Now and Later: Forecasting Your Law Firm’s Marketing Budget
Balancing your firm’s marketing efforts with your actual client work can be a difficult task, with the former enterprise often getting buried beneath the importance and immediacy of the latter. But if you and your colleagues don’t set aside some time to discuss how you are going to approach your firm’s marketing efforts at the beginning of each year and what that’s going to look like financially, you could be allocating your resources in all the wrong places ― and losing potential clients along the way. In order to avoid that scenario, we’ve compiled some common best practices to keep in mind when forecasting your annual marketing budget.
The Importance of Budget Forecasting
For starters, everyone needs to appreciate the importance of forecasting your annual marketing budget. By focusing on the marketing data accumulated during previous years, as well as using digital tools to research your competitors’ spend and strategies, you can leverage that data into an accurate and effective forecasting model. Doing so helps you understand exactly how much money you have to spend and where it would be best put to use. Failing to do so leaves you grasping at straws and trusting your intuition rather than relying on objective facts, which is one of the most common mistakes that can occur in marketing ― legal or otherwise.
One of the primary benefits of creating an annual marketing budget is that it promotes accountability, whether you are conducting your marketing efforts in-house or working with a fully-staffed marketing agency like LaFleur. Clear budgets lead to strategies supported by goals and objectives, and if those goals and objectives are not met or exceeded, there can be no doubt who is responsible for that failure. But if expectations are not clearly defined before implementing marketing strategies, there’s no clear baseline of accountability.
Once those expectations have been established, be sure that your marketing team is capable of tracking the data so that you can account for your spend and also locate potential areas for success. Not only will this help you create a useful budget, but it will also help you monitor your progress month-over-month throughout the coming year and set you up for even more accurate forecasting in the future.
Many decision-makers are prone to taking a quick look at the previous year’s overall marketing spend and then quickly asserting that they should just repeat the same formula. Not only is this short-sighted, but it’s also just plain lazy. Forecasting a marketing budget is not as simple as saying, “X% of our annual revenue should be spent on marketing,” especially since said “mar keting” is actually divided into several different channels, each of which has its own tactics that should be contributing to a larger holistic strategy.
According to a recent survey of 295 global business leaders, they plan on increasing their marketing budgets within the following channels (noticeably absent from this list are traditional marketing methods, such as billboards and radio spots):
- Email Marketing: 59.7%
- Social Media: 56.3%
- Display Advertising: 55.9%
- Mobile Marketing: 51.9%
- Pay-per-Click (PPC) Advertising: 42.4%
Furthermore, a 2016 report from eMarketer stated that 75% of survey respondents planned on increasing their investment in Google AdWords over the next year, and another 69% indicated that they are planning on doing the same with Facebook marketing.
Based on comprehensive research results derived from their exhaustive surveying, Web Strategies found several distinct themes in marketing over the past five years:
- Marketing budgets are on the rise
- More money is now being allocated to digital campaigns rather than traditional channels
- Annual marketing budgets usually represent between 7% and 12% of net revenue
- B2C businesses tend to outspend B2B businesses
- Smaller companies are spending a larger percentage of their revenue on marketing than larger ones
- The majority of digital marketing budgets are used toward PPC search and display campaigns
In short, smaller firms are now focusing on digital marketing strategies that are geared toward increasing inbound leads to their web properties through paid advertising. We have found that when those PPC efforts are paired with top-notch collateral in the form of engaging infographics and informative whitepapers on relevant topics, more leads are generated and more clients are acquired.Want to stay up-to-date with LaFleur Marketing?
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Crafting Your Budget
Now that we recognize the need for budget forecasting and understand how other businesses are allocating those dollars based on unique marketing channels, it’s time to discuss how to actually coordinate and create a marketing budget. When developing your marketing budget, be sure to include only those monies that will be spent strictly on marketing rather than business development or client costs. Once you start to muddy the waters, it becomes more difficult to crystallize your goals and achieve an accurate, trackable figure.
There are four common ways in which a marketing budget is determined, including:
- Top Down: A primary executive decides how much should be spent and through which channels. This is only recommended if the chief decision-maker has all of the relevant data at his or her disposal and possesses a thorough understanding of the legal marketing landscape. Even then, it would be wise to confer with at least one marketing professional to establish a baseline of previous successes and failures before moving forward.
- Copycat: Seek out your competition and mimic their efforts. This can be an effective strategy if you can retrieve accurate and relevant marketing data, but it requires you and your firm to be able to update your marketing efforts on the fly to match those of your competitors.
- Sales Percentage: This method calls for your firm to spend a percentage of how much each new client is worth to you on your marketing efforts, but as each new client’s case is likely worth a different amount, this approach is rather arbitrary and involves too many variables to arrive at an accurate figure. It also doesn’t take into account how those clients were added to your roster in the first place.
- Goals and Objectives: This is the approach that we have found to be the most effective because it forces you to look at the previous years’ data, your successes, and your failures before rushing to any conclusions. Once you are able to review the objective data, you can begin to understand which areas of your marketing plan are most likely to thrive and which require the most attention. To put a neat bow on the process, use this data-driven knowledge to set achievable marketing goals that align with your plans for growth.
Once you have determined how you are going to go about creating your budget, you should consider the following marketing channels, which should work together to create a holistic and comprehensive strategy:
- PPC: Search, display, and remarketing
- Social Media: Facebook, LinkedIn, and Twitter
- Email Marketing: Drip campaigns, newsletters, and blasts specified by audience and practice area
- Content Creation: Blogs, whitepapers, infographics
- Design: Art, graphics, stock images
- Technology: Cost of building and maintaining all of your web properties, as well as a customer relationship management (CRM) tool and a content management system (CMS)
Each of the marketing tactics above should be allocated their own individual spend that is based on observable industry return on investment, but each figure should also be based on your firm’s interests and goals. For instance, if you are planning on revamping your website or creating a new site entirely, obviously you will need to spend a healthy percentage of your annual budget there. Additionally, you might want to spend smaller amounts on Display advertising to draw new visitors to the site and spend more on content creation to provide those visitors with valuable resources ― resources that could potentially convert inbound leads to satisfied clients.
Working with LaFleur
When you work with LaFleur, you’ll find that we use proprietary, experiential, and industry-specific data to help you determine what your firm should be spending on marketing and how that spend would be best divided among different channels.
We are not interested in convincing you to spend any more than what you are comfortable with, but we are interested in providing you with the tools and information necessary to make informed marketing decisions that will result in increased client acquisition and outstanding return on investment.
Please contact us today at (888) 222-1512 to learn more about our approach to legal marketing in a wide variety of service offerings, including content, social, and email marketing. We’ve put our work to the test and passed with flying colors, and we are confident that we can achieve similar results for you and your firm.
Related Legal Marketing Articles:
Gordon, A.L. (2016, January 26). Using forecasting in digital marketing. Smart Insights. Retrieved from http://www.smartinsights.com/managing-digital-marketing/planning-budgeting/perfect-marketing-plans-accurate-forecasting/
Kearns, S. (2016). How to create a marketing budget. Quickbooks. Retrieved from http://quickbooks.intuit.com/r/budgeting/create-marketing-budget/
Leone, C. (2016, October). How much should you budget for marketing in 2017? Web Strategies. Retrieved from http://www.webstrategiesinc.com/blog/how-much-budget-for-online-marketing-in-2014