My Quest For A Magic Number – How I Discovered The Value of a View on YouTube11 min read
How I Discovered the Value of a View
My quest to find a financial model to measure ROI and Performance of YouTube marketing.
It Started With a Simple Question
The conversation started out simply enough, and like so many others that I have every week. I was talking with an executive at one of the companies we work with about their YouTube strategy and its performance.
She said that she loved the story they were telling with video.
And then she asked me: “Eric, we measure everything in our marketing – we can measure our PPC, display, events, webinars, and other marketing channels. But when it comes to video and YouTube, it’s not clear what the ROI is. We seem to be purchasing views at a lower cost than most other companies, but what value is a view to us? How do we know views have any value to us, separate from what others are willing to pay for them? How much more or less would we sell if we purchased several thousand more/less views? What’s the value of a view?”
And while that is a simple question, it turns out the answer is much more complicated.
Why Measuring Matters – It’s All About Performance
Brite’s software is designed to bring performance marketing to video. We help our customers maximize the performance and ROI from video marketing. How can we deliver on that promise if we don’t have a way to measure the value of this performance and ROI?
There’s No Shortage of Data, But Few Answers
eMarketer forecasts the video advertising market will reach nearly $20 billion by 2020. YouTube revenues last year were near $10B in 2016. Surely there was a way to measure these investments.
It Got Personal
This became a personal issue for me. See, I’m the son of a CFO and I grew up with metrics in my DNA. I studied some finance at Berkeley and even did an internship at Lehman Brothers during college. For a long time, I thought I’d be a Wall Street geek (before I found how creative software could be). My 20-year software career has been built around data and precision. So while I deeply love creative and design, I’m a creature of data, so I just had to figure this out.
No Luck Searching Google
I decided to dig in and see what I could learn. I started Googling and while I found some good tidbits on brand lift, that is only telling one part of the story…and lift is really an advertising metric and not a performance marketing metric.
I Asked 20 People and Got 20 Answers
Then I turned to my network and asked 20 of the smartest people I know in the business. I spoke with founders of successful ad tech companies, CEOs of mega advertising agencies that control billions in media spend, and growth hacking marketers. I asked analysts and finance experts. The conversations were enlightening, but the funny thing was, nobody had the same answer. How could billions of dollars be invested every year without a clear way to measure value?
Wall Street Figured This Out Long Ago
This confounded me. In the finance world, there are common, established measurements to value portfolios of stocks, bonds, options, and derivatives using metrics like net present value (NPV), discounted cash flows (DCF), Yield, Discount Rates. These definitions and metrics let everyone use a common framework to understand the performance of investments. A similar model didn’t exist in the world of video marketing as far as I could tell.
How Can We Deliver $100,000,000 in Value if We Can’t Measure Value?
It occurred to me that if Brite is going to realize our goal of creating $100,000,000 in value for our customers in the next few years, then we must have a solid and transparent way to answer the question of how to value a view.
And so began my quest to develop a framework to measure the value of a view and model the economic impact of video marketing.
I spent many weeks working on this. Many many late nights and lots of coffee and countless whiteboard sessions.
The Results? Finally! Marketing the CFO Will Love
I’m happy to say that I think I cracked the code. The framework outlined in the ROI Guide arms marketers with the data and model to help them justify their investments in video marketing. This allows marketers to compare how video performs relative to other marketing channels and align investments with priorities.
Join the Conversation
My goal in developing this was to start the conversation and encourage a way of thinking. I know there are others out there that have a lot to add to this conversation.
I hope this framework is helpful to you as you build a data-driven, performance marketing strategy that makes video marketing a measurable performance channel for your marketing strategy.
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