Hey – thanks for sharing a few minutes with me. You can check out my short intro video to the left, or simply dive into the post and get an inside look at how I estimate what your top competitor may be spending on their online marketing budget.
Don’t forget to download the Easy Form Calculator at the bottom – it’ll help you crunch the most important numbers to arrive at your own budget.
Barry Edwards 🙂
Find the right marketing budget to begin your climb past your competition
As a business owner or marketing/sales director, your priority is to find the most effective marketing solutions for your company at a reasonable price. Finding proven effectiveness that you can trust is the starting point. Next, you have to determine a budget that gets you profitable with this investment as soon as possible.
I primarily market services. And I prefer to market services that bring in over $1000 with each conversion annually (depending on the service, many clients buy more than once per year), such as medical services, B2B consulting and personal and professional training/coaching, because when you build the winning combination of trust-building brand with attention-grabbing marketing, it can take less than a year to see a good Return On Investment (ROI) and the return should only go up from there.
Personally, I quote my clients in phases in order to earn their trust and mitigate risk. I suggest that if you’re looking for marketing services, that you take this approach.
Step 1: Establish the value of leads and conversions in your market
Services vary greatly in conversion value. I’ve worked with medical practitioners where we’ve established an average value of $3000/new patient acquisition (annually) and I’ve worked with business consulting services that average over $50,000/conversion (outsourced project management company, B2B investor, safety engineering company).
If these companies are scaleable, then it’s a waste to not invest in proven, outsourced marketing at $2-3K/month that results in five times that or more in ROI. But usually only the market leaders do… which is why they’re the market leaders.
Step 2: Assess the level of marketing you can do yourself
When you should outsource your ongoing marketing
If my medical practitioner potentially can treat an average of 5 patients/day, that equals $15,000/day, or $300,000/month and 3.6 million/year. But what if they’re only averaging two-three patients per day?
My B2B project management company currently procures 20 clients per year that’s approximately 2 million dollars/year. But, they can handle twice this as well.
When you can potentially miss out on $10k or $100k in sales each month, it’s time to get some qualified marketing assistance. If you can outsource it for $2k/month to secure these sales, you’d be crazy not to. Heck, you should strongly consider in-house assistance.
When you should NOT outsource your ongoing marketing
An auto mechanic’s new customer acquisition typically carries about $500/year in value and their audience is within a 20 mile radius, It’s wise for this company to invest minimally in a really good online presence up front with training on how to run an ongoing, efficient content marketing plan themselves thereafter. This will provide them with a very good ROI for years to come. But, since the profitability and scaleability are fairly confined, it’s not wise for this company to hire a marketer on an ongoing basis.
Many trainers and coaches fall into this same segment. And, if you simply aren’t busy tending to your clients and business, you may want to consider doing all of your marketing materials yourself… as long as you have proper guidance.
Be careful when outsourcing overseas
A lead-producing website will reflect quality branding. It will reflect your credibility. It will have SEO-friendly (Search Engine Optimized) verbiage. It will harness a powerful content marketing process.
Today, it takes a lot more than a website to produce leads and when you’re finally ready to take the next step either hire a reputable lead gen marketer, or at least get the proper training to learn how to do it yourself.
If you further invest $100 in an offshore SEO company that spammed you with promises of being #1 on Google (companies in the US won’t promise you this due to potential lawsuits) will likely leave you with Google penalties and corrupt SEO. When you try to recover from this, a reputable marketer will probably recommend securing a new domain rather than building a new house on a shaky foundation (penalized SEO).
At this point you’ve only wasted $400 and a domain name, but, how much time have you wasted? Two years? How many thousands of dollars have slipped through your fingers in that time? How far behind your competition are you at this point?
A sharp business owner should keep an eye on the potential return on investment (ROI) rather than seeing proper marketing only as an expense (in which case, it will be).
A word about present day online marketing tactics
Online marketing technology and techniques have evolved rapidly in the past 10-20 years. While there was a brief moment in time (roughly 1998-2004) when a good website and decent SEO tactics were enough to get some companies to the top spots of search engines, competition has since flooded the internet. Marketers and search engines have become much more sophisticated and social media has forever changed the marketing landscape.
Garnering leads online will be an ongoing effort from here on out. The most automated, hands off approach is to simply run a Google Adwords campaign in the background. But it’s very expensive to utilize as an all-in-one approach. Most of us need to embrace feeding content to our blogs and social media channels.
Step 3: Arriving at your market’s internet marketing budget
I’m circling back to our online marketing budget numbers now. I’m digging deeper with the small, medium and large market examples. I’m going to list their challenges and priorities as succinctly as possible in order to give insight into how to calculate nearly any service industry’s marketing budget.
