Blog / October 18, 2016

Digital Video + Outcome-Based Marketing: The Future Is Now

By Melanie Franke

What exactly does it mean for an advertising medium to be at its inflection point?

The primary thesis in Sequent Partners‘ new research, Digital Video at the Inflection Point, is that digital video is currently in exactly that spot. As defined, an inflection point is the point on a concave curve separating the upward and downward arcs. It is essentially the point where the line changes direction completely–which explains exactly where digital video is right now, moving from simply a branding medium to a performance marketing tool.

Digital video was always measured by metrics such as completion and CTRs, which say a lot about the behavior of the viewer (read: not even a known customer quite yet) but fail to report on actual sales. New technology and advancements in the measurement of digital marketing show that video can be tied directly to sales, and marketers are taking note.

However, as stated, digital video is currently sitting on that cusp of adoption as a performance marketing tool. Let’s take a look at the findings and what exactly will take digital video over the edge to being widely perceived as a great medium for driving sales.

Digital Video at the Inflection Point

Branding, Sales or Both?

According to the study, 55 percent of marketers still see digital video as primarily a branding medium; however, 40 percent of that same group say it’s a superior tool for driving sales. The relative proximity of these two data points shows that digital video is creeping up on the performance marketing adoption curve.

Performance Marketing_1

“We use the power of video to engage the user, drive digital traffic and have consumers engage with sites,” says Jeff Cronin, Hyundai National Media Manager at Innocean. “We pull them down the funnel towards considering the brand.”

Clearly, digital video starts as a branding tool but can be employed at all phases of a campaign. As marketers start to use digital video for lower-funnel tactics, the medium will naturally move to the performance marketing category.

Perception Needs to Catch Up with Reality

One of the most interesting findings in the study was that 87 percent of marketers experienced positive ROI with digital video, but only 42 percent say they think the medium is better than other media at driving sales. Of this finding, Jim Spaeth and Alice Sylvester of Sequent Partners said, “It seems that perceptions have not yet caught up with the hard facts and marketers’ actual experience.”

But why this disconnect?

An explanation could be that marketers are struggling with measuring and tracking digital video ROI. Those that have figured out the measurement side know that it works while others are still testing and optimizing for the right (or better) KPIs.

It could also be a factor of tight marketing budgets affecting the overall video strategy. Marketers are all too aware that a typical digital video campaign is not cheap. Oftentimes, they’ll launch a campaign with whatever budget they can spare instead of investing more at the outset, which will provide more value in the long run. “The majority of marketers see the powerful digital attributes of video,” Sequent Partners says in the study. “It fits with today’s emphasis on data, targeting, efficiency and programmatic. And it can be tracked to prove its impact and personalized like search or display. They also say that digital video has strong ROI.”

Marketers Have Their Finger on the Digital Video Trigger

Once ROI is proven, marketers are ready to move more spend to digital video. In the study, 74 percent of marketers said they would move money to digital video if they had proof that it was more efficient than other tactics at driving online sales. And marketers have already picked out the areas where they’d move budget for digital video, with new video budget primarily pulling from circulars, mobile, email and social.

However, the study shows that marketers ahead of the curve have experienced positive ROI from digital video has already been proven–it’s just that marketers aren’t aware of the results others in their industry are experiencing.

Performance Marketing_2

Nielsen Catalina Solutions released a benchmark study in June 2016 showing that the average ROAS for digital video, across industries, was $1.53. Sequent Partners’ research examined the effects of targeting and personalization on ROAS for digital video and found a much higher average of $3.92, showing that these additional features really drive the value of a digital video campaign, enhancing its performance marketing capabilities.

“If you target a campaign to the right buying audience, you can literally more than double the lift,” says Robin Opie, Vice President of Data Science at Oracle Cloud. Seeing this success, marketers are likely to move more of their budget to digital video initiatives in the near future.

About the Study

Sequent Partners conducted a quantitative survey of more than 200 brand marketers and 15 qualitative interviews with brand marketers in the CPG, retail, travel and auto industries. Marketers from brands like Bank of America, Kelloggs, Clorox and P&G were interviewed, and titles in the survey ranged from CMOs and SVPs of marketing and sales to regional marketing leads and social media & content managers. The interviews also encompassed measurement partners such as Nielsen Catalina Solutions, JD Power and Oracle Cloud.

Get all of the insights by downloading the full research report.

More about the author

Melanie Franke Content Marketing Manager

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