How Much Should You Spend on Your Own Marketing?

David addresses another frequently asked question, looking at what creative firms should budget in terms of both money and time for their website, SaaS/automation, PR, content creation, and social media.

Transcript

Blair Enns: David, I've really been looking forward to this episode. This is the one where you tell marketing firms how to market their firm. Are you at all nervous?

David C. Baker: Well, I would be a little nervous, but I'm especially nervous because I actually published an article on this, and I got a fair bit of blowback.

Blair: Did you hear from any PR firms?

David: Oh, yes.

Blair: Okay, we'll get to that.

David: This is one of those things where you say, okay, it's your turn to pick a topic, David. What I usually do is I just pick a topic where I'm just tired of answering the question all the time, right?

Blair: Yes. Yes, I'm seeing the pattern. I look at this topic and I thought, this is a brave one. What could possibly go wrong? I've made my popcorn. I have my piercing questions ready. This is a cobbler's children issue, isn't it?

David: Yes. Isn't it crazy? We're always telling clients, when things get tough, this is when you need to spend more. What's more important than your marketing plan? Then you look at the project list and their own website is on there, and it's the last one. It's the one that always gets pushed off and it's funny. Everybody talks about the cobbler's son who has no shoes, but after a while, it just gets sort of nauseating, and it's better than it ever has been for sure.

Let's say they buy this. They want to do this. They want to do their own marketing. The first question is, how do we build a marketing plan on this generalist positioning? Then that's when they realize, oh shoot, that's not going to work. Then the second question is, okay, how much money and time should we spend on this, right? That was the question. I'm a little nervous, not because I'm afraid of the pushback, but just because there's so many variables. If you were designing a marketing plan for somebody in the higher ed space, you would actually recommend that they set up a display booth at a conference, right? I can't think of any other client area where that would make sense. It's just really hard to sort of think about a generic marketing plan for a firm in the creative and digital space, but heck with it. I'm going to try.

Blair: Okay, so recognizing that there's some variability from firm to firm, the general guidance you're offering here is really the answer to the question, how much time and money should I spend on my own marketing?

David: Right. It's really hard to figure this out, not just because every firm is different, but because some of your expenses, like your website, for instance, you may redo it every probably three to four years would be about right. We could talk about the hard expenses, but how are we going to talk about the time? Because the people most involved in marketing are usually the highest compensated. They're also the ones that are always whining about employees needing to track their time, but they don't have the time to do it. Even if we wanted to look at timekeeping records, I know that was a little button for you, right? Are you just holding back as I say that?

Blair: I'm perfectly calm.

David: How do you really track that stuff? Yes, it's hard to do, but that doesn't mean we can't just make an attempt anyway.

Blair: Yes, and you've got a point here, but some of these expenses scale really well.

David: Right, and in some don't. That's kind of a question I've asked myself, because if every firm needs to spend about the same amount of money on marketing, whether they're a 10-person or a 50-person firm, which I do think is true, why am I saying that they need to spend a proportionate amount of time on marketing? Why wouldn't that be the same as the money?

The answer to that in my mind, whether I'm right or wrong, I don't know. The answer to that is that the bigger firms can spread out the effort so that it doesn't fall on one or two people. That's nice. Also they can do maybe a big research project or maybe they can put on a small event or something. All of that falls under the marketing umbrella. What we're going to see is that most firms, regardless of size, need to spend roughly the same amount of money, but they're probably going to spend a more proportionate amount of time on things.

Blair: Okay, so the fixed costs are relatively the same even as your firm grows. When it comes to the actual time of your people, it gets easier in theory as the firm grows. You have more people you can spread the work around to.

