How Much Axis and Avigilon Pay For Sales And Marketing Per Camera

By John Honovich, Published on Sep 01, 2016

When you buy an Axis or Avigilon camera, how much of that goes to pay sales and marketing expenses?

Is it trivial like $2 or $3? Or is it far more?

In this post, we break down those numbers and explain how significant the cost of sales and marketing is in the camera business.

Summary - $60 to $125 Per Camera

*** ****, ** ******** $60+ *** ****** ** direct **** ***** *** marketing ******** *** ******. For ********, ** ******** $125 for *** **** ******.

Working *** *******

***** *** *** ******:

  • **** ** *** ********** the ******* ****** ** sales *** *********?
  • **** ** *** ******* selling ***** *** ******?

******** *** *** ******** and *** *** **** per ******* ***** *** marketing ********.

Axis *******

**** ********* ******* **** sales *** ********* ******** of ~**% ** *******.

** ******** *** ******* sales ***** *** **** cameras ** ** $***. Axis **** *** ******** this ****** ** ** estimated ** **** *** assumption ****, ***** **** has * ***** ** products ***** **** ******** thousands ** ******* *** camera, **** ******* **** are ****** *** (****) of $*** ** $***. Also, ** ******** ** that **** *** ** cut *** *********** ** and ******** *********** ****** discounts ** ****** ******** and *** *** ***** they ********* ******* **** direct (*.*., ******, *&*, etc.).

*** ****** ** $** per **** ****** ** sales *** ********* ***** on *********** **% ** revenue ****** ***** *** estimated ******* ***** ***** of $***.

Avigilon *******

******** ********* ******* **** ***** *** ********* expenses ** ~**% ** revenue.

** ******** *** ******* sales ***** *** ******** cameras ** ** $***. ******** **** *** ******** **** number ** ** ********* it **** *** ********** that ******** ***** **** expensive ******* (*.*., *** PRO ******) *** **** inexpensive ******* (*** ***** Dome ****** **** *** dozen **** * ****** Axis ******).

*** ****** ** $*** per ******** ****** ** ***** and ********* ***** ** multiplying **% ** ******* metric ***** *** ********* average ***** ***** ** $500.

Comparison ***** - ******* ******* ************

******** **** *** **** through ************ (** ***** America ***** */*** ** their ******* ** *********) and ****** **** ****, which ** ********* * sales *** ********* *******. By ********, **** *** distribution ******** *** ***** to *** *******, ***, ScanSource, ***., ***. **. One *** **** ** add ** ***** ******** sales *** ********* ***** which ***** ***** **** up **** $** ****** to $*** *** ******.

Sales *** ********* ** *********

***** ******** ****** ** aware ** ***** *** marketing ********. ******* ** is *** *** ****** or *** *** ** the ***** ******* ** the ********* ****** ** the ***** ****** ****** to **** ******, **** are ******* *****.

*******, ***** *** ***** overlooked. ****** **********, ** surveyed * ****** ** people, *** *** ********* estimates **** *** *** low. ** ******* **** people ************* *** ******* impact ** ***** *** marketing ***** ** ***** price.

** * ***** ** contrast, **** ****** ~$*** million *** * **** on ***** *** *********. Avigilon ***** ~$** ******* USD * **** (**** is ***** **** **** twice ** ***** ** Avigilon). ****** ******, ******, is ***** ***.

Solution ** *** *********** ** ***** ****

** ********* *** *** suggesting **** **** ** Avigilon ****** ***** ****. In * ********** ******, with ****** (**** *********** and *** *****) **** demand / ****** / respond ** ****** ***** and ********* *******, **** may ******* ** * rationale *** ********** *** of *****.

Low **** ******** - ********

***** *** ********* ******** are ** ******* ** ******** that **** **** ** with *&*, *** ** that ******** ** **** 5% ** *******, ******** that ***** *** ********* is ***** *% ** revenue ** * *** dollars *** ***** ****.

