What is the true cost of marketing?
Over the years I have worked with large clients and many small clients. They have the same questions. “What is the true cost of marketing?”
Well, this question can be summed up in a couple words. “It depends”. However, there are three major contributing factors to the cost of marketing, labor, software, and paid promotion. How you choose to scale these three factors will create your marketing budget.
Let’s take a deeper look at these three components of your marketing cost. This will also help us understand why marketing is a long-term investment, not a short-term fix.
Cost of Marketing – Labor
The main cost of a marketing is labor. We are all looking for ways to automate our marketing, but the reality is people drive marketing. As you continue to price out marketing remember there are three main roles marketing needs to function. These three individuals need to work very close and develop strong communication between the team. This collaboration drives better holistic marketing campaigns.
Your marketing manager wears a lot of hats. From setting marketing direction, strategy, project management, campaign execution, analyzing marketing campaigns, marketing software management, public relations, and more. This individual is going to move your marketing forward. A marketing manager is going to be your marketing team lead.
The problem here is that most companies expect too much from this individual. Expecting to hire only a marketing manager is a great start, but the reality is that your company needs graphics and a marketing message that relates to your customers. Your marketing manager is going to be the master of tactical marketing execution.
Every marketing campaign needs to look great. This is where the graphic designer comes into play. Yes, your marketing manager should be able to jump into Photoshop and manipulate some stock photo (I am guilty). However, a marketing manager is not able to create infographics, email headers, logo, or custom art. Art is what makes your marketing amazing.
Your graphic designer also has a role that is not so obvious. He or she is in charge of your visual brand. This means that this lucky individual should not let anything go to the customer that is not approved in your visual brand guidelines. This means the right fonts are used, the right colors are in place and approved stock photos are used. This attention to detail is typically not part of the marketing managers expertise. Your graphic designer is super valuable in keeping the brand consistent. Your brand is important, making your graphic designer a vital role on the marketing team.
Creating a great subject line or punchy headline is no easy task. Creative writing that connects with the customer is essential to delivering the right message at the right time. Again, the marketing manager should be able to come up with a catchy headline, but the copywriter is going to make the copy jump off the page.
One of the most important tactics your company can invest in is your company blog. This is where the copywriter earns their paycheck. Proofing, editing, and producing quality blog content is a time-consuming, grueling task. This process is going to attract customers to your site, so make sure that the right message is being produced. Blogging for business is vital to your success.
The cost of marketing is going to depend on the quality of your talent. You really get what you pay for. A recent college graduate with a marketing degree is going to cost significantly less than an MBA with 15 years of experience.
One final note on the marketing team. Your marketing is only as good as the execution. Get the right team in place and let them execute against the plan. This is the only way to get ahead on your marketing journey and crush your competition.
Expected Yearly Budget = $200,000 year in wages and benefits.
Cost of Marketing – Software
If you are going to invest in inbound marketing at all, which you should, you are going to need software to execute your marketing campaigns. We all try to save money in this category and look for the free versions. Again, you really get what you pay for.
Your marketing software is going to be another variable cost based on the number of contacts you have, the number of emails you send, the amount of tracking you do, and so many other variables. Here are a couple different features to consider when picking marketing software.
Email marketing still has one of the highest returns on your marketing dollar. The volume of email you send is going to determine your price. There are great options out there like Mail Chimp that will give a small business the features needed for success. Email marketing is a great low-cost way to start promoting your business.
Social Media Marketing
Social media marketing is a marketing tactic that uses Facebook, Twitter, LinkedIn, and Instagram to promote the business. This can be free if you decide to use the social media platform directly.
However, most companies are going to schedule social posts in advance. When looking into the right social media marketing tool, ensure that allows you to follow the pillars of social media. Remember, social media is about being social and engaging with your audience.
Tracking & Analytics
Most companies out there are using Google Analytics to track their website traffic. However, really analyzing your marketing effectiveness takes closed-loop analytics to credit revenue to the appropriate marketing channel. This level of detail is going to take tracking software that is more sophisticated. The more sophisticated you get with your data, the higher the price tag.
