It’s that time of year when everyone starts reviewing their numbers, tidying up loose ends, and preparing for the new financial year. In today’s episode of Digital AF, we chat about planning your digital marketing strategy and reviewing the cost of services so you can lock in your marketing budget for the next 12 months.
It’s that time of year when everyone starts reviewing their numbers, tidying up loose ends, and preparing for the new financial year. In today’s episode of Digital AF, we chat about planning your digital marketing strategy and reviewing the cost of services so you can lock in your marketing budget for the next 12 months.
Welcome to Digital AF. My name is April and today I want to chat about planning and what digital marketing actually costs. It's that time of year when everyone starts to review their numbers, tidy up loose ends and get ready for the new financial year. This includes reviewing goals, what's happened over the past 12 months and what they want to achieve moving forward.
Speaker 2 (00:00:21):
Digital AF. The digital marketing podcast that features real conversations from those who live and breathe the digital agency life. April Ford, Digital Agency shares their tips, tricks and exposes the truth about what works and what doesn't. Welcome to Digital AF. Let's get into it.
In this week's episode, I speak to Brendan-
Good day, everyone.
... about planning for the new financial year, as well as reviewing the cost of services so you can plan your marketing budget over the next 12 months. The beauty of working in an established business is that you have an idea as to the flow of your business and industry. This is immensely helpful when trying to determine revenue goals and forecast the investment required to facilitate future growth. So Brendan, as the numbers man, when planning, what's the first thing you should do?
You got to try and figure out what you want to achieve moving forward.
And that's usually based on historical performance.
How would you do that? I know for a couple of clients we talk in months.
Yeah. So most clients that I work with, particularly in the early stages when they're being onboarded or when we're in the first strategy session, we work through a 12-month budget. Some clients can only think a couple of months in advance, but the reality is, just like a financial budget, because a marketing budget is part of your financial budget, right?
You should have a plan for the next 12 months. So, we're obviously just coming towards the end of the financial year, that's a perfect time to be talking about it. So if you think of a 12 months calendar, it's a bit like a cash flow forecast, your revenue's going to go up and down throughout the year. Very rarely is it the same every single month. But funnily enough, most marketing budgets are allocated the same every month.
Yes, they definitely are.
It's quite amusing when you see someone who's just allocated 50 grand a month, every month for 12 months and it's like, well, hang on, you might do 2 million bucks one month. You might do 200 grand the next. You might do 10 million next. So what we do to provide some consistency, the best place to start is to allocate a percentage of revenue on marketing spend. So advertising is one component, marketing costs are another, et cetera. So that'll vary obviously, depending on the industry. In some industries where the more competitive the industry, the higher percentage of revenue you'll have to spend on advertising and marketing.
And the reason is that you actually have to outspend your competitors. So, if we take eCommerce, for example, there are businesses in eCommerce or brands within eCommerce or sectors or niches within eCommerce where they're spending 30 to 40% of their revenue on advertising.
Yeah. Scary. And let's face it, there's a point where it's viable and it's not. So there are a lot of businesses in e-com that just don't make any money. You've only got to look at a lot of brands you might see that have super expensive brand ambassadors-
... for example, there are a lot of say betting slash mattress companies where they will spend 30 or 40% of their revenue on advertising and they actually make a profit because all they're after is market share at that point in time.
Yes. Or they might make a profit at certain points inside of the year, but they've still got to maintain position throughout the year as well.
Exactly right. So, in some industries and let's take buying mattresses online and there's a whole bunch of brands named after different animals. I won't name names, but ultimately they spend a bucket load because they have to, and the margins are tight, right? So I'm not expecting every e-com business to go and spend 30 to 40% of their revenue on advertising because they'd just go broke if they did, because they might not be raising capital like other companies are, but let's take the average Joe privately owned company that hasn't raised capital. They might find that in eCommerce, the most they can spend is 15 or 20% of their rev. on marketing. So in other words, if they're spending 20% of their revenue on advertising, for example, they're expecting to get a five-times return.
Does that make sense?
Yes. So with regards to planning, do you think about when you are looking at the previous 12 months, do you compare it to major events that have happened in a calendar? So we'll continue to use e-commerce as an example, but you've got major sale periods which impacts revenue, but it will also impact your costs.
Yeah, definitely. Well, that's the beauty about picking a percentage of revenue. And when I say picking, you've got to establish what is a reasonable percentage of revenue to be investing in advertising and marketing. And the way you do that is you've got to speak to agencies because it's the only way to get a baseline unless you've been fortunate enough to look at the books of a bunch of other companies like yourselves.