** ******, **** ** because ******** *** ** direct ***** ***** *** extremely ******* *********, ****** any ***** ***** ************ vendor.

 

Comments (25)

Did you just tease an upcoming report?

Yes :) and it helps clarify the fair question of 'Why didn't you cover Hikvision?" It's coming.

Plot twist, Hikvision has been paying IPVM to write about them more.

Oh, I bet they're loving all the "good publicity" *sarcasm*

It's my fault really, and I'm sorry.

I'm fickle.

I'm hard to impress. I have the attention span of a dingo dog. You need to bombard me with tons of expensive marketing wizardry before I'll even mis-pronounce your new brand.

I tend to get stuck on the specifications instead of being swept into the majestic euphoria that only purchasing your products can provide.

And even after I do buy, you have to start all over again next week, lest my memory fade or a competitor's FUD starts to weaken my goodwill.

It's costly I'm sure. But don't give up on me.

Just tack it on to the price, ok?

so, were using the WAG method of accounting I see?

Armando, what assumptions do you disagree with or are concerned about?

Myself, I was thinking it was higher than $60 for Axis.

Do you really think that they sell close to 10 million units a year?

edit: sorry my math was wrong, more like 2.5 million...

The estimated average sale price of cameras is a WAG. Without data to indicate the total number of cameras (or devices if we are going to include recorders, etc), there is no way to get anywhere near accurate on this number. Are we including volume int he average? If they sell 1x $5k camera and 10x $500 cameras, how are you calculating the average? and is your guesstimate of sales price average based on street price, distributor cost? (before or after the rebate?) or based on the actual revenue received by the manufacturer?

I do however agree that the cost of marketing expressed in a percentage of revenue per device metric is valuable information (and often higher than most would guess). Should be noted that doesnt actually mean that it costs them that much per camera. Without the rest of the info its pretty much a guessing game.

Then we have that we dont really know what they are putting into that category on their P&L... Theres alot of stuff that really should be marketing expense that isnt booked that way.

is your guesstimate of sales price average based on street price, distributor cost? (before or after the rebate?) or based on the actual revenue received by the manufacturer?

What is received by the manufacturer, ergo why that number should seem low relative to what people pay, given that the cut to distribution / dealers needs to be factored out (since Axis does not receive that).

If they sell 1x $5k camera and 10x $500 cameras, how are you calculating the average?

I am weighting based on private data we have obtained about Axis camera model sales distribution.

Those with knowledge of what Axis sells will likely think the ASP estimated is on the low side. I did that to be conservative. Assume Axis sells more higher priced PTZs than I estimate, that would skew the ASP higher, meaning the sales and marketing cost per camera would be even higher than $60.

My overall point is that Axis and Avigilon spend quite a lot of money (easily in the $50 to $150 range) on sales and marketing.

If you would like to challenge other assumptions, feel free to cite specifically.

For the record, I am saying it is likely higher than what your math indicates.

It could be higher. Then instead of $60 per camera on sales and marketing, it is more like $100 - $150 per camera on sales and marketing.

Axis sells a lot of M series that they typically get paid $200 or less (factoring in distributor / dealer discounts / and corporate pricing discounts for large customers). Then they sell a smaller amount of PTZs that helps pull it up, etc.

John, I'm sure you did your best to estimate average price per camera accurately. If you managed to get a monthly sales report from one of Axis's distributors, the Axis estimate may very well be very accurate. And such an estimate is very valuable by itself, regardless of particular types of expenses share in a camera price.

But no matter how accurate your estimate is, the raw data, i.e. 20% and 25% of revenue spent on sales and marketing, is much more telling.

While it's public information, I never bothered to check. I always assumed that it would be in 5% to 15% range, given that what is sold here is not your typical consumer product.

Great report!

For what its worth, I budget 7-10% for marketing, not including sales payrolls. Wonder if anyone else will pony up their info?

I think a lot of integrators spend next to nothing on marketing, not that is a good thing.