CRM (Customer Relationship Management)
Personalized marketing campaigns are going to be more successful than “batch and blast” campaigns. This means you need to understand what stage of the customer journey your lead is at. This is where a customer relationships management (CRM) system comes in handy. A good CRM is going to allow marketing and sales to create and send the right marketing message to the right person at the right time. These systems will scale with your business as you place more contacts into your marketing software.
All-In-One Marketing Software
It is my suggestion that if your business is serious about marketing, that you use all in one marketing software to get the job done. These systems will track your marketing campaigns, help manage social media, deliver email, and have a CRM attached to deliver the right marketing message, at the right time. These systems are popular but can be very pricey. These marketing systems will give you the best data and help you make better marketing decisions for the future.
Marketing software should be part of the marketing on-boarding. The marketing platform that you choose should integrate with your website and other marketing assets. Integrating your tools is going to give you the best long-term results.
Expected Yearly Budget = $2,400 – $50,000
Cost of Marketing – Marketing Message Distribution
Okay, labor and software are going to eat up most of the marketing budget. However, you still need to get your marketing message out to the right people. There are 2 ways of going about this and we suggest your marketing team use both.
Organic Marketing Results
This is the type of marketing we all love. Free or organic is the best by far. However, this type of marketing message distribution can be very difficult and take time. For example, blogging for business is a great way to increase organic traffic to your website. However, this is going to take time blogging daily.
Organic social media is very similar. It is going to take time to build an audience and deliver your marketing message. The problem here is that you are relying on another platform to drive traffic. This is becoming harder and harder with more competition and social media signal changes.
Organic traffic is going to take your business 6-12 months to really start seeing results. Again, this is the type of marketing that we all want, we just need to stay patient. It takes time.
Paid Promotion/Traditional Marketing
Paid promotion is going to be different tactics because you are going to have to pay for your distribution. The exposure we receive through paid promotion is going to depend on the budget. The more we spend, the further our message goes. This really come down to your marketing budget and what you are willing to pay for. Here are 4 different paid marketing tactics we can use.
PPC (Pay Per Click)
Pay per click is going to use digital platforms like Google or BING to place an ad and drive traffic to your website. This marketing tactic can cost $5 per month or $10,000 per month. It really depends on your budget and your goals. PPC is a fast way to develop a digital marketing presence.
Social Media Advertising
Organic reach on Facebook is down, way down. What can we expect, Facebook needs to make money too. Advertising on social media platform like Facebook is a great way to deliver your message to your customer. The great thing about social media advertising is you can use demographic information to target your audience.
Radio, Television, Print
Yes, radio, television, and print are still around. No matter what the internet says these forms of marketing are still alive and well. The cost to develop and deploy radio, television and print advertising will again depend on your target audience and length of the message. Radio, television, and print are going to be on the expensive side of marketing and should be tested before committing larger amounts of your budget.
Tradeshows and events can be fun, exciting, and costly. However, if you are marketing to a specific audience there are industry trade shows that can really be beneficial to your business. Finding the right tradeshow or event can be a very profitable marketing tactic. Just ensure that you are picking the right one and using follow-up tactics to drive higher ROI.
There are thousands of other ways to promote your business. The cost of these marketing campaigns is going to vary on the complexity and aggressiveness of your marketing campaign. For example, getting a booth at a local tradeshow can be expensive, but getting a booth at a national convention is going to cost 5-10 times more.
Your traditional marketing budget is really going to depend on your goals and what you can comfortably afford. The goal here is to find out what is going to give you the highest return on investment. Track your traditional marketing efforts and see what you should continue to invest in.
Expected Yearly Budget = variable
As you can see, marketing is going to be an investment. According to the Small Business Administration, you should invest anywhere from 7 to 8 percent of your gross revenue for marketing and advertising. However, if you are in a competitive industry you should invest up to 20%.
The cost of marketing really depends on how aggressive you want to grow your business. The sooner you start developing your external marketing message and start executing against marketing campaigns, the faster you are going to see results.
When you are ready to invest in marketing your entire organization needs to buy in. This is not going to be a “test run”. On average marketing takes 4-6 months before you start seeing results. From coming up with great marketing ideas to executing your campaigns, it is going to take time and patience. Your marketing investment will pay out over time, just don’t expect marketing to be a quick fix to your business problems.