David: Yes, exactly. Philosophically, you shouldn't try to hire somebody else's brain in terms of developing the insight that's going to declare your point of view and help draw the right prospects to you. We've talked a lot about that. I think it's fine to job out the rest of it. Even if you don't want to job it out, it's useful to just

just assume that, so that we know roughly what it would cost if you retained the writing effort for whatever you're doing, maybe it's a webinar, maybe it's a weekly email, whatever, but you jobbed out everything else, all the expenses. That's the assumption here. You're going to hire out for all the stuff except for the insight development, and the other assumption is that for the big expenses, like a website every four years or so, we'll just assume that you're going to pay for that monthly even though you're not, that's just how we need to think about it so that you can spread that out and amortize it over three to four years, something like that.

Blair: The assumption is even if the firm is a digital firm that does website design and development, they are going to hire out for this. I've heard you make that recommendation before. Do you still stand by it?

David: I do, yes, because it's a lot cheaper to hire somebody else to do it. [laughs] It's going to get done. They'll treat you like a client. It's really hard to treat yourself like a client. That's how we would start, right, with the website, and I'm just assuming that nowadays, I think this will probably change, probably go down actually, you'd expect to spend 20,000 to 40,000 for your website if you're hiring another firm to do it.

Maybe you can get it done cheaper, maybe you can spend more, but just that 20,000 to 40,000 should capture most of the websites that our audience is going to do for themselves, and so we could spread that out over, say, four years if we assume that's how often you need to replace it, and that's about a thousand dollars a month. As we put this budget together, that's how I'm thinking about it. It's a big expense, maybe it's 40,000 every four years, so maybe that's roughly a thousand a month.

Blair: Okay, so budget roughly a thousand a month, and even though there's a big variance in the types of firms represented by our audience here, as I'm thinking through this, there would be a lot of these firms that have a lot of complexity to their website, would there?

David: No, there's no community where people from the outside are participating in it.

Blair: Probably no e-commerce?

David: Very little, yes, if any, e-commerce. If there is e-commerce, nobody's buying anything on it. [laughs] Those hats that you printed up, right?

Blair: Right.

David: You want people to wear your brand everywhere.

Blair: Okay, so that's the first expense is the website, and you're saying budget a thousand dollars a month.

David: Right, set it aside, and then every three to four years, get a new one.

Blair: Then, SEO, SEM, how much should firms be spending on that?

David: I think about probably 3,000 a month, which should cover the ads as well as the firm who's researching managing that ad buy. That's going to include some SEO. Whoever is doing the website is going to take care of the technical SEO, but SEO and sort of interfacing with the articles that you write, if you believe in that sort of thing, that should cover it.

Very few firms can afford to spend much money with Google AdWords buys because those have become so expensive, but LinkedIn still makes sense.

This might change in a few years, but LinkedIn still makes sense. It's a very addressable market. You can see the results. They've got some new technology now that allows somebody to fill out a form and never leave LinkedIn, and so you can capture that lead without sending them to your website, which people are more reluctant to do. About 3,000 a month for that, which is a pretty big expense. I guess it's the biggest expense you have. If you don't need to spend money on this, well, then don't do it, right? If whatever else you're doing isn't sufficient, this is one of the first things that I would try.

Blair: Got you, so we're at a thousand a month. I'm keeping a tally here, a thousand a month for the website. Again, it's usually a one off every three or four years. Then 3,000 a month for search engine marketing and optimization. Then we've got hosted software.

David: Yes, and here you have a decision to make. Are you just going to use an email marketing platform, like Mailchimp or Campaign Monitor or something like that? Or you want to get the whole enchilada and have a full-blown automation platform, like Act-On or HubSpot or something like that.

The email marketing, you probably expect to spend about 400 a month. If you're going to go with an automation platform, the average there is about 800 a month. You don't want to switch midstream here. Whatever decision you make needs to be a fairly permanent decision. If you're not going to use all of the information that comes with the automation package, then you probably don't want to spend the money with it. Something like HubSpot is fine. The only time you have to think too much about the automation platform, because they're all pretty good now, is whether or not you're going to set up that same.

instance with your clients, if that's the case, then you probably ought to be using the same one that you're going to use with your clients. There's a lot of advantages in an overlap. So 400 to 800, something like that on the SaaS side.

