ROI or return on investment is key in business. What you put in should generate profits several times your original cost. So for the Hollywood studio executives, the sign of a successful movie is not the glitz and glamor of Oscar night, it’s about the ROI.
The average movie earns about four and a half times its original budget in global box office revenues – so around 450% ROI. That means that every £1 spent they will get £4.50 back on average. Of course, there are different ways of calculating the original budget and it may or may not include marketing. But anything less than 400% ROI gives Hollywood accountants’ long, sad faces.
If you want to make a video for your business, the same rules apply. What is the return you want on your investment in making the film? If you are filming a conference (see later case study), is it to use as a marketing tool to attract more people to next year’s event? Is it to enhance your reputation? Is it to generate more customers? Is it to reassure your staff, making them feel valued and ensuring your retain your best people?
The cost of making a video can be seen as high, but not if viewed in the context of what you need it to do. As we’ve said before (and will say again) having video on your website significantly increases your ranking on Google – some say by about 80%. Calculate how having a video could lift you in the rankings, and in turn, estimate the potential increase in customers.
Thinking of the return you want shows the value of video – it’s a business tool that generates profits, both in a monetary or reputational sense.
Facts
- Avatar won two Oscars and has made over $2.7 billion worldwide. However, its ROI is 500% as it cost so much to make. Average in Hollywood terms.
- The Matt Leblanc war-comedy “All The Queen’s Men” is the movie with the worst ROI at -99.92% . That means it got back just 0.08% of the cost of making it. We haven’t seen it either.
- The most profitable film of all time (according to CNBC) is My Big Fat Greek Wedding. Because of massive worldwide popularity, marketing strategy and word of mouth appeal, its ROI was 6150%.
- ET, the Extra Terrestrial, comes second – but way behind with a ROI of 3172%