Video Marketing

ROI Calculator for Lead Gen Videos

William Gadea 12.27.2016

Are your marketing investments creating value for your company?

Before you spend on an asset, it’s useful to calculate what sort of results you will need to justify its cost. And, after you make the investment, taking stock of your returns will help you learn so that you perform better at the next opportunity.

As important as these calculations are, they are not always simple. That’s why we’ve created this ROI calculator for videos with a lead generation objective. (If you are making a video with a different objective, you can still calculate ROI, but this tool might not be the best way to do it. Here’s a place to start.) We do not collect data from these fields; feel free to play around with different scenarios in privacy!

If you are a current customer, or are thinking about becoming one, we want the video you make with us to create value for you.

1. Gross Profit Margin (%)
2. Average Sale/Contract ($)
3. Closing Rate (%)
4. Previous Number of Monthly Visitors
5. Subsequent Number of Monthly Visitors
6. Previous Conversion Rate (%)
7. Subsequent Conversion Rate (%)
8. Amortization Period (months)
9. Cost of Video ($)
10. Additional Gross Revenue
11. Video ROI
Courtesy of IdeaRocket

Directions: Establish two comparable periods over which to compare your results (before and after you introduce your video.) These periods should be long enough to provide you with a good sample of data, but not so long as to delay the receipt of the information beyond when it is useful. If your business has seasonality, consider using the same period from a past year.

Inputs

Line 1. Gross profit margin is the percentage of your total revenues that is profit after your cost of goods sold (COGS) is deducted but before fixed expenses (overhead) are subtracted.
Line 2. This is the average revenue from each of your sales or contracts. If you get a lot of repeat customers or recurring revenue, you might consider using average customer lifetime value for this field.
Line 3. This is the percentage of your leads that become customers.
Line 4. This is the number of monthly visitors that reached the page where your video will live, in the ‘before’ period.
Line 5. This is the number of monthly visitors that reach the page where your video will live, in the ‘after’ period. This number should be greater than line 4 only if you anticipate that social media or email distribution of the video might drive new visitors to your site. Any increase in visitors will be attributed to the video.
Line 6. This is the percentage of visitors to your page (line 4) that become leads, however you define that, in the ‘before’ period.
Line 7. This is the percentage of visitors to your page that become leads, in the ‘after’ period. Hopefully, your video will increase this percentage.
Line 8. This is the number of months over which the tool will calculate your returns. Enter a number that represents the likely life of the video. (24 months is a serviceable default value.)
Line 9. This is how much you spent, or anticipate spending, on a video.

Outputs
Line 10. Additional gross revenue: This is the amount of additional sales that your video has created, or is likely to create. If you would like to make a spreadsheet to recreate this calculator and perhaps add additional inputs, here is how we make the calculation: =((5*7*3*2)-(4*6*3*2))*8
Line 11. This is the Return on Investment that your video has yielded, or is likely to yield. Any amount greater than 0% is a positive return. Calculation: =((1*10)-9)/9

If you are interested in animation for business, check us out!

William Gadea

William Gadea

William Gadea is the Creative Director and Founder of IdeaRocket.
William Gadea

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