Episode 214: Do You Need A Marketing Budget?
Rob Cairns talks to Ryan Waterbury in their montthly agency series about why you need a marketing budget.
- Why you need a marketing budget?
- What should go in the budget?
- Is marketing just your website?
- Nothing is free in marketing
Rob Cairns here.
Damn here with Ryan Waterbury and we’re going to continue our series of what agencies should look at for their clients.
How are you today, Ryan?
I’m doing great.
And today I’m doing OK considering the challenges of no Internet access from WordPress trim.
How are you doing?
I think I’m doing pretty good actually.
So, so today we’re going to jump into and explore why companies need a marketing budget.
And I think this comes from.
Many discussions you and I have had over a couple years in saying.
Did they even think about it?
Did they think about this an expense they don’t have a budget and that goes beyond?
Am I gonna run ads or not run ads and what I’m gonna do so?
Let’s kind of break it down.
What do you think should be in a marketing budget?
For a company.
Well, First off, you need one.
That’s number one.
They’re almost always with startups, nonprofits.
Any business there’s zero allotted for a marketing budget?
And I I can’t tell you how many times that I have to explain to customers that.
Uh, they they need a marketing budget.
They need to think about it and there are two things that really come into play.
Time and money and.
Time can only solve so many things.
Uh, and that that that’s usually when we talk about content marketing and putting the time in to actually write content or produce content.
The the second thing money when when we start talking about marketing budgets.
There are a lot of eye opening.
Eye opening conversations that happen that business owners are especially the the newer ones and I work with a lot of entrepreneurs, some serial entrepreneurs.
You know that there’s.
And investment, and it’s not an expense, it’s an unnecessary investment that needs to happen that needs to be budgeted for.
So let me throw a scenario.
Yeah, actually the business owner says you, oh great, I don’t need a budget.
I have an employee who will post pictures on Instagram all day long about my business.
What do you think about that?
I think that’s terrible, and here’s why.
How do you know your customers are in Instagram?
So marketing budget.
When we look at a whole.
There’s actual research that we do, and when I put together a proposal, we do some discovery.
Uh, you know we build customer personas and we we figure out who’s buying your products so that let’s take that scenario that customer that says I’m going to post random stuff on Instagram one.
Going to be seen by your customer two if it is seen by your customer.
Is it relevant and is it what they’re looking for?
A lot of times.
You can spend a lot of time doing those things, but are they going to give you the returns?
No, I agree with that and what I’d add to this honestly is.
You know, I don’t need a budget and my response would be at that part time employee is doing 3 hours of posting on Instagram.
That three hours times their salary should be part of your marketing budget.
It’s not free.
And whether it’s time that you’re paying somebody to do it or the budget of actually doing it, there’s still a cost to it.
Oh absolutely, I mean.
You know, I think about it like I do with my accounting.
I can do it, but it takes me longer and my accountant usually yells at me a little bit when I when I try and do some things in the books and she has to clean him up so I end up paying for it.
And that was one of the first things that I realized my time is better spent doing things that I’m good at in in my business, and hand it off to professionals to take care of those things.
Because that’s what they do at the core and marketing.
Is a service and it’s not an expense.
I think I alluded to it earlier.
It’s an investment that you absolutely need to think about.
Whether you do it yourself and pay someone internally, or you partner with an agency.
No, I agree with that now.
The kind of things that should be in a budget.
We’ve just sort of alluded to the salaries of the people involved.
That’s number one.
Where a lot of people missed the boat on marketing is anything to do with your website should be in that budget as well.
Is that true or is that an operational expense?
I was thinking about this the other day and in relation to one of my clients that you know I had talked about Webcare and some of the other things that come along with.
You know owning a website and he said I don’t need all that stuff.
So I hit him with the.
Web care owners manual and you know, reminded them that.
Your website is your number one marketing tool.
It’s not something that you just need to have.
I mean, you can certainly run a business without it.
But you’re less likely.
To be found by your ideal clients.
So a properly built website that’s performant and.
Relays your service or product information to your ideal customers.
It’s the foundation for in, at least in my opinion, the start of every.
No, I I would agree with that.
I think it’s the start.
I think it’s your home base.
We, you and I have talked about.
It’s one of those things you own.
It’s not rented space or rented land, or borrowed whatever you wanna put on it.
So I think from that standpoint.
It’s really worth including that in your budget.
What other things should be in the budget?
