The Economics of Video Ads: Why Your ROI Demands You Start Today
If you're still debating whether video marketing is worth the investment, you're asking the wrong question. The real question isn't whether you can afford to produce video content—it's whether you can afford not to.
In our most recent podcast, we broke down the hard economics behind video marketing that every business owner needs to understand. The numbers are so compelling, they'll likely change how you think about your entire marketing funnel.
You can download this FREE PDF breakdown here as well.
The Retargeting Reality Check
Let's start with what you already know: retargeting works. It's the engine that drives actual conversions and the outcomes you're looking for. But here's what most businesses miss—they're building their retargeting audiences in the most expensive way possible.
The traditional approach goes like this: Run ads to drive traffic to your website, then retarget those website visitors. Simple enough. But when you look at the costs, the math becomes painful.
Current average costs across major platforms:
Google clicks: $3-5
LinkedIn clicks: $3-5
Meta clicks: $3-5
So you're paying $3-5 just to get someone into your retargeting pool. Meanwhile, CPMs keep rising every year, making this approach increasingly expensive.
The Video View Arbitrage Opportunity
Here's where video changes everything. While you're paying $3-5 for a website click, you can get video views for pennies on the dollar. We're talking about 1-2 cents per view for someone who watches your entire one-minute video.
Let's do the math:
Traditional approach: $3-5 per retargeting prospect
Video approach: $0.01-0.10 per retargeting prospect
With the same budget, video gives you potentially 15 times more people in your retargeting audience. But the benefits don't stop there.
The Quality Multiplier Effect
Not only are video viewers cheaper to acquire, they're also higher quality prospects. When someone watches your entire video, they're demonstrating genuine interest and engagement with your brand. They've invested time to understand who you are, what you do, and how you solve problems.
This engagement translates directly into better conversion rates. Video viewers who enter your retargeting funnel convert at significantly higher rates than standard website visitors, making your cost per acquisition dramatically more economical.
Why Video Tells Your Story Better
Beyond the pure economics, video excels at something that's becoming increasingly important in today's complex business landscape: storytelling.
Modern B2B solutions are more sophisticated than ever. Trying to communicate your value proposition through a static banner ad or simple graphic is like trying to explain a symphony through sheet music alone. It can be done, but you lose so much in translation.
Video allows you to:
Clearly articulate the problems you solve
Demonstrate how your solution works
Build trust through authentic communication
Address multiple pain points in a single piece of content
As one expert noted, "You can't do that through a static banner. You can, but it takes you hundreds" of different creative assets to achieve what one well-crafted video can accomplish.
The Consumer Behavior Shift
Here's another factor working in video's favor: people don't read anymore, at least not in the way they used to. Video has become the preferred method for consuming content, especially at the top of the marketing funnel.
Vertical video formats, in particular, are performing exceptionally well because they align with how people naturally consume content on their mobile devices. If you're not meeting your audience where they are and how they prefer to consume information, you're fighting an uphill battle.
The Real Cost Analysis
Yes, producing quality video content requires an upfront investment. You might spend $3,000-5,000 or more on professional video production. But when you compare this one-time cost against the ongoing expense of driving traffic through traditional methods, the ROI becomes clear.
Consider this scenario:
Traditional approach: Spend $1,000 on ads, get 200-300 website visitors for retargeting
Video approach: Spend $1,000 on video ad promotion, get 10,000+ engaged video viewers for retargeting
Even accounting for the initial production costs, you're building a much larger, more engaged audience that will drive better results across your entire marketing funnel.
FREE PDF DOWNLOAD detailing the cost / benefit analysis.
The Scaling Advantage
Perhaps most importantly, video marketing creates a foundation for sustainable growth. When your cost per acquisition is lower and your conversion rates are higher, you earn the right to request larger marketing budgets. You can demonstrate clear potential for growth and show actual results that justify increased investment.
This creates a virtuous cycle: better performance leads to larger budgets, which leads to more video content, which leads to even better performance.
The Complex Solution Communication Challenge
In today's marketplace, businesses are solving increasingly complex problems. Whether you're offering enterprise software, specialized consulting, or innovative services, your solutions require explanation. Static images and text-based ads simply can't convey the depth and nuance needed to communicate complex value propositions effectively.
Video breaks through this limitation. In sixty seconds, you can walk prospects through a complete problem-solution narrative that might take hundreds of static ads to communicate effectively. The economics become even more favorable when you consider how much you'd spend creating and testing all those individual static creative assets.
Making the Decision
The question isn't whether video marketing works—the data clearly shows it does. The question is whether you're ready to embrace a more economical, more effective approach to building your marketing funnel.
Every day you delay is another day of paying premium prices for inferior results. Your competitors who embrace video marketing aren't just getting better ROI—they're building larger audiences, achieving higher conversion rates, and earning bigger budgets to accelerate their growth.
The mathematics are undeniable. The consumer behavior trends are clear. The competitive advantage is real.
Your Next Steps
The economics of video marketing make a compelling case for immediate action. While the upfront investment might seem daunting, the long-term benefits—cheaper audience building, higher conversion rates, better storytelling capability, and sustainable scaling advantages—make video not just a nice-to-have, but a business necessity.
Stop calculating the cost of producing video content. Start calculating the cost of not producing it.
Watch the FULL EPISODE for additional insights on how often to update the creative in your digital advertising campaigns.
Watch the Full Episode on YouTube
Listen to the Full Episode on Spotify
Want personalized guidance?
Schedule a free discovery call to discuss your specific digital advertising goals:
https://link.eic.agency/widget/bookings/eic_initial_discovery_start
This article is based on insights from the Click and Mortar podcast hosted by Mike Patterson and Dustin Trout, digital marketing experts focused on helping businesses maximize their advertising ROI.
