Our marketing firm is rather close with a local accounting firm. By "close", I mean we've known each other for decades, and by "local accounting firm", I mean the most significant accounting firm in the region, handling the accounting functions for businesses both large and small in several surrounding states.
I was thinking about what purpose an accounting firm serves: to provide a business or organization with the tools and expertise required to function properly and in a financially responsible and optimal way. For some businesses, this may mean that the accounting firm needs to be handling everything from bookkeeping and quarterly taxes to 1099's and succession planning. However, there are some businesses that handle some of those functions in-house. With a full-time AP/AR staff, a business certainly wouldn't be looking for bookkeeping help first; instead, such a business may only want to start with help filing taxes and performing third-party audits. Most business owners understand finance from a high level, but are too busy to stay apprised of the ever-changing tax code. And most businesses (yes, even large businesses with immense capacity for payroll) can't financially justify maintaining an entire accounting department in-house that is capable of performing EACH and EVERY accounting task that will arise throughout the year.
The conclusion here is simple - an organization seeks outside help with critical tasks when it recognizes the cost effectiveness of doing so and/or the lack of in-house talent to accomplish the critical tasks. Why is it then, that while the vast majority of business owners see the logic in retaining the services of an accounting firm, while they fail to see the same logic in retaining the services of a marketing firm?
When all is said and done, hiring a marketing firm nearly always is better for a company in terms of managing costs, as well as ensuring optimal performance of marketing budget. It's very common for a company to have either at least one employee dedicated to marketing full time, or to have someone such as an administrative assistant handling marketing in addition to office administrative tasks. The math is pretty simple: According to the Bureau of Labor Statistics, the median salary for administrative assistants is $32,410, with a total range between $20,230 and $48,520. Add in benefits (15% of salary) and payment for time not worked, such as sick or vacation days, and the median ends up around $40,000, with a range of $28-56k (just ballparking here). We'll just run with the *employee cost of $40,000.
**A brief side note: remember all that talk about the accounting firm and how businesses hire accounting help because they realize they don't have the in-house talent required to file taxes, etc. as well as the accounting firm can? Well what makes you think that your administrative assistant or that guy that just got his marketing degree have all the skills you need for marketing? How long have they managed marketing? How many millions in Ad spend have they managed? Do they know not only social media, but SEO, PPC, analytics, display advertising, web development and design, and video and graphic design and production? Who knows, maybe they actually know all that stuff at a really high level. Which would then beg the question... why in the world would they accept $40k/yr to do it? Someone with a high aptitude in all of those fields would easily command 6 figures, and frankly, those people are rare... more often than not, digital marketers and marketers in general become experts in one specific field, not all of them. And more often than not, if you opt to have your buddy/brother/neighbor/friend-of-friend make your website, make your video, or "handle" your marketing, you'll quickly recognize how much actual skill they lack. Avoid buyers remorse and use a professional. End of brief side note.**
Circling back to our example, we now have to account for the actual money spent on advertising (such as buying Ad space online, on TV, or on radio, for example). The SBA (Small Business Administration) recommends that businesses with less than $5 million in annual revenues spend 7-8% of gross revenue on advertising. A CMO survey published by the American Marketing Association and Duke University, showed that companies with less than $25 million in revenue spent an average of 11% on marketing, and $25-$99 million in revenue spent an average of 9% on marketing. So, a business with a million in revenue will spend somewhere around $70k on advertising in a year. A $5 million revenue business will spend around $400k. A $25 million revenue business will spend around $2.25 million in marketing. Simply based on even the low end, a million dollar revenue business with a single lowly employee managing the marketing, you're already over $100,000 in cost for marketing (compensation package + advertising cost).
