Monday, February 9, 2009

How to Set Your Marketing Budget

As a new year begins, it’s important not to put off the unavoidable - establishing the firm’s annual marketing budget. Many either simply abide by industry guidelines which suggest that 2-5% of firm revenues should be allocated towards the promotion of the practice, or they just don’t develop one altogether.

But guidelines are just that – guidelines. Usually a wiser approach to budget-setting is to take a “task” approach. Such an approach requires careful consideration of a series of questions addressed in a very specific order:

What should the marketing effort accomplish?
There may be several answers to this, each suggesting a whole range of possible tactics. A firm may be seeking to raise its profile within the community, promote a particular practice area, educate potential clients, highlight the hiring of a new attorney or any combination of such matters. In addition it should determine the relative importance of each of the stated objectives.

What are the potential strategies for each defined objective?
This includes addressing the key issue of the optimal “marketing mix.” The marketing mix is a function of a number of things including the nature of the services being offered, the target audience, the extent and character of the competition, geographical considerations and the economic times. Any and all possible marketing tools should be explored for their viability in addressing the challenges posed in the first question.

How will each potential tactic/marketing tool be maximized?
It’s not enough to develop an advertising campaign if the ad is only going to run once or twice. The most wonderfully designed web site will prove ineffective if the site is not ranked high on the search engines. And a content-rich seminar will not “pay out” if it garners an insufficient number of potential prospects to “convert” into clients. It is important to determine the threshold level of commitment to each activity that will be required in order to make it a success. How many ads? How high a rank on the search engines? How many seminar participants?

What is the cost to implement each potential marketing activity?
This can require some digging but is necessary in order to determine the optimal dollars required if the firm were to implement everything it wished to do at a sufficiently high/strong level (e.g., running ten ads instead of one or two).

Making the requisite cuts
In most cases, implementation of all possible marketing tools utilized at their optimal levels will result in a dollar figure well beyond the realistic scope of the firm. This is where the art of budget-setting comes in to play.

Two options exist. The first is to cut the level of spending allocated to each of the activities. Hence the advertising campaign, the web site optimization, the promotion of the seminar, etc., are all implemented - but at reduced levels. The problem with this is that the level of marketing activity will fall below the threshold necessary to make any of the programs effective. A preferred option is to instead, focus on just some of the potential activities – but at levels high enough to ensure their success. Which activities should be supported in such a way becomes a function of whether the activity addresses the more important of the objectives as determined in Step 1 and by their relative cost.

If you have questions regarding setting your marketing budget, e-mail Les Altenberg or call (856) 810-0400.