Blair: Okay, so if I'm running a small firm, I'm seeing these costs start to add up. If I'm running a larger firm, so far nothing's bothering me.

David: Good.

Blair: This next one is where you got a little bit of blowback because you've got PR firm listed here. Yes. Tell us about how much agencies should spend on public relations.

David: You're enjoying this way too much.

Blair: [laughs] I've seen the texts.

David: You're slathering me with meat tenderizer and throwing me into the alligator pool.

Blair: Yes.

David: I think they ought to spend nothing on this. There are a few instances where it makes sense. I'm not saying that PR firms don't do fantastic work for listeners' clients. They do many times, but hiring a PR firm for yourself, what happens here is that they will do all the stuff within reach, which is basically get mentions in trade pubs, which your prospects are not likely reading, and which you could probably get yourself.

If you could hire a PR firm and you get a story and like a notable publication, and then even that's not going to make much difference. If you then tell everybody on your list about it, that can have a pretty significant impact. I just don't see many PR firms that actually deliver those publications. They don't have many reasons to do that, right? My work has been talked about in Fast Company, The Wall Street Journal, New York Times, on CBS News, Inc. Magazine, and some others. I can't remember at the moment.

Every one of those was accidental, was just organic. It just happened. None of those were sought. I just don't think you ought to spend money on a PR firm for yourself. That's not an indictment of PR firms. It's just not a good fit for you.

Blair: With all the mainstream media exposure you've had for your work, has any of it been valuable to you?

David: Oh, very, very valuable, yes. Not because of the people who saw it directly, which I don't think many people would have seen it, but telling people, like a blurb on a book where somebody at New York Times wrote a column and said he's the expert's expert. It's like, well, by God, I'm going to use that everywhere. Yes, it's been very helpful. I just don't think a PR firm is going to help you get those things. If they could, well then, this may be one of the only things you have to spend money on.

Blair: If you run a PR firm and you would like to share some feedback, you can find David on LinkedIn, and Twitter @davidcbaker.

David: Have you hired a PR firm before?

Blair: I don't know why I have to think about this. No. I think about it from time to time when I have a book coming out. I could see it if I had a very specific goal for a very specific audience. I have a friend who's about to launch a book, and he is aiming for the Wall Street Journal bestseller list, and he is working with a PR firm that helps with these specific goals. I can see where that makes sense. A generalist to generally raise my profile, no, I've thought about it, had lots of solicitations, had a couple of conversations. I tend to agree with what you said for the most part.

Yes, a generalist PR firm wouldn't work for somebody like me. I could imagine, I don't know what that is today, but I could imagine a specialist firm would have some sort of value proposition that might be worth considering.

David: Right, yes. We've got zero for PR firm. Let me tell you this, we're at 1,000 a month for your website, 3,000 a month for marketing. That's 4,000. 400 to 800 a month for your tech stack. Let's call that 500, so we're at 4,500. Zero for PR firm, so we're at 4,500 a month.

Blair: What about writing and content generation?

David: The ideal is for you to do this. It's cheaper in the sense that you don't have to spend money on it, of course it takes time. The ideal is the cost is zero, your hard cost is zero. You should do it yourself, right?

Blair: Yes.

David: Now, if we're going to get to the end of the year and nothing's happened, well, that's not optimal, right? The second best option is to hire somebody to help you with that. What that might look like is this is an author or an editor who's going to interview you and sort of pull this together and take the time and maybe also have the skill that you don't feel like you have to shape articles and so on. They will not be as good as if a skilled writer wrote them herself or himself, but it's better than nothing.

