VMU | How Much Should I Be Budgeting For Video?
Season 2 | Episode 1
In the Season 2 premiere of Video Marketing Unscripted, Storyboard Media co-founder Ben Oliver answers the question, “How much should I be budgeting for video?”
Ben discusses the key factors to consider when creating your video marketing budgets. He then breaks down the ways marketing, sales, and customer experience teams can make the most of those budgets to ensure a stronger return on your investment in video.
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Ben: 00:03 Oh good, you got that. Hi, I’m Ben. Welcome to Video Marketing Unscripted, where we help growth stage companies better leverage video. It’s season two, we’ve figured some shit out. Anthony, what’s …
Ben: 00:18 Oh, that’s right. No Anthony this season. I’d like to introduce everyone to David Olson, our new content strategist, and my new co-host, here on Video Marketing Unscripted. David, welcome.
David: 00:32 Thanks Ben, it’s great to be here.
Ben: 00:34 What do you got there? You got a question for me, or just some fancy machine?
David: 00:38 This is The Quizilator 5000.
Ben: 00:41 Sounds legit. Okay.
David: 00:43 It is a collaboration between the top minds in Silicon Valley and my Uncle Jimmy.
Ben: 00:48 How novel. What do we got this week?
David: 00:51 Today’s question, Ben, is going to come from The Quizilator, which will scour the Internet for the most searched for terms related to video marketing. Let’s just see … Oh, perfect.
David: 01:06 How much should I be budgeting for video?
Ben: 01:08 Okay, that’s a good question. We get this question a lot, in a lot of different forms. What I really want to make sure is clear, that what I’m talking about here, is show much each department should be budgeting for video. How much should you be setting aside and expect to spend on your video? Over the course of a year, let’s say.
Ben: 01:24 So, let’s start with the marketing department. The most common department that’s utilizing video, and I got a couple metrics that I can share with you there.
Ben: 01:31 So, if you look at companies that have average to moderate growth. They should be allocating about 10% of their annual revenue for their marketing budget. Some of you may be laughing, some of you may be thinking that you’re getting away with murder here, but either way, that’s kind of the expectation.
Ben: 01:49 So, if you use that as part one of the equation, let’s go ahead and fill in that 20% of your marketing budget should probably be going to video. So, for example, if your company has an annual projected revenue of $5M, then 10% of that number is going to be your marketing budget, and that would be $500,000.
Ben: 02:09 Now, 20% of that $500,000 is $100,000. So, a $5M company should be looking at about $100,000 in video marketing spend. There’s a lot that you can do when you get to a certain tipping point in your video marketing spend. So, you could go ahead and be conservative, and let’s say, spend $ 20,000 on making a video.
Ben: 02:32 But, if you’re able to go ahead and spend $100,000 on video, you can get, probably, more of a 10X return on that spend, than a 5X return, because you’re able to do more with what you’re creating. So, with that additional spend, you can actually go from making one decent video, to several decent videos. But also, complementary content that helps drive eyes to those anchor pieces of content that you really want people to see. So, there’s kind of this hockey stick effect that happens. Where, for your first dollars that you’re spending … Or, actually, I guess for you it would be, for your first dollars that you’re spending, the return is probably pretty flat. Then, there’s a sharp curve. Then, of course, at some point it’s going to level off a little bit, after you’ve spent, who knows, $500,000.
Ben: 03:21 But, there’s definitely this window there, where you’ve got a sharper return on the investment that you’re making. So, highly recommend taking that extra leap and putting more commitment into promoting the content that you’re making. Now, in our experience, sales teams probably don’t even have any hard budget they’re working with.
Ben: 03:37 Whatever they need to spend to increase revenue, they’ve got a green light to do so. So, let’s talk a little bit more about return on investment with sales teams. So, let’s say you’re the same $5M a year revenue company, and you’ve got a 100 day sales cycle. If, by utilizing video, we can shave 10 days off of that sales cycle, get it down to 90 days. Then, theoretically, you should be able to generate 10% more revenue. So, we’re talking about $500,000 in additional revenue. So, I would maybe spend $499,999 on video to do that, or whatever ROI you feel is comfortable. Now, that’s just one way that video can help sales, and there’s all kinds of ways we can talk about maximizing that potential upside.
Ben: 04:22 Now, with customer experience teams, it’s a little bit different. Customer experience teams, I like to look at it as more, “How do you treat both sides of the equation?”
Ben: 04:31 So, a lot of customer experience teams are focused on answering support tickets. It’s time to answer, and how many more people am I going to need to put in place to answer the support tickets that we’ve got in place?
Ben: 04:44 So, I prefer to look at it as how do you minimize the support tickets that you’ve got? To answer more support tickets, you’ve gotta put more people, more time, more money into that. To minimize the support tickets. You can offset that. So, if we could set up a video FAQ. Some person to person video conversations, where one-on-one questions can be asked. But, also then, led to a playlist that shows you how to fix certain things.
Ben: 05:13 To head that off before it becomes a support ticket. Now you’re looking at the opportunity cost of what it would take to treat the volume that’s there, versus preventing that volume from growing in the first place. So, to try to some up. For marketing, 10% of your annual revenue, 20% of that, marketing budget, that’s your spend.
Ben: 05:32 For sales, think of the potential upside, and for customer experience, opportunity cost. So, I hope that answered your question. We’ll see you next time. You’re welcome.
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