John Kankley wrote in to ask this question:
We are just about to launch the first episode in our series. We are hoping to get sponsors in future episodes. The first episode isn’t going to be sponsored since we haven’t established our audience. We are going to try and pay off our investment in the first episode with t shirt sales. Do you think it is a good idea to put a funny/entertaining/remarkable t shirt ad at the end of the video? Do you have a ballpark idea of the % of video viewers that will convert to t shirt sales?
Well, firstly, you didn’t specify if your series is going to be entertainment or news-ish. This advice only applies to entertainment-type shows.
The rough percentage of viewers to buyers is about 10% of your viewers over the course of a year, with the top 1% being superfans and buying multiple things.
So is that a viable business for you and your investors? For a one off video, probably not. You don’t have a lot of fans yet, you don’t know if your series is going to strike a chord. You have a better chance if you could make 5 or 6 episodes (or enough to credibly fill a DVD), which should only marginally increase the production budget (if it quintuples the budget, you’re doing something wrong and need to rethink your project).
For your series, you should have an ad for a T-Shirt and for the DVD. T-shirts are about $5 a pop to make and DVDs are less than $2 in quantity. You should shoot extras and whatnot on the set and have that ready to go when the last episode airs.
Let’s be conservative, say you are able to gather 10,000 hard core fans. So 1000 of those fans will buy something, and 100 will buy both things. These people want to support you, so you aren’t competing with Blockbuster or Amazon. You can price a little higher. So $15 a piece, and maybe you sell them both for $25. That means your potential gross is in the neighborhood of $16000, minus cost of DVD and T-shirt production which is around $3900, that leaves you with a potential $12,100 of revenue over 12 months. (Keep in mind this is with you doing all of the labor on the packing and shipping and customer support.)
Not a ton of cash, but enough to raise a small amount so that you can build audience and buy time to get a sponsor or producer for season 2 or your next project. But $12k is a fairly decent amount to get people paid on set, to help with some marketing, and whatnot.
You’ll still need a ton of favors and lots of hard work and ingenuity and some luck to pull it off.
18 Comments
November 10, 2008 at 6:48 pm
And a good bit of content. That’s the one thing that will bring people back, the content.
November 10, 2008 at 7:07 pm
if I could get 10% of my subscribers to buy something – anything – I would be both happy and amazed. I am happy to have the repeat viewers at all!
November 10, 2008 at 7:13 pm
@Ozzy Of course. You need to put out good stuff, but it’s hard to know what’s good and what’s not until it’s done.
@Peter lol yeah. Building the audience is the hardest part. But if you can be consistent (with both release and quality) you can find that audience, to get those 10,000 repeat viewers, each video need to be getting much more than that in terms of say YouTube views, etc. RSS users and other sort of subscribers (i.e., on YT) are better since they indicate the appetite for new content by you.
November 10, 2008 at 7:26 pm
Thank you for your advice Kent!
Sorry for the lack of details. We are creating an online video entertainment series and we are just about to launch the first video in the series.
Great idea about the DVDs. Will superfans upload the bonus materials to YouTube?
We hired a graphic designer to help us create some quality merch. We are going to use a print on demand service like Printfection & Cafepress to remove our t shirt overhead. I have some t shirts from my last project collecting dust in my closet. We are thinking about pricing our shirts @ $20 a shirt. That leaves us with a $5 profit margin per shirt.
Do you guys think $20 a shirt is too much?
November 10, 2008 at 7:30 pm
@john $20 isn’t too much, but… The on demand services are cool and all, but for that $20 you can be clearing $15. That adds up quickly (but making and selling and shipping tees is a huge pain in the ass).
About the extra stuff, maybe? But probably not. Commentary tracks are hard to upload, and I subscribe to the don’t be a dick philosophy of piracy. Ask you fans to not be dicks, since you are already giving away the conent for free.
November 10, 2008 at 7:43 pm
Sweet….
T shirt sales are going to be our main revenue source at this point in the game. We would love to have sponsors in future episodes. On our destination site we are going to post links to our quantcast & tubemogul profiles on an Advertise page.
