New research from Videology and Gain Theory has analysed the impact of video in driving offline, in-store sales – revealing positive return on investment figures.
Gain Theory, a marketing foresight consultancy, worked with a group of Videology’s advertisers, using their first party media spend, sales and campaign data to try and understand what the ROI of video looks like, how it compared to TV, and to understand the impact of inventory quality.
The brands in the study – titled Video Works – had varying budget levels, target audiences and creative messages for their TV and video campaigns, and the results showed that all brands had a positive ROI on their video investment, with 95% of sales occurring offline.
The gross revenue ROI of video relative to TV was, on average across the study, 1.27 times higher – meaning that for a brand with a £2 ROI for TV, this would be £2.54 for video.
Videology made it clear that video does not “unilaterally deliver a better ROI or scale than TV” – however, when part of an appropriate AV mix, it “does deliver a more effective ROI.”
“We looked at the current percentage of video as part of the planned AV budget for the brands in this study,” said Matthew Chappell, partner, Gain Theory.
“This averaged at 5%, ranging from 3% to 8%. An optimal mix, i.e. the investment into video creating the greatest offline sales impact, is on average 12.8%, a huge 156% growth.
“To re-state this, brands are currently spending around 5-10% of their AV budget on video. To maximise the ROI from AV investment, the percentage of video, in most cases should increase.”
Quality rules
The study also demonstrated the impact of inventory quality on ROI, showing that clients who have higher percentages of video budget devoted to broadcast content have a higher video ROI relative to TV.
When broadcast content reaches 60% of the investment mix, the video ROI relative to TV can be as high as 250% (i.e. video ROI is 2.5x higher than TV).
“Broadcast video, the most premium environment, which in turn creates the most impactful ad opportunities, really matters,” the report states.
Depending on each brand’s KPIs, broadcast video “should play a significant part” of the video supply mix.
“Video certainly performs as a medium in driving sales activity offline – with every case study showing a positive ROI,” said Rich Astley, UK MD, Videology.
“Econometric modelling provides the closest we have to empirical evidence of the relationship between media consumption and purchase activity in bricks and mortar stores so its great to see the power of linear TV and video in combination.
“When you look at consumption trends it instinctively makes sense but this is the first time we’ve been able to really objectively prove it.”
A copy of the report is available for download here.