What are the main things you spend on marketing? Local shows? online ads? others?

Lets see if anyone else ponies up even basic info before I start putting strategy out there, LOL.

A

A design idea for a Hik analysis article :)

I hesitate to push back on IPVM as a vast majority of reports are verifiable, fact based analysis on device/company performance. This investigation may be an interesting effort but is entirely speculative and based on assumptions that are totally unverifiable. The margin of error could be 5% or it could be 50%. In the absence of verifiable data on a manufacturers' actual average camera sales price, what is really learned about a business or industry? What is the significance of "cost of sales and marketing per camera" when a company such as Avigilon also sells licenses, servers and peripherals? In the absence of a verifiable percentage of sales across all product groups from a manufacturer, the "cost of sales and marketing per camera" is almost meaningless. It becomes merely a political talking point...fodder for the reckless.

In the absence of verifiable data on a manufacturers' actual average camera sales price, what is really learned about a business or industry?

You work for one of the two companies covered in this report. We follow the industry very closely. There's enough knowledge here to make an educated estimate.

Take Avigilon for example. I estimated $500 but I erred on the side of caution / low because the higher I estimated the more surprising / controversial the average per camera cost would be.

Now, let's go to verifiable data. Avigilon reports that it spends 25% of its revenue on sales and marketing. This is a fact from their financial report:

For every 4 dollars Avigilon dealers spend with Avigilon, 1 dollar goes to pay sales and marketing. This is fact.

Feel free to propose another way to segment or think about those expenses.

what is really learned about a business or industry?

Great question and that will be part two on Hikvision.

My point here is that it requires spending a lot of money on sales and marketing to build a direct branded company. There are too many people who say "Longse spammed me with a $6 camera offer, ergo Hikvision must be making money hand over fist." When the reality is, building local sales teams and conducting local marketing campaigns are extremely expensive even if the cost of your products is nil.

Agreed. Not arguing the published facts and intrinsic knowledge of IPVM (duh!!!). My only point was that in the absence of knowing (with some degree of certainty) what percentage of a manufacturers' revenue come from "camera sales" as opposed to other sources of revenue (servers, licenses, peripherals, etc) makes the metric of "cost of sales and marketing per camera" a bit iffy. If cameras represent 25% (arbitrarily) of revenue then cost of sales per camera is x. If cameras represent 75% (arbitrarily) of revenue then cost of sales per camera is y. x and y can be quite different and can send quite a different message to readers. Either way it is expensive and I don't have an opinion other than to find an alternate phrase to "sales and marketing cost per camera" unless all manufacturers have the same distribution of revenue from camera sales and "other" sales. Sorry if I'm being too finicky.

My point here is that it requires spending a lot of money on sales and marketing to build a direct branded company.

So true. And what's interesting here is that Axis and Avigilion are already established brands with considerable brand recognition. Their marketing is simply top of mind awareness at this point. What would be required to establish a new brand? Considerably more to make oneself heard over the din.

And in addition to marketing, there is still the ongoing sales cost. Integrators value local sales and field engineering people. Cut your local people and many dealers will look elsewhere because those local resources help close deals and solve problems.

For any people whom have work for manufacturer, it is pretty usual to have sales cost between 10-15% of turnover (average is around 13%) and for marketing expenses to range between 2 to 8% on average (depending how much you want to build your brand and how much competition to have to fight, what phase of your global development you are in). So I believe the numbers on this report are directionally correct: sales and Marketing on the 18% to 25%.

Now we can argue about the ASP, which on my mind become irrelevant... you just have to know that each time you buy a Video product 18 to 25% of the cost is attribute to marketing and sales efforts.

"Avigilon does not sell through distribution and avoids that cost, which is certainly a sales and marketing element."

That might be true for North America, but certainly not for Europe.

Louis,

That is a good point. North America accounts for 2/3rd of Avigilon's revenue so it is still a substantial factor but not as complete as I first wrote. I've fixed the error. Thanks!

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