Want to know the most common problem when a business decides to start marketing with video? Budgeting.
They want to pick up their camera and start filming before ever thinking about the numbers. As a result, they start producing videos without a plan, which is almost guaranteed to fail.
What’s your Customer Lifetime Value [CLV]?
Before we start rehearsing your monolog, you need to figure out what your customer lifetime value is. Customer lifetime value is how much profit your business will generate off a client in the course of their life. For example…
A dedicated lifetime customer to a pizza shop may spend $500 while a dedicated lifetime customer to a lawyer or doctor may spend $20,000+. The higher your CLV, the more beneficial video marketing is to your business.
A company with a high CLV needs to convert fewer people to cover the cost of a video, and a business with a low CLV needs to convert more people to cover the cost of a video. Thus a pizza shop probably shouldn’t spend $10,000 on video marketing because they’ll need to convert 20-lifetime customers just to break even. However, a lawyer can spend $10,000 on a video because it only takes one customer to break even.
What’s your Video Shelf Life?
How long will your video be used for marketing your business? Is it a one day sale or on the home page of your website?
Video content that will be used for years to come can generate a larger ROI than videos only utilized for a short duration. This obviously has its exceptions, but in general, it’s a better idea to shell out more marketing dollars for your homepage video than it is for your daily vlog which is only relevant for a couple of days.
Where is the video going?
Don’t allocate all your money into production. Set aside money to publish and promote your video. Even if the video is going on your Facebook page, it’s recommended that you boost and promote your video with the Facebook ad manager to increase engagement. Failing to promote your video may result in lower viewership and a lower ROI.
Unfortunately, I don’t have a magic algorithm that determines your video’s budget. This is a job for your video producer. They can work with you step by step to determine how much you should be spending on your video to garner the results you’re looking for while also maintaining a high return on investment.
Want to speak with one of our video producers about your next project? Drop us a line on our Contact page, and we’ll have one assigned to your project.