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In digital video advertising, marketers have traditionally relied on the medium to deliver branding objectives rather than focusing on sales goals. However, our recent research revealed that digital video is at the inflection point of its adoption curve: It's moving from a branding tool to a sales and branding tool.

We see, at its simplest, three reasons for this change, as evidenced by our qualitative and quantitative survey of 200+ brand marketers in retail, CPG, auto, and travel:

  1. Marketers are under constant pressure to deliver improved sales returns, which a recent Russell Reynolds report directly linked to increased CMO turnover.
  2. Recent developments in attribution analytics are providing more granular measurement of sales-lift, to a point where this evolving tool can finally identify the specific sales contribution of digital video.
  3. Advertisers are learning that mastering four key skills will lead to strong digital video ROI.

Major Findings

  • Digital video will become a key revenue generator for marketers. Fully 65% of marketers say digital video is growing in importance for driving offline sales, the study found. That near-future view contrasts with the current situation: Marketers are more likely to view digital video as a branding tool, with more than half seeing it as a superior tool for building brand awareness and favorability, telling their brand's story, and connecting with consumers emotionally.
  • Marketers' perceptions of digital video are shifting. The study showed a disconnect between marketers' perceptions and their experience with digital video: 87% reported enjoying positive ROIs with the medium, but only 42% think it's better than other mediums at driving sales. It seems that perceptions have not yet caught up with the hard facts and marketers' actual experience.
  • The evidence shows strong potential for digital video to drive ROI. The hard behavioral evidence made clear that embracing the power of targeting, personalization, effective creative, and learning through behavioral ROI analytics are key to successful digital video ROI activation.

We also know that specific strategies can drive digital video performance even higher. Nielsen Catalina Solutions (NCS) reports that targeting digital video increases performance by 27%. In individual case studies at NCS, return on ad spend (ROAS) with digital video soars to $3 and $4 when targeting is combined with personalization. A national home improvement retailer generated a $6 ROAS with that combination, as measured by MasterCard Advisors. Moreover, a large regional Honda dealer association's ROI was as high as $7.83, as measured by J.D. Power—and that's in bottom-line returns, not top-line—with targeted, personalized digital video.

Here are ways that brands that can master these capabilities and drive higher ROI for their marketing expenditures.

ROI Results Are Driving Change

Most marketers see the powerful attributes of digital video, such as how well it fits with today's emphasis on data, targeting, efficiency, and programmatic and its tracking and personalization capabilities, which are very similar to search and display. They also say that digital video has a strong ROI.

Despite their knowledge of its positive capabilities, marketers are not as quick to acknowledge digital video's power to drive sales. Only 42% of marketers consider digital video a superior tactic for driving sales, even though 87% report seeing positive ROI with the medium. So why the disconnect?

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image of Jim Spaeth

Jim Spaeth is a co-founder and partner at Sequent Partners, a specialized media metrics and brand consultancy company.

LinkedIn: Jim Spaeth