The use of streaming video online has steadily been rising for years. The use of Netflix instead of cable, Youtube’s growth and popularity for the last decade plus, and other services for video have continued to become more significant and used more often as the internet grows.

In fact, video traffic has risen so much that the majority of internet traffic across the world now is simply used for video streaming.

ROI for video – Statistics and Facts:

In May 2015, Cisco released the complete VNI Global IP Traffic Forecast, 2014 – 2019. Global highlights from the updated study include the following projections:

• By 2019, there will be nearly 3.9 billion global Internet users (more than 51 percent of the world’s population), up from 2.8 billion in 2014
• By 2019, there will be 24 billion networked devices and connections globally, up from 14 billion in 2014
• Globally, the average fixed broadband connection speed will increase 2.2-fold, from 20.3 Mbps in 2014 to 42.5 Mbps by 2019
• Globally, IP video will represent 80 percent of all traffic by 2019, up from 67 percent in 2014

This is significant for businesses looking to grab and convert more customers. Video is not only dominating internet traffic, it can also increase your conversions if done right.

Making effective explainer videos is important, and should be created with an open mind.

The return on investment for business has many claims across the industry for different providers with different case studies and different business models.

However the trend is clear; to stay competitive, and engage your customers in a new way, video is a vital tool you can use. Whether your goal is to increase brand awareness, increase sales, or educate your customers, video is a great option to look into. Online video use will continue to grow over time as the internet does and more people become connected.

What is an Explainer Video?

An explainer video is typically a short video (usually 60 to 120 seconds long) that explains a business idea, product, or service in a simple and engaging way. These videos often use animations, voiceovers, and dynamic storytelling to break down complex information and present it in a format that is easy to understand.

The versatility of explainer videos means they can be used across a wide range of platforms, from company websites and social media to email marketing campaigns and product demonstrations. They can explain product features, illustrate how a service works, or clarify difficult-to-understand concepts in a way that text-based content often cannot achieve as effectively.

Why Explainer Videos Work

Before diving into the ROI of explainer videos, it’s important to understand why they are such a powerful tool. Here are some of the reasons explainer videos work so well:

1. Engagement: Video content is one of the most engaging forms of communication. Research shows that consumers are far more likely to watch a short video than read a lengthy article or product description. According to studies, viewers retain 95% of a message when they watch it in a video, compared to just 10% when reading it in text form.
2. Simplicity: Explainer videos simplify complex concepts. Businesses often struggle to explain what makes their product or service unique in a few sentences. Videos allow them to break down these ideas with the help of visuals, narration, and storytelling, making it easier for the audience to grasp the key message.
3. Multi-Platform Versatility: Explainer videos can be shared across multiple platforms and used in a variety of marketing strategies. Whether it’s on social media, embedded in email campaigns, or prominently displayed on a company’s homepage, videos have the power to reach audiences wherever they are.
4. Emotional Connection: A well-crafted explainer video not only conveys information but also taps into the emotional aspect of consumer decision-making. Storytelling, combined with visuals and sound, can evoke emotions that resonate with viewers, fostering a deeper connection to the brand or product.

The ROI of Explainer Videos

Now that we’ve established why explainer videos are so effective, let’s dive into the return on investment (ROI) they offer. ROI is a critical metric for businesses, as it helps them measure the profitability of their investments in marketing and communication strategies. Explainer videos can generate significant returns in a variety of ways:

1. Increased Conversion Rates

One of the most direct ways explainer videos can boost ROI is by increasing conversion rates. Numerous studies have shown that businesses using explainer videos on their landing pages or product pages see higher conversion rates compared to those that rely solely on text-based content.

A study by EyeView Digital found that using video on landing pages can increase conversion rates by up to 80%. Another report from Wyzowl shows that 84% of consumers are convinced to buy a product or service after watching a brand’s video.

Here’s why videos are so effective at driving conversions:

• Clarifying Value Propositions: Explainer videos clearly articulate the benefits of a product or service, helping potential customers quickly understand its value. This reduces confusion and hesitation, which are common barriers to conversion.
• Trust Building: Seeing a product in action or hearing how a service works in a video can build trust with potential customers, making them more likely to complete a purchase.
• Calls to Action (CTAs): Explainer videos can incorporate direct and compelling calls to action, encouraging viewers to take the next step, whether it’s signing up for a service, making a purchase, or contacting the company for more information.

2. Enhanced Customer Understanding

A significant challenge for many businesses is explaining their unique value proposition to potential customers in a clear and engaging way. This is especially true for companies with complex or technical products and services. If a customer doesn’t fully understand what a business offers, they are far less likely to make a purchase or engage further.

