There is probably no more important acronym in business than ROI. Every cent a business spends should not only be accounted for, but should help bring in a greater amount of revenue. Your workforce is an investment, your buildings, equipment and other capital is an investment and your marketing materials are an investment. And they should all be doing their part to help bring in more revenue to the company.

Measuring ROI helps you decide where to spend money and what to focus on in the future. When it comes to animated videos, we often hear our clients talk about them in terms of “cost.” We encourage people to think and talk about them in terms of how much of an investment they’ll need to make. Because, like stocks or property or any other type of investment, they should ultimately increase in value and make you money over time.

Calculating the ROI of an animated video is relatively simple (except for the fact that you have to math).

Since ROI is all about bucks, you’ll need to assign a dollar value to whatever it is you’re measuring, whether it’s sales, user registration, leads, brand awareness or something else.

Things like increasing sales and boosting registration are easy to measure because the objective itself is the measurement. Other objectives are a little less clear and not as automatic as simply counting registrants or looking at top line revenue. If you are generating new leads, you can connect your form to your CRM software or place a pixel on your site that will report to your Google Analytics.

To measure something like awareness, you can conduct surveys and monitor Google searches of your brand or any terms related to it that you’re interested in. You can also monitor activity that is related to the video on your website. For education, particularly if it’s in a formal setting, a quick quiz at the end can tell you if people learned what you wanted them to.

Jeff Kear, co-founder of online event management software platform Planning Pod, says the company assigns a dollar amount to all leads that come to the company’s website based on its free trial signup rate and average revenue per customer.

Based on that calculation, each lead who signs up for a free trial is worth around $50 each to Planning Pod. It’s impossible to know exactly what actually triggers someone’s decision to try the software, Kear says, but the company heavily weights the two clicks before someone signs up, and each of those clicks is given a weight of $25 each.

“We have set up our goals in Google Analytics so that we can track the two clicks prior to a site visitor signing up for our free trial, and one of the items that we track is clicks on our animated explainer video (with each click being a view),” Kear explains. “Based on that, we can determine our ROI for our explainer video based on number of clicks times $25.”

This is a great way to show you how to use your analytics to determine a dollar value for your leads or whatever it is you are measuring.

You also need to pick a pre-video timeframe to measure against for comparison. Like, look at six months or a year prior to placing your animated video on your site and compare it to the same timeframe after you’ve placed it to see how many people visited your site because of your animated video.

When you have your dollar value for your leads and you have figured out how many new leads your video has brought in, you can figure out the gained value by dividing the number of leads in the before period of your comparison to the after period in your comparison.

Subtract the cost of your video from the gained value figure and then divide that number by the cost of the video and you’ll get your ROI in a percentage.

Everything is variable depending on your specific company, obviously, but it is not at all uncommon to see a 20% increase in leads when you employ an animated video on your site. This is why we always encourage companies we work with to think of their videos as an investment. Like any good investment, it should create value for you and ultimately make money for you. To help you stay on top of ROI, we invite you to click here to use our price estimation calculator to see approximately how much an animated explainer video will cost for your organization. (You don’t even need to talk to anyone!)