These days, video is more important than ever – brands are now recognizing that it’s no longer optional. As the prominence of video increases, you may find yourself wondering: how much should a company spend on video marketing?
As you might expect, there’s no one-size-fits-all answer. Your video marketing budget will depend on:
- the size of your company.
- how long you’ve been around — in other words, do you have good brand awareness, or are you just starting out?
- your goals – how are you using video, and what do you want to get out of it?
- how video marketing fits in with your overall marketing plans.
But before we get to that, let’s start with the basics.
So, what is video marketing anyways?
It’s not just social media ads – it’s also landing page video, app store video, outreach (such as videos in email newsletters), testimonials, product demos, and even how-to or explainer videos. Basically, video marketing is any kind of video that attracts customers, engages them, or teaches them more about your offering(s).
Video can help generate downloads of your app, bring people to your website, convert leads into customers, or convince your current customers to try a new product you’re launching.
Why is video marketing important?
According to a survey conducted by Wyzowl in December 2020, 69% of consumers said their first preference would be to watch a video – compared to 18% who preferred a blog or other text-based content, 12% who wanted either an infographic, ebook, webinar, or sales call.
These numbers speak for themselves – people vastly prefer video, with the next most popular option being a massive 51 percentage points lower.
Additionally, according to the same survey, 84% of people say watching a company’s video has convinced them to purchase a product or service.
Video is more engaging than other forms of marketing, and Twitter says video on their platform is six times as likely to be retweeted as photos.
Video is not just something that people like watching – it actually gets results.
According to Animoto, 88% of video marketers are satisfied with the ROI of their social media videos.
Have we convinced you that video marketing makes sense?
How much should companies spend on video marketing?
With all that background, how much should you budget towards video marketing?
The general rule of thumb for marketing spending (as a whole, including video marketing along with all other marketing activities) is 10% of annual revenue. This is the number quoted most frequently – but is it right for you?
In fact, marketing spend really varies based on industry, company size, and how established the company is.
For example, energy companies typically need to devote much less to marketing, as they have a very stable customer base, excellent name recognition, and have typically been around a long time. A new start up company might need to devote much more than 10% to marketing to increase brand awareness, generate leads, and convert leads into customers.
Small businesses may struggle to devote 10% of revenue to marketing, and Small Business Associations recommends 7-8% of revenue on marketing, with about half of that devoted to digital marketing (which these days would predominantly be video).
On the other end of the spectrum, SaaS companies typically devote a much higher percentage toward marketing, often over 20% – and even exceeding 50% in some cases.
Despite all of the variation, 10% is probably a good starting point – and if you can’t afford that, start with whatever you can. With video becoming the dominant media type consumers are searching for, you might consider devoting even more than half of your overall marketing budget towards video. From there, you can use techniques like A/B testing to evaluate the ROI of different marketing activities and determine whether a higher or lower spend suits your business.
No matter what budget you decide on, we hope we’ve raised your awareness as to the variety of video marketing options available, and how important it is to get started – at whatever scale makes sense for your company.
We’re always interested to hear what our readers are up to – so feel free to reach out and tell us what’s worked for you, or what content you’d like to see in the coming year.
We also offer free 30-minute video consultations to discuss where you are and how video could help you reach your goals – whether that means generating traffic or leads, converting viewers to customers, or retaining the customers you have.
Still want to learn more? Check out some of our related content:
- 5 Video Types Every Developer Should Consider
- Influencer Marketing: Is it worth it?
- Using Video to Boost Sales Conversions
- How Much Does an Explainer Video Cost?