I've put zero here because philosophically, I think you ought to be doing this yourself. We've talked about this probably 20 times, but to me, clarity comes in the articulation and not before. I want you to struggle with it. In fact, we just recorded an episode where you said that you learned so much by just wrestling with the idea and

it would have been difficult to come to some of those conclusions if you had been doing it in a talk or with a client, live or something. I really believe that. I have zero for this. If you did need to hire somebody, it would probably be a $1,000 or $1,500 a month or so, depending on who you hire, but I have zero for that.

Blair: Okay, so zero for writing content generation. You really should be doing this yourself, but as you and I, and many listeners know, some people know they should be doing it themselves. After a pattern of 1, 2, 3, 5, 10 years of not doing themselves, maybe that's evidence. Yes. It's probably time to reach out, get somebody to help you. I have somebody in my life who has now sent me two books that they've written with chatGPT. This person is just completely enamored with the tool. Look, I wrote a book. Then a month later, look, I wrote another book. I just skimmed through the first one. I think, it's not bad. There are some subjects out there where the body of knowledge exists out there in the world. It's fairly standard. A novel point of view, bringing a novel point of view to it either isn't necessary or, well, that's the problem. These large language models are not going to bring a novel point of view to any subject. They're just going to summarize and regurgitate what the standard body of knowledge is.

I know in the content creation space, that's a big hot topic. It's so easy to create content. I didn't intend to go deep on this, but I'm with you. I think you should do it yourself. I know that these days, I think my writing has gotten better because of chatGPT. Because when I'm writing, I'm asking myself, could somebody just type this question into chatGPT or Bard or some other LLM, and get something like this? If I can't bring a personal angle and a point of view to it, I'm not going to write about it.

David: I thought you were saying to chatGPT, hey, take my thoughts and write them just like David would. I've tried that, and it said, who's David?

[laughter]

The closest I came to this was, I guess it was my third book, Financial Management of a Marketing Firm. I had written tons of articles about that subject. Each article was on a particular subtopic. I realized, oh, there's probably a book in here. I didn't have the time to do it. Plus, each article sounded like an article, right? I sent all of it to a really skilled author/editor and I said, "Hey, rewrite these articles so that they look like chapters, and then tell me what's missing

She wrote me back, and said, "Okay, these four chapters are missing." I wrote those four chapters, and then that's how that book came to be. I wrote the whole thing, but I didn't shape it into a book. That's a little different to me.

Blair: Yes, that's different. I know other people who've done that as well, and books that have sold very well as yours have. That's writing, zero, ideally. Social media, what should people be spending on social media?

David: I don't think they should be spending any money at all. Of course, we talked about LinkedIn ads and that's technically social media, so that would fall under another category.

Blair: What about $7.95 on Twitter or X?

David: Or TikTok, right, yes. Your clients are probably not reading that. I've got mixed emotions about this because I think your presence on social media can be very valuable from a recruiting standpoint and also to just give people a sense of your culture and so on. I don't know that you need to spend money on it for that reason. I wouldn't even think that you should be interacting much on social media except for LinkedIn. I think you really should. I think you ought to build a presence. You ought to have thousands of people following you on LinkedIn.

You should be commenting judiciously and thoughtfully. You should connect with people, and not immediately after that, try to sell them something. Then a week later say, well, I haven't heard back from you, like don't do any of that stuff. I don't think you need to spend money on social media except for the LinkedIn paid ads. You should be spending time on LinkedIn.

Blair: Of all the social platforms, whether it's paid or whether it's just organic investing your time, you've singled out LinkedIn as the platform that most of our listeners should be putting their time, attention and even money into.

David: Right. Yes, you might have fun on Twitter. That's my disposable personality. I'm expecting to get canceled at some point, and I just don't want it to impact my business. I just sort of fool around on Twitter. LinkedIn matters a lot and I think you ought to pay attention to that.

Blair: So far, we're at 4,500 bucks a month, and then you've got miscellaneous. What's in the miscellaneous category?