In each case, your first step is to search the competition, decide who you’re aiming to beat and examine their online presence. You don’t want to spend more than you have to on your marketing efforts. But you don’t want waste valuable time and money either.
You must be willing to look at the possible ROI at year’s end… and thereafter!
Putting together a quality lead generating solution for businesses can take anywhere from two months (auto mechanic or dentist) to six months (small biz) to ongoing (most of us) . The business owner must be able to evaluate the possible return on the investment by year’s end. Since feeding your marketing channels takes time, you should expect the first year’s return to be less, but following years to be more and more fruitful.
Breaking down small, medium and large markets
Smaller markets have smaller marketing budgets, but can get positive ROI faster
For more detail on this group, you can take a glance at this article that I wrote about budgeting for dentists and auto mechanics – both of which have conversion values of around $500. I made the case for a $4,000 investment in proper website and Local SEO. In this case, there has to be strict limits on how much ongoing content creation is paid for and a paid ad campaign would have to be lean as well in order for the campaign to remain profitable.
But, since they’re only competing for clients within a 20 mile radius or so, they’re likely to only have a few competitors. They should spend they’re money on a quality online marketer up front and then see a great return within six months and beyond.
Priorities: Local SEO, Facebook ads, quality branding on website and consistent on social media. Email campaign if competition is heavy.
Challenges: Posting semi-regular, GOOD content is a challenge at this level as the budget doesn’t support outsourcing. This responsibility usually falls on the owner or a very good assistant – both of whom are usually too busy to sustain it. But most smaller markets will have weaker competition that is easier to beat with a self-sustaining content marketing campaign.
Medium markets require additional tactics
I had a medical practitioner a few years ago that was capturing approximately 2 leads/week online. I redesigned their (huge) website over a period of six months and dramatically improved their on-page and off-page SEO. My social media partner, Mark Tennant overhauled their social media presence (mostly Facebook). The estimated increase in revenue of their first year was $288,000. It’s safe to say they made an incredible return on their investment us that year, but the future increase in ROI is where the real gravy is. Mark is still under contract for social media marketing and he’s killing it for them.
Priorities: Local SEO is very important. Branding: Website must establish trust and professionalism. Social media presence needs to be taken seriously with regular posting of quality content. Highly targeted Facebook ads usually a must. Google Adwords recommended for many industries at this level.
Challenges: Email campaign, lead magnets and possibly online training are important for establishing/maintaining a good sales funnel. This is usually where the struggles begin with prioritizing these within established budgets.
Larger markets and conversion values – everything goes
Onto the B2B project management company with an estimated $100k/conversion. Acquiring and converting a lead of this magnitude is extremely difficult as their will be marketing-savvy competitors willing to invest smartly to win over these accounts. There’s too much money to be made or lost here to undervalue the marketing effort. Their needs to be a full time sales/marketing professional on staff and he/she should be responsible for tracking the ROI of the marketing team. If that team is outsourced, incentivizing the marketer(s) with commission on conversions should be strongly considered to mitigate your risk.
Priorities: For this campaign to be successful, top-notch branding across website and social media channels is imperative. It needs to be fueled with an consistent and well thought out Content Marketing Plan. The CM Plan should position key company players as experts in their field and the content should produce authority indicators (eBooks, lead magnets, industry articles) while feeding the blog and social media channels.
The company would be wise to also develop a couple levels of online training in order to lead prospects through a defined sales funnel. This also provides a way to scale the company with little extra overhead (human resources).
Challenges: This level of online marketing requires a dedicated and consistent effort. Remember that it takes quite a while to get all the major pieces in order and “fueled” with excellent content. Online training vehicles are probably imperative to both the sales funnel and to scale the company at this level. But this positions the company as an expert in its field for years to come. The ROI can be staggering. The marketing effort should be analyzed regularly – shifting the budget to the more successful techniques deployed.
The final word on establishing your online marketing budget
In the end, a few important questions need to be answered with each market:
- How much can I conservatively hope to get in return in my first year? Subsequent years?
- How professional are my top competitors’ marketing efforts?
- How much money do I stand to lose annually by NOT investing wisely in my online marketing?
Each business and market has it’s uniquenesses. I supplied the above examples as I think most companies supplying services will find a lot in common with one or two of these markets. Don’t forget to download my Easy Form Calculator to help you get some real numbers together and start thinking realistically about your own efforts.
And don’t forget… it always starts with a good, hard look at your toughest competitors’ efforts!
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A simple one-sheet that will let you adjust your budget numbers until you find a range that you’re comfortable with.