You know I talked about the time budget earlier.
If you know with your website as a foundation, I think every business needs to block and talk about different things achievements that they’ve made as a business case studies.
New product reviews.
And with your website you need to take into account that time that it’s going to take you to produce content and make updates.
The second part of that time budgeting is your website is the hub and your social media.
Channels we touched on Instagram Facebook Twitter YouTube.
Those are all spokes from your central hub, which is your your website.
Even the the Google business listing should be updated regularly.
So you need to 1st off account for time for just the basic updates and content creation.
This is the time budget.
The second part of this.
Is when we start looking at paid advertisement.
That’s when you need to one look at creating content for the paid ads, which is a time piece.
But then you also need to start looking at ad spend and how much does it actually cost for me to acquire a new client.
And that’s a big factor.
And what people again don’t understand and it’s something I think we’ve got to keep beating a drum against the wall.
Is it always costs more to keep an existing client than to?
Acquire a new one.
Yeah, the I was in a discovery meeting with a videographer really talented guy and we were talking about.
Doing a commercial production and he was asking just some general questions about.
How to get new clients come?
I was a referral to him so that that’s how I think most of us in the the web and digital marketing industry get a lot of our clients right off the bat as referrals.
But beyond that, if your business didn’t get any.
How would you survive and what does it actually cost you to go out and acquire new clients?
And if you’re selling a higher dollar service or product.
One of the numbers that I’ve seen and measured.
30% of the net profit of that project can can actually be necessary to land that client.
It’s true, but I and I and I think sorry run, and I think the other thing we need to look at.
Is what should you spend right? I mean, you know where PPC ad pay per click ads are concerned? A lot of people like to take the old guerrilla tactics, so I’ll throw $10 a day at something or $15 a day. I truly believe those tactics don’t work anymore.
No, those days are gone and.
That used to buy you a lot on Facebook and Instagram, but they’ve slowly been creeping up their ad pricing.
Yeah, it used to be ridiculously cheap to advertise on Facebook versus Google Now that’s not really the case, and if you’re sending a low budget like.
You’re likely not even producing enough impressions or conversions to actually let the AI.
Figure out who your ideal client is.
You have to spend.
I would say at least five to 10 times that.
If you were developing a marketing budget and a lot of it depends on what industry you’re at, is it a profit or a non profit?
And a lot of that.
Do you think that uhm?
Where should you concentrate the budget besides your website, in your opinion?
So when I.
Look at new marketing clients.
We do two things and generally.
If we’ve done a web build with them, or if they have an existing web presence.
We look at improving that web presence and starting SL.
SEO is a long term game so.
You may start to see results 90 days from now.
Six months from now, a year from now.
So we usually look at a hybrid approach where.
We start building content, optimizing the site appropriately.
Looking for backlinks.
Seeing where we can improve things immediately on the SEO side.
But a portion of that budget.
In my opinion, absolutely has to be spent on PC.
PPC pay per click will.
Get immediate eyes on your product or your service and that takes some fine tuning, but it’s it will provide you quicker results than the long game of COOI think a hybrid approach works, just generally for most of the businesses.
That’s a really good point, and, uhm, we all know that PPC.
He has a more in term reproach and I want to kind of touch on so.
You’re a client.
You go out and hire A marketing agency.
You say my budgets $1000 a month whatever, just for a round figure.
And then you go when you say.
Oh, is it not only $1000 a month?
Just go do it so the agency runs off and do it and you say oh, I got 5 clicks or five leads.
And my problem with a lot of agencies is.
They don’t do proper reporting back to their clients, and I think you know where I’m going to go with this.
If you don’t do proper reporting, how does the client any agency optimize what they’re trying to do?
So it really comes down to dollars and.
Uh, you don’t have to have it, and I know some other CEO’s take this philosophy as well that you don’t have to have exact and vanity metrics reporting.
If your client is seeing an increase in revenue.
They’re happy if they’re not seeing an increase in revenue, they’re going to question what you’re doing.
And so revenue increase and attribution models.
Really need to be looked at.
What are you doing?
In a marketing campaign that is helping to increase your clients Rep.
That’s that’s really the bottom line in in the most general terms.
It it could be increased leads coming in and but are those leads closed?
Are they good leads?
Ecommerce gets a little easier because you can see sales numbers where more products are sold.
That’s an immediate impact.