David: I just want to acknowledge that every firm is different. They're different in two ways. One is they're specialized in a particular area, so your marketing plan needs to be tailored to that specialization. Maybe you're in fashion and beauty, and they're not going to read a weekly email from you. Maybe they need to be more inspired with

motions and video stuff, whatever. They're personalized because of where you're specialized, but they're also personalized based on your personality as the person heading this up. I just want to give people an extra thousand a month essentially to do whatever seems appropriate for those two things, their specialization and their personality. Maybe you could have a great audience by not just being a guest on podcast, maybe you can host one. Maybe there's a quarterly research project that you're all excited about and you could turn that into all kinds of articles, right? Maybe you hire somebody to help find speaking relationships or speaking opportunities for you. Whatever that is, it just seems like there ought to be at least sort of a slush fund of $1,000 a month to do other things. What does that take us to now?

Blair: So $5,400 to $5,800, let's call it $5,000 to $6,000 a month. In the typical firm, I'm thinking of a small firm, $60,000 to $70,000 a year.

David: What do you think? Does that strike you as low, high, or just about right?

Blair: I wouldn't argue with anything you've said here other than the very obvious point that we've already covered, that we're making generalizations to hit the middle part of the curve of our audience. Obviously, as you get out to the edges, there are going to be different use cases. I know firms that spend hundreds of thousands on marketing, and then I know firms that spend nothing. I think a lot of independent creative firms really do struggle with how much time and money should I spend on this. I think if you're tuned in, these numbers are helpful.

David: You highlighted something that I wanted to emphasize as well, and that don't spend any more than you have to, right? Then you introduced this concept to me years ago, and I've hung onto it and thought a lot about it. It's the idea of placing every marketing tactic as a certain rung on a lead generation ladder. As your presence in the market grows and the pull that you have will leave behind those lower rungs on the ladder and climb up. Maybe you're doing cold calling at the beginning, a lot of it, because you need to and it makes sense and you need to learn from the marketplace. Maybe you don't need to do that if you're an author at some point. Spend as little as you can and keep exchanging the little things for the upper things. I know you would have accepted a role as a panel participant before. You're less likely to accept that now based on where you are in this whole panoply of things, right?

Blair: Yes, but I learned from you very early on, many years ago, across panels off my list early. I won't appear on a panel. Then at some point, maybe you don't do a breakout. You're only doing keynotes and you just climb, climb, climb. That makes a lot of sense to me.

What if you want to hire some of this out? I downloaded a LinkedIn lead where you click on something, download a paper, you're converting, giving them your information so that person gets notified that they have a new lead in Blair Enns. I downloaded three white papers because I wanted to show my team an example of something specific. Then I started to get emails, and then my phone rang and it was a salesperson from one of these organizations and I laughed and I said, hey, I know why you're calling. I downloaded your white paper just as an example for my team. I'm not a customer.

It was a young, polite, enthusiastic salesperson. He said, yes, I'm getting that response a fair bit. I said, how's it going? Because here he is, he's phoning and you can hear the people in the background. There are people calling to follow up on these leads. I said, "How's it going?" He said, "Ah, we're getting a lot of leads." Yes, well, yes. How's the calling going? He said, "We'll probably get some sales out of it." Salespeople are so optimistic. It's been a long time since I've converted on a website of any kind or a social platform like LinkedIn and then got a phone call, but that's what happened.

David: Yes, but back to your question, would it ever make sense to hire this out? Obviously, you might hire out parts of it. If what you do for your clients is ad buys, well, you probably would do that for yourself. Let's say you don't do that. Then you might hire that out. What if you wanted to hire a firm to do all of it? I think that makes sense in maybe a fourth or a third of the circumstances. There's lots of things you could hire. You could hire an appointment setting firm where they're just on the phone for you trying to get you hour-long phone calls or Zoom meetings with what presumably are prospects. That seldom works. It only works if you have no time and if it's very obvious who needs to be reached and they just do that for you. I wouldn't recommend that hardly ever. There are firms that do the whole thing, like Newfangled is one of them, for instance.

