Perhaps the biggest lesson that marketers have learned in the last few years is that throwing money at marketing tactics doesn’t necessarily deliver a relational return for the investment. Instead, even with the leanest of budgets, today’s marketing investments deliver a greater return when they are thoughtfully conceptualized and executed. That’s why many marketers have ditched high-cost, glossy print advertising for lower cost digital ad formats that reach a targeted audience.

Now, the same thought process should be applied to creating video ads. According to

Wistia, a video software company, production cost is not the driving factor for video success. Instead, it’s all about the quality, which according to Wistia’s report, “Does Production Quality Matter in Video Advertising?”, includes authentic storytelling and valuable information.

Testing a Hypothesis

After producing hundreds of videos for clients, Wistia began to see a pattern in the results. Often, it wasn’t the expensive, glossy videos that were the most well-received by audiences. This led them to theorize that video cost didn’t always equate to video success. Instead, a company could spend far less and potentially generate greater results, delivering higher ROI despite the limited budget.

Wistia went to work to test this hypothesis. They created the One Ten One Hundred research project in partnership with Sandwich Video. Three video ads were produced with similar messages but significantly different budgets. The three budgets were $1,000, $10,000, and $100,000.

To determine which video produced the greatest ROI, Wistia used two key performance indicators (KPIs). The KPIs included Cost Per Install and Cost Per 25% View. There were three different ad formats used to further the findings: direct response video ads, sequential ads, and video carousel ads.

Wistia also wanted to ensure that the results were directly related to cost versus the ad format and platform. Similar audiences were targeted across platforms like YouTube and Facebook. To see more about the research beyond the report, Wistia produced a documentary called One, Ten, One Hundred where you can see how each video was made.

The Results Indicate It’s Not About the Spend

The research found that the $10,000 video ad performed twice as well across all ad formats compared to the $1,000 and $100,000 video ads. The $10,000 video only had about half the Cost Per Install (CPI) compared to the other video ads. For example, on YouTube, the $10,000 video ad had an average CPI of $6.66 versus greater than $10 for the other video ads. These results were even compelling when measured on Facebook. For example, the $10,000 video ad had a Cost Per Install on Facebook of $23.57 versus  $77.54 for the $100,000 video ad.

A highly polished production doesn’t mean a larger audience feels engaged. If anything, those that participated in the test were less impressed with the $100,000 ad. Instead, the participants preferred the $10,000 video ad because they more closely connected to the storyline. Also, they liked how the product was presented in a way where they could see how to use it. The participants even related more to the $1,000 video ad, which was created on an iPhone.

In financial terms, Wistia spent $1.09 on Facebook to get one viewer to watch 25% of the $1,000 video ad but $1.53 to get the same impression from the $100,000 video ad. This meant that the average Cost Per Install for the $1,000 video ad was 30% less than the most expensive video ad. Therefore, the ROI on the $100,000 video ad just wasn’t there.

Most importantly, the participants liked how the mid-range budget video ad didn’t feel like a sales technique. This contrasted the reaction to the most expensive one that immediately made them connect the glossy presentation with those brands that have only ever tried to sell them something.

Social Media Channels Measure Video Ad Results Differently

And, it turns out that social media channels like YouTube aren’t necessarily impressed with what others think about video ads. In fact, it turned out that YouTube didn’t give any preference to the best-performing video ad. The tests showed that the ad ordered first in a group of uploaded videos got the most impressions while the ad at that bottom of that same group had the fewest impressions.

The results are even more complicated on Facebook, which doesn’t offer a clear view of what defines an actual video view. This is because it appears that just the act of scrolling past an autoplay video triggers a view result in the Facebook ads platform.

Finding the Right Video Ad Partner

Now, small businesses don’t have to worry about how they are going to pay for a Hollywood style film crew for their next video ad. It turns out they aren’t necessary for digital marketing success. The better approach is to work from a much smaller budget, putting more resources into the concept, message, and storytelling techniques to more deeply engage with audiences.

Brad Anderson

Brad Anderson

Editor In Chief at ReadWrite

Brad is the editor overseeing contributed content at ReadWrite.com. He previously worked as an editor at PayPal and Crunchbase. You can reach him at brad at readwrite.com.