There’s some more complex things there, but that’s just that’s a measurable.
Metric, but in general.
If your client sees an uptick in business after you start a marketing campaign.
That’s one of the the easiest things that you can measure and report.
Yeah, I would agree with that to a point, but what I more meant is.
If you’re throwing your marketing dollars
Say at a PPC campaign at social media?
Your email list and for example, your email list, comes back and says that the metric that that shows you where more and more people are generating leads and sales from that tells you you probably should spend more money on your email list and those are more the kind of numbers I’m concerned about is how do you.
Optimize that those campaigns.
If you don’t know where your results are coming from.
Yeah, you want to know which channel is is producing results.
You’re not going to know that right away, and that’s what I started to talk about with the when we were asking about the the five and $10 campaigns.
That’s not enough to.
Put your product in front of enough of your ideal clients to see any measurable results.
It’s now actually saying Facebook’s now saying for them to even figure out where to target your ads, you’re looking at 1000 to $2000 now. Believe it or not.
Oh, absolutely, and I mean you’re competing against a lot of, I mean, a lot of other companies.
Uh, people get adlain and.
When you’re scrolling through a feed.
Uh, how many ads do you personally look at?
I I I work in the industry and so it takes a lot for me to look at.
Ads, I mean a lot.
Oh I’m I’m.
Awful working in the industry.
I turn on conventional TV and say OK.
This ad yuck.
This ad yuck.
This ad yuck and I was watching the Olympic Games last month and.
I said to somebody recently that only two ads on Canadian television, uh, really caught my eye and attention.
Everything else, I can’t tell you what the products were, who they were and why not.
One one thing when we talk about spend and this gets back to time when you mentioned email list.
A highly underutilized tactic or question is.
If you’ve got people that purchased your product and they’re in your email marketing list, send out a survey.
You might not get a lot of people too.
Fill the survey out, but they’re going to tell you what they like about your business, and you’re probably going to get some responses back if you do an honest survey of what they don’t like about your service.
Yeah, so one that’s a way to improve the.
The features and the benefits that you can use in new ad material and focus on those when you’re looking for new clients.
Knowing about your ideal customer is a huge part of the marketing game and.
And when you when you send out that survey, little pro tip here.
Say you’ll give away a couple Amazon $50 non Amazon, Amazon or Starbucks $50.00 gift cards if you fill it out.
And give them away.
That $100 would be the best $100 you ever spend from a marketing budget. ’cause they’ll tell you a lot.
Exactly, you want to make one the survey easy to fill out and ask the appropriate questions to get good information back.
But two, you want to incentivize.
It’s the same reason when you go into a restaurant you ever see on the bill.
Yeah, I bet.
If you fill in, this survey will enter you in a draw for a free meal.
I mean there, there are ways all sorts of ways to find out about who your best customers are and you want to find people like them that like your product like your service.
The more that you know about your ideal client, the easier the marketing game.
Gets because you start to show more ads or provide more.
Content and more value added.
Pieces to people that are like your customers that may not have purchased from you yet.
Yeah, so true.
Now something I really want to talk about in terms of determining the budget and this has a lot to do with money is value of expertise, so we’ve all heard it.
Why should I pay an agency when I can get a student to do it for $15.00 an hour or $10.00 an hour or?
$14.00 an hour.
And my response usually is.
Go ahead and.
And they look at me and they said, really and I said, ’cause I guarantee you.
9 out of 10 times you will never get the same results out of somebody who has not been doing this a long time.
And that impacts a direct impact on the budget and what you’re going to spend on marketing dollars.
Oh, absolutely and.
A lot of clients that.
Come to me for marketing.
Are in business owners and individuals who have either worked with another web company, worked with another marketer, or.
Have tried the DIY route and they’re just not seeing any results.
They’ve come to the realization that.
It’s not an easy thing to go out and find new clients.
There are a lot of moving parts in a in a marketing campaign, especially in digital marketing campaigns.
More privacy focused efforts out there.
It’s gotten even more difficult to collect information about your customers from website visitors.
So relying the clients I work with that.
Come to me and and ask how they can improve, how they can get more business.
Those are the clients I like to work with because they realize the value that working with a professional gives them that they they’ve realized that I need to budget.
I need to spend some money.
To go out and find new clients.
Yeah, the same reason you and I in the agency game need to spend money to go find new clients.
Uhm, it’s a it’s a tart and the other thing I would say to people is.