And agencies that understand business as well.
Yeah. I mean, agencies that have been around for a while, more than a few years, and have been around the block as in, they've been in business for an extended period of time. When I say extended, I don't mean two years over COVID; I mean like 10, 15, or 20 years. They'll be able to confidently with authority, say in your industry, you need to spend X. So like I know for example, whether it be medical devices, whether it be financial planning, whether it be law, whether it be a niche area of law, I can tell you with confidence, you need to allocate X percentage of your revenue in advertising, even down to food. And I guess you'll often find that really good operators will know their operating costs percentages.
If you talk to a hospo person, like a restaurateur, he'll be really clear about what his wages to revenue have got to be. They've got to be at 24% or they've got to be at 26 and a half percent. Or whatever it might be. Same with food costs.
So, it's about having clarity over what you've got to spend as a percent of your revenue. So, when you're going back to your question about time peak period, peak selling periods, well, those months are higher in revenue anyways. So, the percentage would ultimately go up with that, and you might go, "Well, look, we're trying to grow. So therefore, we're actually going to not budget 5%. We're going to budget 7%. So we're going to put a couple of extra percent of our revenue into marketing."
And so typically, when I'm working with a client, we'll go, okay, look, as riveting as it might be and as boring as it is for them, we go through a spreadsheet and it's literally like, "Okay guys, what's the viable figure in your business based on your cash flow forecast?" Which they may or may not have, to go, "Okay, right. This is the line in the sand about A, what you have been spending, because you got to look at this historically, what have you actually allocated?" Some have been lucky enough or they haven't been spending that much. Others have been spending too much and there's been wastage and poor management. So where we start is to look at historical and that's just looking at, "What were your sales months one month? And what did you spend in your advertising and marketing?" And then that'll give us a percentage and then we go, "Okay, right. Moving forward, intentionally, what do we want to spend?"
Yeah. So that's the next step. What are you wanting to achieve this financial year? And whether that's a percentage of growth or the other side of it, which impacts budgets is you may have a new category that you're opening up as well. So you might have a new category that you're selling to or a new market that you're selling to as well, so you have to build momentum with the marketing there. So your return might not be as instant as if you put it into something that is a known quantity.
Yeah. And it's not necessarily that. A lot of people think of return as an instantaneous thing, but the reality, it's not. Particularly, the bigger the business, it's like a ship, the slower it is to turn around. Or slow down or pick up speed. So ultimately, the idea of, "If I spent X now and I want to..."
But I also think that with new business too, because-
Well, a new business doesn't have brand awareness, right?
A business that's already got brand awareness will be able to scale up and down their marketing much more quickly with great efficacy. Whereas someone who's brand new whom no one knows about, they're going to really struggle. And let's face it, we might actually talk about exactly what a new business might do, but let's stick with the older, let's stick with an established business for the time being. So you mentioned breaking into new categories. It could also be simply increasing a percentage of a different type of work that you want to do or a product that you want to sell, and that might be a strategic decision around margin. So for example, it could be a cosmetic injectables company that does far too many consults, doesn't convert enough, and doesn't do enough actual injecting, doesn't sell enough filler and Botox, and therefore they're not actually making much money because all they're doing is consults and they never actually re-book someone.
So rather than trying to go into patient acquisition or client acquisition in that case, the marketing spend might be geared towards retention because they're focused on trying to sell a service that they make more margin out of. So it's not always based on revenue. So when we actually sit down and talk to a client about what are they trying to achieve, to answer your question, some are measuring their success based on revenue, others is measuring their success based on margin like gross profit margin. Others are just wanting to maximise their bottom line. And so a lot of the time they think, "Oh, to maximise my bottom line, it's all about just cutting costs," as opposed to being more intelligent with doing or selling more services or products that actually have higher margin than lower margin. But that's a business conversation, and going back to what we've talked about previously, you're just using marketing to fix it.
Yep. And then, so you've obviously you've got marketing budgets, but there's also other investments that businesses need to make when they are looking at opening new spaces and expanding into markets, things like that. So things like additional space, if you're a retail or a professional service can be an additional cost. Do you lump that into the marketing budget?
Yeah. Well, I mean the marketing budget's like the dump file on a computer where everyone pops everything into. The first thing we need to think about is if you've got this marketing budget that you've created and you've plotted your monthly sales for 12 months, say it's financial year '23 coming up, we're going to go, "Okay. Right. We know what we're forecasting to try and do in sales every month. We've decided on, we're going to allocate 12 and a half percent of revenue and advertising spend." And that's literally a calculation that we put in the spreadsheet. So it tells us the amount of money we've got to spend. Then we start to think about, "Okay, what are we doing inside of that 12 months?" So let's say we're opening new stores. Now we've got clients who are opening multiple stores every month from allied health and medical devices, through to furniture, through to all sorts of different industries.