Blair: Yes, I was just thinking, are we going to give our friend Mark O'Brien a plug at Newfangled? They do pretty much everything on this list and even some more.

David: Right, and for some firms, it makes sense, especially if you're going to get to the end of the year and nothing's happened. At the lower end, 5,000, the higher end, 12,000, that's pretty much what you're going to spend to have somebody do the whole thing for you. There's a half a dozen firms that do this. We both happen to know Newfangled, but yes, I think it makes sense sometimes.

Blair: I see the appeal of this. I see the appeal of somebody listening to this and going, okay, well, yes, that's on my to-do list and that's on my budget list and et cetera. Just handing everything over to one organization and getting on with the rest of the things on your list. I totally see the appeal.

David: Yes, and also it builds the right habits so that if you decide to take this back over at some point, you know what you should do. You're already in that groove and so on.

Blair: Yes, okay, but you've got four guiding principles to think about whatever you end up doing. What are those principles?

David: Spend as little as you can.

Blair: I like it.

David: Keep climbing the lead generation ladder.

Blair: Yes.

David: Attribution, remember that episode we did?

Blair: Yes, forget about it.

David: Yes, forget about it. If I'll ask somebody on the phone, hey, how did we get connected? What led you to this? They'll forget that they read a book or they came to a conference, so they'll just mention the last thing that occurs to them, right? Anyway, if you want to look more into the attribution stuff, we talked about that on October 20th of 21. Then don't dabble. Don't do eight different things, half-assed eight different things. Just do one or two things really well.

Then the other question is, okay, we've talked a lot about money, but how much time should you spend? Here again, you want to spend as little time as possible to get the results, but about 4% of the entire time at a firm. If you had 25 people at the firm, if one person could do everything on this list, which they couldn't, but then you keep one person busy doing this, so about 4% of all the firm's time would be devoted to this sort of thing, to all things marketing. That gives the answer hopefully for time and money.

Blair: Wow 4%.

David: Yes. That strike you as high or low?

Blair: 4% strikes me as quite specific. I'm not sure if it's high or low. That comes from averages that you've looked at over your client base over the years?

David: Yes, firms that are really doing a good job and they're efficient at it. How much total time is being spent? About 4%, yes. Now it's going to vary, right? Some firms need to do different things, but 4% on average is a good place to start.

Blair: Do you want to leave people with just a reminder of the goal of marketing here?

David: Yes, the goal of marketing is really to make money.

Blair: Really?

David: Yes. I know this shocks you. We don't care about website visitors. We don't care about how many times a form is converting, except to the extent that this helps you adjust the funnel, so that you're making money. If we just go all the way down to the bottom of the funnel, because we've been talking about the top of the funnel largely, if we go all the way down to the bottom of the funnel, what are we looking for? We're looking for a new right fit client every two to four months, somewhere in there.

Now, if you have too many clients and they're too small, well, you're going to have to close more than that. If it's right fit client, then one new client every two to four months. What do we need to do to get there? How many conversations? Maybe you need three or four great conversations with prospects before one of them closes. How many people do you need opening your emails to get that? All we really care about is, is this delivering great clients consistently without hurting our brand? That's how we need to evaluate everything.

Blair: I think Peter Drucker said the goal of marketing is to create a customer. He also said a business really has only two functions: marketing and innovation. It's one of the two important things that you do.

All right, so if you're listening at home, just to recap, how much money should you spend on your marketing? Between $5,000 and $6,000 a month. If you're going to outsource it, expect to spend about double that. How much time should you spend on your marketing? About 4% of all of your human resources. Obviously that goes away or goes to almost zero if you do outsource it, which I guess makes the case for doubling your investment. You can pay the money and the time, or you can just pay the money. That's your choice, people. Thanks for this, David.

David: Thanks, Blair.