Setting a price on creating advertising is extremely difficult. Sometimes the price tag can seem outrageously expensive and sometimes it can show to be the best investment your marketing department has ever made. A well-designed creative can spurr the amount of clicks massively, while lack of quality can hurt your whole brand badly.
Most companies Today are looking for cost-efficient and result-oriented advertising where the return of investment can be calculated to every cent. In this blog article, we will discuss how you can resonate when investing in creating advertising for your company.
At ExpansionVideos, our firm recommendation to customers is to spend appropriately on developing the ad itself. Let us explain why. If your marketing department is planning to spend $10,000 on YouTube paid advertising for a 4-week campaign, spending $2,000 on only creating the ad itself comes across as an unwise decision. But most likely, your marketing department will want to run another YouTube campaign next year too and maybe with twice the budget. A well-produced and good looking ad can be re-used for several years to come, we have had customers that have used our animated videos for over 5 years. If you are planning to spend 100s or even millions of dollars on digital marketing, showcasing your brand or products to millions of people for many years to come – is it not worth it to invest in high-quality content then?
Lets iterate my argument with numbers. Spending $2,000 more on the creation of an ad results in a 10% higher click-through rate of an ad used in a digital campaign. 10% of every click to the website results in a conversion generating an average $90 revenue. The cheap ad results in 100,000 impressions out of which 1,000 clicks through to the website and 100 visitors make a transaction resulting in a total of $9,000 in revenue for the company. The more expensive ad results in 100,000 impressions out of which 1,100 clicks through to the website and 110 makes a transaction resulting in a total revenue of $9,900. That is $900 more in revenue. Now, imagine running that campaign 5 times per year for 5 years. That is $22,500 more in revenue. That is a pretty decent return of investment.
Another reason for why your company should dare to invest in the production of the ad is because it increases your chances of breaking through the noise. The media landscape is very much driven by the amount spent on buying media space. Why does Coca-Cola still buy advertising for millions of dollars every year when probably 90% of the world population already recognise their brand? Because it makes it more difficult for smaller companies to enter the market. If you succeed with creating an innovative and disruptive ad you will increase your chances to spread by the word-of-mouth effect. Humor, emotions and knowledge are great ingredients to get resharared and engaged with.
With a little thought, a little math, a little data, and a little creativity, it is possible to have a good idea of how much to invest in marketing for the highest possible return. The Bank for Canadian Entrepreneurs recommended small and medium companies to spend 5-10% of their annual revenue on marketing.
If you would like to discuss further on how much your company should invest in the production of your commercial, please get in touch with our dedicated team members. Important factors are: your expected lifetime value of customers, market characteristics, timescale and ambitions for the future.
“Many small things have been made large by the right kind of advertising.” –Mark Twain
“Advertising is a valuable economic factor because it is the cheapest way of selling goods, particularly if the goods are worthless.” – Sinclair Lewis