Don’t wait till.
Your down time to say now I need to spend money.
Do it in your up time and do it all year round because it’s always easier to find new clients when you’re busy than when.
You’re not busy.
When when I look at my own marketing and what I what I have to do?
I consciously schedule time.
I constantly have to remind myself that.
I need to take the time to write an informative blog.
Send out newsletters to my list.
And this is in addition to doing the daily work of managing client campaigns, building new sites.
Uh, making sure their sites are secure, running fast and there aren’t any issues.
It it can be a daunting task that.
I think we’re more aware of it because we do these things and realize how much running an ad campaign can be.
But to set that time aside for myself, knowing how much time is involved, it’s challenging because first and foremost we we want to make our customers happy and work on work on stuff for them.
But in order to grow and maintain our businesses.
It’s an active process that we need to think about and we need to educate clients to think about.
The marketing takes time.
It is a marathon job, not a Sprint, and people need to realize that sooner or later I mean it’s an ongoing.
Battle and then some so.
If you were.
Limited on budget and we’ve kind of talked a little bit about money in PPC or SCO, or.
Wherever where would you start putting your money?
Content marketing hands down.
I First off I would take a hard look at SEO and.
Take a look at your website.
Your number one marketing tool.
And see how people are using it.
See what people are doing on your website.
That will give you the most bang for the buck of any other marketing method.
The lasting benefits of SEO.
It can be for years and as other SEO professionals and myself will say the best time to start was six months.
Go and you know when business owners look at dollars and you know a lot of them see it as an expense.
Uh, you know so.
PPC sometimes is off the table and that’s fine, but a lot of them that started out that that DIY route.
With coaching education and some SEO consulting, they can do content and they’re happy to spend extra hours themselves versus paying.
You know, for for ad space.
That’s been my experience to seeing positive benefits when you’re on a limited budget, is really the time factor.
Uhm, you know?
You would think Casio?
Yeah, I would tend to agree with you long term, but then also realize if you don’t have the budget you’re not going to get the results right away.
So they kind of go hand in hand as well.
Right, that’s the other.
That’s the other thing is.
Educating and marketing is an expense at all. It’s an investment and that that’s why I picked out Co as a starting point because Co is an investment and that’s how I approach it with.
Every new client that it’s a long term investment.
So when I talk with clients about marketing in general and we talk about seeing the results.
And then it can be a long game that this is an investment.
They start to see.
That marketing as a whole, not just the CEO portion.
Is an investment and not an expense so that changes the conversation a little bit and.
Thinking starts to change that.
We need to budget not only time but also money for future improvements.
Uhm, while we’re budgeting.
And I always say.
To my clients it all depends on what the product is worth to you and what the marketing result is worth is so.
And by that I mean.
If I was working on something for high end coaching products that were selling for 2003 thousand dollars, I pop.
I would be.
Determining my marketing budget more different than if I was selling a 1999 book.
What is your thoughts on that?
When we look at.
Higher ticket items.
Whether it’s a service or a product, there are less people that are going to be buying that product.
We’re even looking for that product.
So you’re going to have potentially a higher cost of acquisition for someone to buy that product, and if, let’s say, you’re, you’re.
For every sale would not be unheard of at all, if not a little more.
Yeah, that’s that’s true, and people don’t look at it that way. Like if the $200 product gets you, not product advertising gets you a $2000 sale. I’ll take that every day. Like, honestly, I know of one story or I had a client.
Before Christmas one year who we debated around.
The ad spent for Facebook ads.
And $3000 in Facebook ad spend turned into one $50,000 custom sale.
That is a win win win every day.
Of the year.
Yeah, especially with small business owners.
Until they see that sale, that $3000 is an expense. It’s not an investment, it’s you know money that they have to.
Spend and pay.
To get that result, it’s that’s a hurdle that.
We always struggle with when we talk about marketing budgets that.
We need people to get eyeballs on your product or service and in order to do that we need to compete against other businesses that are spending this money to get eyeballs on their product.
And if you don’t do that.
People won’t see your product and you won’t won’t convert sales.
Yeah, and that is so true and.
The other thing.
When you’re doing your budget, people need to keep in mind us and you need to do repetition.
Just ’cause people sees your product once doesn’t mean they’re gonna buy or even look at it the first time.
The second time, the third time or the 4th time.
Now that comes back to the.
Standard rule and sales that’s been around for eons.
