track your video return on investment (ROI). Instead of relying on assumptions, you can understand exactly how your video is performing, make data-driven decisions, improve the areas that are falling short, and plan impactful future campaigns. Here’s everything you need to know.

What Is a Video ROI?

Video ROI is a measurement of the profitability and effectiveness of your video marketing campaign. It compares the benefits of your video campaign to the costs of producing and distributing it to understand if your efforts are paying off.

Why Does Video Matter?

Video is an essential part of modern marketing, particularly in the digital space. According to 90% of marketers, video has a powerful ROI.

There are many benefits to video, including building trust in the audience. About 89% of people report that watching a video has been the driving force in them buying a product or service. This is particularly true of video product demonstrations for products that are complex. Seeing the product in action gives prospective customers an understanding of how it can provide real-world benefits.

Video also drives engagement, which is a key part of building brand awareness. Based on research, video generates 1200% more shares than text and image content combined.

How to Track and Improve Your Video ROI

Ready to get started with video ROI? Here are the essential steps:

Define Your Goals

Like any other marketing campaign, you need to start with a goal. Focus on SMART goals:

• Specific: Clearly define what you want to achieve, such as “increase traffic from video content.”
• Measurable: Establish criteria for measuring progress, such as “25% increase in website visits from video sources.
• Achievable: Ensure the goal is attainable based on previous traffic trends and industry benchmarks.
• Relevant: Make sure the goal aligns with your broader business objectives. More traffic can lead to higher conversion rates, which ties into your overall business goals of more revenue.
• Time-bound: Set a deadline for achieving the goal, such as “increase website traffic from video content by 25% over the next three months.”

It’s not helpful to have general goals like “get more sales from video content.” Industry benchmarks can help you set appropriate goals, but don’t rely on them too closely. Focus on your own success and improving your campaigns first.

Identify Your Target Audience

You can’t speak to your audience if you don’t know who they are. Make sure you conduct market research to understand your audience. Here are some details to focus on:

• Demographics: Age, gender, location, occupation, income
• Interests: Hobbies, passions, preferred content types
• Pain points: What challenges do they face?
• Online behavior: Preferred platforms, preferred content types, viewing behavior

Outline Your Campaign Costs

Consider all the costs of video marketing, including the time you’ll spend creating and promoting it. Ideally, you should build a buffer of 10% to 20% into your projection to account for unexpected costs, especially if you’re managing the campaign on your own.

Track Important Metrics

There are many metrics that you can use to track and evaluate your video’s performance. Some of the common metrics for videos include:

• Views: The total number of times your video has been watched, which indicates initial reach and interest.
• Watch time: The total amount of time viewers spend watching your video, which helps gauge engagement and content quality. Longer watch times suggest that the content is resonating with viewers.
• Engagement rate: A combination of likes, shares, comments, and overall interaction with the video. Higher engagement often correlates with a more interested audience and better brand perception.
• Click-through rate (CTR): The percentage of viewers who click on a call to action (CTA) in your video, such as a link to your website or product page, which indicates the effectiveness of your CTAs and how compelling your video is in driving action.
• Conversion rate: The percentage of viewers who take a desired action after watching the video, such as signing up for a newsletter or making a purchase, which ties the video performance to business outcomes and revenue.
• Cost per acquisition (CPA): The total cost of producing and promoting a video divided by the number of new customers acquired, which helps assess the financial benefits of your marketing efforts.

There are many metrics you can track based on your goals, but these are a good start.

Use Analytics Tools

Videos perform well on platforms like Facebook, Instagram, YouTube, LinkedIn, and TikTok. Each of these platforms has its own analytics and insights to help you measure your video performance. Based on your audience, goals, and budget, you may need to use other tools like Google Analytics to evaluate your data.

Determine the Financial Return You Need

Think about your financial return and what you need to see from your marketing campaign to make your video worthwhile – your “breakeven” point. Everything above that is a benefit.

For example, if you have a video marketing campaign with a budget of $10,000 per month, you need at least $10,000 in monthly sales to break even. If your average sale is $100, that means you’ll need at least 100 sales to break even on your production costs.

Calculate Your ROI

Video marketing ROI is a ratio of net profit to the total cost of your video investment, expressed as a percentage:

ROI = (Net Profit – Total Cost) / Total Cost x 100

Net profit is the total revenue generated from your video campaigns, minus the cost of goods sold (COGS). Total cost is the sum of all the expenses to produce, distribute, promote, and track videos, including time, talent, equipment, software, and promotion.

For example, if your video generated $15,000 in revenue, but your COGS was $4,000 with a total cost of $7,000, your video marketing ROI would be:

ROI = ($15,000 - $4,000 - $7,000) / $7,000 x 100

ROI = 57.14%

So, for every dollar spent on a video campaign, you earn $1.57, a positive ROI that indicates that your campaigns were profitable.

Optimize Your Campaign

In addition to tracking your ROI, you need to continuously optimize and improve your campaigns. Here are some tips:

• Writing compelling titles that grab attention and accurately describe the video.
• Make a clear, eye-catching, relevant thumbnail that will increase clicks.
• Use A/B testing to evaluate the effectiveness of thumbnails, titles, CTAs, or video lengths and see what performs best.
• Share your videos on YouTube, Instagram, Facebook, or even paid advertising.
• Be direct about the action you want the viewer to take, such as visiting a website, sharing a video, trying a product, or subscribing to a channel.
• Add captions and subtitles to ensure your videos are optimized for silent viewing, making them more inclusive.
• Create quality content that boosts your brand’s authority and credibility.

Get Better Results from Your Video Campaigns

Tracking your video’s performance with video marketing ROI can seem overwhelming, but it’s an important part of knowing you’re getting the most out of your time and effort. Use these strategies and tips to plan your campaigns, evaluate their performance, and ensure you’re getting value out of your marketing efforts.

About Author: Torrey Tayenaka

Torrey Tayenaka is the co-founder and CEO at Sparkhouse, He is often asked to contribute expertise in publications like Entrepreneur, Single Grain and Forbes. 

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