Does Video Make Money? We Crunched The Numbers.
In the digital era, we have entered the video golden age. We’ve all seen the numbers to support this. The internet is becoming a video-first medium.
As such, video is an increasingly crucial tool for you as a marketer. If it’s not now, it should be. If it’s not now, it’s gonna be.
Alright, so the numbers look good, right? Video seems really important, right? Great. But what if it’s not enough? More specifically, what if you need actual dollar amounts to see the value of corporate video? Or, as often is the case, what if you need real dollar amounts to take to your boss to show the return on investment for video production?
Well, we crunched the numbers. Video is fun and flashy marketing and it’s really fun to see your company on screen. But it may also be the best way to spend your marketing dollar. We’ll show you exactly how a video can turn a marketing director from an expense creator to a bottom line hero.
Example 1-Product Video for a B2B Company
Let’s start with a pretty important one. How much does video drive product sales in a Business-to-Business environment?
The foundation for findings for this are going to be based on the following statistic, provided from Aberdeen, via Vidyard, 2015:
“Marketers who use video grow revenue 49% faster than non-video users”
Where the 49% comes from is that the marketers surveyed not using web videos were experiencing 8.9% growth in revenue versus marketers who are using video that were experiencing 13.3% growth in revenue. The ones not using video were spending about 4.7% of their budget on marketing and those using video were spending 6.8% of their budget on marketing. So it’s fair to say that not all of the 2.1% of difference in marketing budget is just video, so we’ll take that into account. But you can see that these companies surveyed, whether using video or not, are clearly spending decently on marketing and seeing solid revenue growth.
So let’s look at some hypothetical small-medium sized businesses at different revenue levels. Considering not all of the extra 4.4% revenue growth generated from video-using companies was necessarily from video alone we can conservatively estimate it down a bit. It seems safe to say that at least half (2.2%) of the increase is from video (it would be a huge coincidence if it wasn’t at least half the difference) and we know it’s not all of the 4.4%. So let’s conservatively split the difference somewhere in the middle at 3.5%. Here's what 3.5% revenue growth looks like for 4 imaginary companies:
So now that we have the estimated dollar amounts generated from spending on video let’s plug in some hypothetical video budgets for each of our imaginary companies to see what the ROI value would be. Now we know that not all video campaigns are created equally but for the sake of argument let’s assume a level of video effectiveness that gets us to our average 3.5% revenue growth at 5 different budget levels. *THIS IS THE THING TO SHOW YOUR BOSS*
Michael Mason is the Owner and Executive Producer at Perfect Chaos Films. Perfect Chaos Films is an Austin video production company specializing in corporate video. The Austin Texas part means we also specialize in tacos and live music.