You need 7 touches with a client.
Before they’re likely to buy your product.
And those touches and we talk about the customer journey and where they interact with your business.
Uhm, part of the marketing is.
Having good branding and a good present out in the world and being active on your social channels, responding to questions appropriately, that’s all part of the marketing process.
It’s not just writing good content, spending money on ads.
It’s a cohesive process that needs to happen.
And you know it, it touches into public relations a little bit, but having a good image and good response that potential clients can see when you’re in interacting and answering questions on in public spaces.
It makes a difference and.
It influences the choices that that customers make.
So marketing is not an easy process.
It encompasses a lot of different things.
Yeah it does.
One of the things that I’ve noticed if you’re in a smaller niche space.
It it’s more difficult than some of the other generalized products and services out there have.
Have you noticed that?
Yeah, it it’s so true and it’s and people don’t really understand that at all.
Yeah, if there was a magic key, uh, to turn and sales would come rolling in.
I’d have $1,000,000.
Oh, if there was a magic key to turn, I would have been rich and retired years ago.
Yeah, we we laugh about that, but it it’s so true, right?
I mean it’s yeah.
Uhm, the other.
Thing we also need to keep in mind is.
With marketing dollars, just kind of while we’re hashing it out is if you’re niching down and we hear an industry or you should niche down your products, you should niche down this.
You should niche down there.
From a marketing digital perspective, the more you dish down, the more it’s going.
To cost you.
Uh, yes and no.
The returns can be greater and when we when you have a good product and you’re not serving, I mean we see this in the in our realm.
You know my particular niches are politics, nonprofit and small startups.
Those are the businesses that I’ve been most successful with and I know the most about.
So I’ve already tested.
Uh, dozens of different funnels over the years, one with, uh, a lot with my myself and.
But through marketing campaigns and refining client campaigns.
As we find that we.
Get down tighter into you know that ideal customer in that that smaller market.
It does require some more spend to get there.
But once you get there and zone in.
You can start to bring in customers more easily.
That that is so true from that perspective, but I still think so.
I’ll give you an example.
There are certain keywords and there are certain industries when we’re running ads that cost more.
So let’s jump into the industries for a minute.
We all know that anything in the financial services industry if you’re doing.
Google Ads or Facebook ads cost more, there’s some.
Certain industries that are hard.
They’re regulated more when you’re doing.
When you’re determining a budget so.
You know you gotta look for sometimes alternative means on where you’re going to throw your advertising dollars, for example.
You are a a gun collector.
Uhm, you cannot throw money at gun ads on many social media platforms.
It’s just not a lot.
Even if you had the budget.
You just can’t do it.
I’ve had clients that are in the firearms manufacturing industry and.
It’s a it’s an interesting industry to work in, but you’re absolutely right, the you have to be very careful about how you spend your ad dollars, and that’s a particular industry where.
From experience and knowing what you can do on the platforms and what impact you can have.
You know, that’s one that we would go very heavy into SEO and building the presence on the website now.
You know, and that that’s one of the the benefits of working with a professional.
We know what you can do on the platform and what kind of results you can expect and where.
Uh, where you can have the biggest impact?
Yeah, So what do?
But you know you talk.
You talk, you talked a little bit about some of the the financial industry and also about the marketing industry.
Seeing a $75 per click charge.
He isn’t unheard of.
No, it’s not.
It’s not at all.
So as we kind of wrap this up, what is your number?
One tip to developing that budget?
You you need to understand.
Who buys your product one understanding your your clients?
Uh, that’s that’s probably the number one generality.
Once you understand who’s buying your product.
And how much they’re spending on your product?
Then you can backtrack and.
Start to build a marketing budget based on that and.
Around you know that that number you can carve out.
Anywhere from 10 to 30% of the profit on your product or service. Those are just general numbers, but that’s where where I would start with your ideal client.
Looking at their total lifetime value and starting with a budget of, let’s say 10%, let’s be very modest and that could be your time calculated into dollars, or that could be partnering with an agency and including ad spend.
That’s a really good point, Ryan.
If somebody wants to get ahold dear, how’s the best way?
Let’s start with my website.
https://onedog.solutions/ and on every major social media platform @onedog olutions, Twitter, Instagram, Facebook, all are good methods.
You can email me at Ryan.Waterbury @onedog.solutions and I’d be happy to answer any questions that you have.
Have a great day.