Do you guys have any advice for approaching sponsors?
November 10, 2008 at 7:46 pm
@john sponsors are all individual. Just build a case for why they have to sponsor you. And then find a partner to help find that money.
November 10, 2008 at 7:53 pm
Gotcha, that makes sense. Thanks again Kent….
November 10, 2008 at 7:56 pm
I wouldn’t recommend banking on this sort of strategy for a brand new show. Unless the series is an instant hit or you already have a built-in viewership, expect only a handful of orders from friends and family in the beginning. T-shirt and DVD sales are more of a longer-term monetization plan, because you really need an audience to support it. But definitely start thinking about bonus content like behind-the-scenes, outtakes, and all that fun stuff.
The 10% statistic of viewers-to-buyers seems on the high end, but I’m sure it’s possible with the right audience.
And no, $20 a shirt isn’t unreasonable – but don’t forget shipping costs. A $20 t-shirt can easily turn into $28 at checkout.
November 10, 2008 at 8:02 pm
@rick yeah it’s still a risky business plan (albeit without Tom Cruise). But it’s a better plan than nothing or hoping that someone is going to rush in to make you a millionaire. And it’s not 10% of views, but 10% of viewers and over the course of a year. So 10% won’t buy it immediately, but as time goes on, etc.
But that’s $12.5k for about 300-400 man hours of work. Not a great return, but enough to pay off mom and dad if they invest a little. And it certainly is a better investment than the $40k student film.
November 10, 2008 at 8:07 pm
Shipping will definitely crank up the price. We are thinking about switching to a company like http://www.districtlines.com/ after we build up some traffic. I would like to focus on creating more content and have a vendor process shirt orders.
Do you think 5% t shirt sales out of 500,000 video views is reasonable?
November 10, 2008 at 8:17 pm
@john again, it’s not views, it’s viewers, or more accurately fans. Many vids can get up to 500k views, but how many fans are generated off a single video?
I would spitball and say that if you have a single video that gets up to 500k views, you could sell 500 tees if all of the stars aligned (on the high end). More if you marketed well. Much less if there was no loyalty generated.
So that’s .1%
Right now the only good way to track fans is through subscriptions through the sites and RSS. So a randomly featured video on YouTube will generate X amount of traffic for that one video, but a significantly smaller number of subscribers.
The act of watching and waiting for the next video is what builds the loyalty, etc. That doesn’t happen over night.
We use Amplifier.com, same deal. It’s always a tradeoff between your time and money. Only move to a paid solution if you truly don’t have the time.
November 10, 2008 at 8:26 pm
Sorry about the redundancy in my last comment. Just reloaded the page and read your latest comments. I definitely see what you are saying about building an audience.
Great one liner about the Cruiser. I’m still waiting to see the Tom Cruise reality show.
November 12, 2008 at 6:42 pm
Definitely make your own T-Shirts. We started with Printfection and are a still using it. We’ll be moving over to printing our own, but we should have been doing it from the start.
Not only does it mean more profit, but as a consumer/fan I’m much more likely to buy two $15 shirts over one $20 shirt. Threadless.com gets me everytime when they’ve got a $15 shirt.
November 13, 2008 at 12:39 am
I agree. I think this sounds risky. Ask a Ninja is the only web show that I know of that actually makes a decent amount of money selling stuff. Most people I know (with fairly decent audiences) just have stuff available in case. Through sites like zazzle or cafe press.
November 15, 2008 at 11:29 pm
LOL, the record label I work with did pants. With “you need this” written on the crotch. LOL. They were such a hit, the venue stole all the stock.
July 11, 2009 at 8:09 am
[...] to monetize other things down the road, once you have established an online fan base. The team at Ask A Ninja, for example, used DVD and t-shirt sales to finance their work before the big ad dollars started to roll in. Reznor suggests collecting [...]
October 15, 2009 at 4:39 pm
[...] to monetize other things down the road, once you have established an online fan base. The team at Ask A Ninja, for example, used DVD and t-shirt sales to finance their work before the big ad dollars started to roll in. Reznor suggests collecting [...]