Penny-wise, Pound-foolish:
The Real Cost of Making your Corporate Video on the Cheap
For as long as I’ve worked in the world of corporate video production, would-be clients have told me they know their video will cost “$1000-per-finished-minute.”
This was alarming to me, even 20-plus years ago.
One simple objection I would offer is, “There are an infinite number of variables in production, e.g., shooting an interview in Paris costs more than shooting an interview in the office next door.” Sometimes I would throw out a comparison of the most recent 30-second Super Bowl commercial, compared to the 30-minute training video they just produced: their formula would mean that the cost of producing that cool Super Bowl commercial was only $500, while their 30-minute training video was $30,000? (Okay, the latter may be true.)
Where did this formula come from? Who started the $1000-per-finished-minute-of-video myth? And is he or she still gainfully employed in this industry? Oh wait, I think that’s him living under a bridge downtown.. just kidding.
Fast-forward to 2010. With all due respect, I am still hearing this formula from prospective clients in my role as a business-developer for a commercial production company. These days, I’ve changed my dialogue with these clients. At the risk of sounding cheesy, I try to communicate that the video should “make them money,” not cost them money – whether it’s a direct-response commercial designed to sell a bazillion of the next “sham-wow du jour,” or a training video that saves their executives from having to travel around the world, it’s about bottom line.
A $40,000 video sounds like a lot to a marketing executive who’s making $60,000 a year. And don’t misunderstand me: $40,000 is a lot of money by anyone’s terms, and especially in today’s battered economy. We’ve had corporate clients whose companies have spent millions to acquire another company’s product, only to allot less than $100,000 to actually market that product. Corporate marketing executives today are not only being asked to do more with less: they’re having their hands tied behind their backs as they’re being thrown into shark-infested waters.
But for those top decision makers who are reading this, those who may be tasked with budgeting the marketing dollars for your company’s Next Big Thing, let’s look at a few examples, to put it into perspective.
Apple is expected to have sold about 3 million new machines in this quarter alone, meaning $300 million in sales – or (if numbers stayed the same year round) $1.2 Billion. Now I realize this comparison is a bit of a stretch, as Apple is likely the most omnipresent and brand-savvy company in the world. Their marketing tools and strategy reach far beyond their well-produced videos.
But how did they get that way? By spending $5000 on a 5-minute video? Probably not. (Apparently, 91% of you reading this own a Mac product, so you’ve seen their product videos: good stuff!)
And let’s look at the world of direct response. Current data show that many products in the “as seen on TV” category have grossed as much as $120 million in just one year using infomercial advertising alone. The average infomercial costs about $250,000 to produce. Of course there are other expenditures involved (hey, I work in marketing, not accounting), and statistically, only one in every 10 infomercials succeeds. This is partly because the competition is so intense, and partly because many of these marketers are inexperienced, with substandard products and poorly produced infomercials. That being said: provided you have a good product, are reasonably positioned competitively, and have a highly produced program, you could stand to make $11,750,000!
Good corporate marketers think in terms of how many units they must sell, or how much they need to improve their company’s bottom line, to not only pay for the video but to profit from it. Factored into that equation are the costs of lost opportunities with their target audience, the costs of giving their competitors more time to beat them to the customer, etc. Aside from the car rental company Avis who found success in 1962 with their slogan “We’re number two, we try harder,” few companies excel by being number two in the marketplace.
One popular category that we produce at Citizen Pictures is trade show videos. These are videos that are designed to play in an organizations’ trade show booth, viewed by a targeted, captive audience of their potential customers. The video is eye-candy-with-substance that pulls customers into the booth and holds their attention long enough for the highly skilled booth attendant to engage them in conversation.
We’ve all gone to trade shows, and we’ve all passed by plenty of booths trying not to make eye contact with the booth operator. But what makes you stop and look? Home-video of the inside of a manufacturing plant? Or a fun video, well-designed with fast-paced statistics about how this new widget is changing people’s lives? And how much did the exhibitor spend just to be there in front of their prospective customer?
What is the true cost to your bottom-line when your target audience just keeps walking?
Robin Bond
Robin Bond is Executive Producer for corporate and commercial production at Citizen Pictures in Denver.