A Business Perspective on the Impact of Production Quality on Video Advertising A compelling story is far more important that shinier production quality.

The adage, "you get what you pay for," doesn't always hold true. When it comes to video advertising, Wistia, a video software company, found other factors drive impact more so than the production cost.

In their recently released report, "Does Production Quality Matter in Video Advertising?", the Wistia team concluded that large and small businesses alike need to consider more than price before they assume video advertising exceeds their market budget.

Research Method

Wistia wanted to answer the following question: Do companies have to spend hundreds of thousands of dollars on video production to get a return or can they use something as simple and low-cost as an iPhone to create compelling ads that engage viewers?

To find out, they worked with Sandwich Video to create three two-minute videos for Wistia's video creation tool, Soapbox. They used similar audience targeting and ad copy for each and launched the ads on YouTube and Facebook. However, each of the three videos was produced for a very different price: $1,000, $10,000, and $100,000.

The research focused on two key performance indicators (KPIs). There were Cost Per Install and Cost Per 25 percent View. These KPIs provided a way to calculate the return on investment (ROI) as easily as possible plus directly relates to a company's bottom line.

The advertising budget for this study was split across three ad types that included direct response video ads, sequential ads and video carousel ads. For example, with sequential advertising, a person viewed the $1,000 ad, then they would be shown the $10,000 ad next, and so on. They also used the Facebook carousel ad format, which allowed all three videos appear at once so that viewers could watch and compare each one.

In terms of targeting, Wistia used two core targets on Facebook, which were lookalike audience based on a customer match and an engagement audience targeting those audience members who tended to watch less than 75 percent of another video.

With YouTube, the targeting strategy varied from the one used for Facebook due to the more complex nature of this video platform. The focus was in-market audiences who previously searched for advertising, marketing, or video software in Google; custom intent based on non-brand search terms; topics related to marketing, sales, and video software; and remarketing in terms of those audience members who previously interacted or watched a Wistia video on YouTube.

Key Findings

Here's what they discovered after conducting the research:

Storytelling means more: Results showed that the $10,000 video performed twice as well as the other two videos. The Wistia team thought originally that the $10,000 version had the best narrative and product alignment. According to viewers, the $10,000 resonated the most in terms of feeling authentic and meaningful versus the $100,000 ad that appeared to be "too polished." According to one viewer, the most expensive ad felt more like a company was selling them something versus the other ads that felt more like a small business who wanted to connect with them.

Just recently, two UK ads for the holidays demonstrated a similar result. More people connected with a John Lewis ad made for 50 pounds (about $65) versus the Elton John ad that cost more than seven million pounds (about $9.1 million) to produce. Although numerous viewers found the Elton John ad to be emotional, more were touched by the other ad because they could relate more to the person in the ad than a celebrity.

In returning to results from the Wistia videos, the $10,000 video delivered the best performance across all factors, including targeting, advertising type and ad copy. For example, the $10,000 video had a Cost Per Install on Facebook fo $23.57 versus the $100,000 video which had a Cost Per Install of $77.54.

Video production doesn't need to be polished: The results showed that the iPhone ad performed just as well and sometimes better than the video that included Hollywood actors and film crew.

For example, Wistia spent $1.09 on Facebook to get one viewer to watch 25 percent of the $1,000 ad and $1.53 to get the same impression for the $100,000 ad. Therefore, the average Cost Per Install for the $1,000 ad was 30 percent less than the $100,000 ad. There was a slight advantage for the $100,000 ad on YouTube. The conclusion was that there isn't enough return on the investment to necessarily justify spending $100,000.

What this means for businesses of all sizes.

The good news for small and large companies alike is that they don't need to figure out how to create a huge budget for their video advertising campaigns. Overall, the $10,000 video performed the best, and there wasn't much difference in results between the $1,000 and $100,000 videos. Instead, all businesses should focus on developing compelling stories for their target audiences versus production quality.

This is especially positive for small business owners who previously assumed video advertising was not financially feasible. And, the lesson here for big companies is that throwing money at a marketing tactic isn't the best solution.

Related: 4 Keys to Creating the Video Ad Your Business Needs

Key recommendations for video advertising in 2019.

With that in mind, Wistia shared some advice for how to approach video advertising in 2019:

• Start with a small video advertising budget and focus on creating the content over the production cost.

• Consider hiring an in-house video producer who can manage the video advertising process and own a company's brand voice.

• Split test variants rather than just the variables that deal with targeting and ad copy support.

• Look at video as a mechanism for driving more action from prospects, leveraging direct response, conversion-focused video ads.

• Create a series of video ads to take advantage of Facebook's sequential ad and video carousel formats.