The smaller clients we have (single location with maybe a handful of employees), never break into the 6 figures range in their budget with us. So what does that tell you? For less than the cost of having an inadequately trained employee who might not even stick around for more than a few years (25-34 yr old workers average 3.2 yrs in a job - yeah, we haven't even discussed the cost of employee turnover, which is about 40% of the annual salary of a position) plus the cost of advertising, our clients not only get their marketing managed by experts, but our clients have access to not one person, but an entire team comprised of experts in an array of fields. Literally, a client is deciding whether to spend more on one person who knows they're in over their head, or spend less on a team of all-stars. Needless to say, it's a pretty easy decision.
Here are a few case studies, to illustrate our fit in a variety of situations:
A car dealer with a very full staff and budget retained our services. They had at the time a minimal marketing presence and an automated PPC campaign. In lieu of hiring a full time marketing manager, we were brought in to fix the PPC account, of which we discovered approximately 99% waste, and establish a marketing presence. They're making at least $6-10 for every $1 spent on marketing now, setting sales goals regularly.
A university department with a full marketing staff retained us for SEO, video, and digital advertising help. Enrollment is up and the marketing paid for itself several times over, while the university avoided adding a position in the wake of a hiring freeze being lifted.
A retailer (brick and mortar store) with a full sales staff retained us to establish a presence online with video. The retailer is now expanding and is shifting even more responsibilities to our firm.
A civic leader responsible for promoting community events is always incredibly busy, so we were retained to take care of everything. Now she has time to cultivate important relationships and partnerships that bring people from near and far to the community, while we handle literally everything from a marketing standpoint for her, saving her from needing to add a full-time position, for a fraction of the cost that that would've been.
An engineer wanted to retain us for SEO help for his one man operation. We analyzed his website and it's performance, along with the rest of his online presence, and determined that all was well. In this situation, we simply gave him a few ideas for incremental improvement and left without taking a cent (we don't recommend unnecessary surgery).
An attorney couldn't find an administrative assistant that was capable of handling marketing as well (not surprising, as those unicorns don't exist). We were brought in to handle the marketing efforts for less than the cost of a few months of employee salary.
The ultimate indication of whether it's justifiable to hire outside marketing help is money. ROI. Profit. Does performance improve with outside help? Not always. Just like with anything else, there's bad Ad agencies out there. We've seen businesses get fleeced too many times by agencies trying to push one go-to product to everyone, essentially trying to fit a square peg in a round hole, forgetting that every business is different and needs a unique approach to optimize their marketing efforts. However, with digital (online) marketing, everything is trackable. There is a wealth of analyic tools out there that allow us to track the impact of every little thing we do. With this ability, we can not only be transparent in our efforts, but we can continually refine and improve our work. This is how we consistently get 500-800% better traffic from our online marketing efforts versus ALL other online marketers in the world.
I rely on numbers and hard data to make decisions. It could be assumed that most businesspeople would say the same; they'd say that if the numbers indicate that they should do something, they will. However, what's more common is businesspeople simply doing what they understand. If they've been advertising in the same magazine for 20 years, and they have a strong indication that online Ads would significantly increase their ROI, they'll often just stay the course and continue the magazine advertising. Because of this risk-averse mindset, which is completely understandable (I'd never invest in something I don't understand, just like Warren Buffett, nor would I ever want anybody to do so), many businesses literally leave money on the table. With this in mind, I wrote this brief analysis to help get your mind thinking a little more of the financial impact of your marketing decisions. We're happy to personally talk with you more about your specific situation to help you decide what would be best for you to do, so feel free to reach out to us today.
About us: Level 11 Online Marketing is a fast growing digital advertising agency that is becoming known for disrupting the status quo. We specialize in digital advertising, video production, SEO, SEM, advanced analytics, custom web solutions via website design & implementation, social media strategies and conversion optimization. Headquartered in Utah, you will find Level 11 team members throughout Utah, Nebraska, Arizona, California, Idaho, and Colorado. We have the best creative minds in the industry backed up by the most talented software developers and video production teams, resulting in powerful, efficient advertising campaigns.
If you have questions, comment here or email us at firstname.lastname@example.org today!