Explainer videos solve this problem by simplifying complicated information and presenting it in a way that’s easy for anyone to understand. A well-made explainer video can answer common customer questions, explain how a product works, and show off its benefits in a format that’s both entertaining and informative.

When customers understand a product better, they are more confident in their purchasing decisions. This increased clarity often leads to more sales, less confusion, and higher levels of customer satisfaction—all of which contribute to improved ROI.

3. Lower Bounce Rates and Longer Site Visits

For businesses that rely on web traffic, the time visitors spend on a site and their engagement with the content is crucial. High bounce rates (where visitors leave after viewing just one page) and short site visits can be signs that users aren’t finding the information they need quickly enough.

Explainer videos can significantly reduce bounce rates by immediately capturing the viewer’s attention. When a video is present on a page, visitors are more likely to stay and watch rather than clicking away. This increases the average time spent on a website, giving businesses more time to convey their message and convert visitors into customers.

Furthermore, longer site visits and lower bounce rates can have a positive impact on a website’s SEO (Search Engine Optimization), as search engines tend to favor sites with lower bounce rates and more user engagement. This can lead to higher rankings in search engine results, which in turn drives more organic traffic and enhances ROI.

4. Improved Customer Retention and Loyalty

While explainer videos are highly effective at acquiring new customers, they can also play a crucial role in retaining existing ones. Customer retention is essential for maximizing the lifetime value of each customer, and explainer videos can help in several ways:

• Onboarding: For businesses that offer complex products or services, onboarding new customers can be challenging. Explainer videos are a great tool for walking new users through the setup process or teaching them how to use a product effectively. This ensures a smoother customer experience and reduces frustration.
• Training and Support: Providing ongoing support to customers through educational videos can improve their satisfaction and loyalty. For example, a company that sells software might create explainer videos that show users how to use advanced features, helping them get the most out of the product.
• Building Trust and Authority: Regularly producing explainer videos that educate or provide value to customers beyond the initial sale can position a business as an authority in its industry. This builds long-term trust and encourages repeat purchases, which are key to improving customer retention.

5. Cost-Effective Marketing

Explainer videos offer an excellent return on investment because they provide a versatile marketing tool that can be reused across multiple platforms and campaigns. Once an explainer video is produced, it can be shared on social media, embedded on a website, included in email marketing campaigns, and even used in paid advertising.

The beauty of video content is its longevity. Unlike some forms of content that may become outdated quickly, explainer videos can remain relevant for years if the core message remains the same. This means that businesses can continue to reap the benefits of a well-made explainer video long after the initial investment has been made.

Additionally, advancements in technology have made it easier and more affordable to produce high-quality explainer videos. Whether a business opts for an animated video or a live-action one, the cost of video production has become much more accessible, especially compared to the high cost of traditional advertising methods.

6. Boost in Social Media Engagement

Social media platforms are one of the best places for businesses to reach a wide audience, but standing out on these platforms requires content that grabs attention. Explainer videos are highly shareable and tend to perform well on social media because they are visually engaging and easy to consume.

On platforms like Facebook, Instagram, LinkedIn, and Twitter, video content typically generates higher levels of engagement (likes, shares, comments) compared to text or image-based content. A report from Social Media Examiner found that 60% of marketers used video in their social media content, and 57% reported that it generated the highest levels of engagement.

When users share an explainer video with their own networks, it amplifies the brand’s reach, essentially providing free advertising through social sharing. This organic distribution can result in a significant boost in brand awareness and visibility, all of which contribute to ROI.

7. Increased Email Marketing Effectiveness

Email marketing remains one of the most effective ways to nurture leads and convert them into customers. However, getting recipients to open and engage with marketing emails can be challenging, especially with inboxes overflowing with promotional content.

Adding an explainer video to an email can significantly increase its effectiveness. According to a study by Campaign Monitor, just including the word “video” in an email subject line can increase open rates by 19%. Furthermore, emails that include a video see click-through rates that are up to 65% higher than those without.

Explainer videos in emails can help businesses convey their message quickly, making it easier for recipients to understand the benefits of a product or service without having to read through lengthy text. This increased engagement can lead to more conversions and, ultimately, a higher ROI for email marketing campaigns.

Conclusion

As an animator and designer who’s been working in entertainment, elearning and advertising. I can attest that a well-crafted messages in video can and will impact your sales and business. I do not provide statistics or percentages for sales because every client’s requirements are different for their message, and the impact on sales and conversions can vary depending on a video’s execution and marketing online.

However I will say that a great majority of clients I have helped have gone on the praise how a smartly executed explainer video has impacted their sales and helped them to grow their business faster and more affectively.

The return on investment is clear! Video is where it’s at.

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