Measuring the True Cost of Marketing
By Peter Mirus
I typically see professional services firms measure marketing cost as: dedicated in-house marketing staff + outsourced services + material (and similar) expenses.
This measurement does not reveal the true cost of marketing because it does not fully measure the allocation of resources necessary to drive business growth through the marketing process.
In order to understand the true cost of marketing you need to build one or more scenarios that consider how marketing will be implemented within your firm. Putting the scenario(s) together need not take a lot of time.
When doing so, there are four helpful considerations, often overlooked, that will help you to keep from making critical errors in judgment in cost evaluation.
1. Marketing is 50% performed by non-marketing staff.
If 50 hours are invested by the “marketing team,” 50 hours will be invested by other people. For marketing to be successful (and cost effective), many people within a firm need to be involved in the process. The actual portion of total marketing effort that is performed by the marketing team varies from firm to firm, and from one stage of development to another. But the 50/50 rule is one to get you thinking.
2. Will your strategy run out of money before it generates ROI?
If you take six months to revitalize your brand, three months to begin executing a marketing plan, and three more months to begin closing leads, you might be waiting 12 months to realize substantial ROI on your investment. If that is too long to make an investment without seeing results, you’ll need to build a different scenario—one that is practical and accomplishable.
3. Lack of knowledge and/or lack of commitment can increase costs exponentially.
If you’ve neglected your brand and marketing efforts, there might be some “catch up” work to be performed before liabilities start turning into assets. You need a good strategy and total company commitment. Remaining in a “knowledge poor” or “commitment poor” positions kills marketing projects and wastes money, so you need to allocate resources to make sure the correct knowledge is acquired and the necessary commitment is sustainable.
4. Now, what about the cost of NOT doing certain things?
Example: The marketing team has rightly recommended a content marketing strategy. But key subject matter experts (including firm partners) refuse to make content generation a priority, so the recommendation is squashed. Meanwhile, competitors develop robust content marketing strategy and develop strong pipelines leading to more qualified leads and customers.
This is by no means an exhaustive set of considerations. However, taking these items into account will help to make sure that your firm understands the true cost of what you are proposing to undertake!
For a related topic, check out this article: Six Marketing Metrics that Matter
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