Now, every time they open a new store, we've got to allocate, "Okay, how much are we spending to launch that store? Is the signage cost going to the marketing budget or is that an extra ordinary cost?" So you start to actually build out a launch budget or a startup budget for each new location or store. Or going back to what you said before, it might even be about a service. So all of a sudden you might be introducing a brand new service that you've never done before and you want to start generating traffic for it.
Well, okay. We've got to allocate funds to that that might not necessarily mean that you stick to your 12 and a half percent because you've actually brought something new into the mix. So when you're doing this 12 month exercise, it forces people to actually think about what are they going to do business-wise during that year because you need to talk about that stuff, you can't be oblivious to it. Get halfway through the year, have spent all your money because you decided to do some wild launch for your latest store and get every influencer under the sun to talk about it and then have no money left for the rest of the year.
Or stock for people to buy.
Yeah. Yeah. That's right. Well, it's amazing what people will spend their money on and I'm not there to manage someone's money, I'm there to manage their marketing. But if they can't afford to pay the bills, then there's a problem.
Yeah. And also, I suppose we take a global view of marketing where it's like, "Okay, so we're going to allocate XYZ to advertising, but what else are you doing?" Because everything you do impacts the results of the advertising. If, for example, you say, you're going to open up this new category and we do marketing for it, we drive traffic to a website, but you actually don't have any stock available and then they don't convert because it's a 12 to 14-week wait.
Yeah. Yeah. Well, it's a waste of money then.
That's not an advertising problem.
That's a business problem.
And I think one of the things that people probably don't often consider is that you can pair things up and down. So there's nothing wrong. That's the beauty of having a really good relationship with an agency that understands your business. If they don't really, really understand business and in particular your business, then it's difficult to have those sorts of conversations because an agency will flip out if a client calls and says, "Oh, I need to cut this back by XYZ." And it's like, "Oh my God, the world's imploding." But the reality is, it's just they might be out of stock.
Or they might be booked out. So you need to be able to have a really open dialogue with your agency to be able to say, "Okay, look, we need to scale up. We need to scale down," whatever it might be. Could be a delay in shipping and all of a sudden you can't get product.
100%. There are a million business decisions that impact advertising and marketing and when everything's considered and there is that open dialogue about future planning, that's when it works really, really well. And we can make suggestions and recommendations on budgets and ideas based on the conversations that we're having. So the more information and constructive information that we're given, we can provide recommendations based on the challenges that businesses are facing today because let's face it, we're all facing challenges. There are people who have recruitment challenges, people that have stock challenges, and people that have apparently lettuce challenges at the moment. So all of those things, that information is really important and also should be considered when we are future planning with clients.
I mean, every client that I'm meeting with at the moment I'm asking a series of questions depending on their industry. For example-
Is lettuce in that?
Yeah, it is actually. So with food clients, it's like, "Okay, what are we doing about cost of goods and what do I need to be mindful of?" And it's like, "Well, why is the agency asking about that?" And the reason I ask about that is because I want to know in three months' time, have you guys got to redo your menu pricing and therefore, do I need to actually position this business in a slightly better shape than what I did previously because they are going to have to charge three bucks extra for a burger? Or am I going to have to think about changing an entire marketing strategy? Because there's a microchip shortage. Because we're in the world of shortage, there's a shortage of everything, everything's run out apparently.
Everyone bought too much stuff.
Where did it go?
Yeah. I think it's in my dad's storage shed actually. So ultimately, I'm asking questions about, "Is a microchip shortage going to impact you guys?" We've got multiple clients where it is.
We do. Yep.
We've got multiple clients who sell products that are from huge manufacturers who are like, "You know what? We're going to have to take Bluetooth connectivity out of that device. It's a lifesaving medical device that people require."
Yeah. It's pretty scary.
It's wild. So asking things about lettuce, microchips, fuel-
Factories shutting down.
... labour, all these sorts of things. But I want to know that because if I've come up with this strategy on how we're going to grow this business over the next 12 months, and I haven't asked those questions and planned for it, I'm going to look like a numpty if we've blown all this money and then all of a sudden they've got no product to sell.
Or no one to make the product, or no one to ship the product. So yeah, when we're doing that 12 month planning exercise, we're actually looking at all those different things and it's not necessarily because we're suggesting they need to do something, it's just bringing it to their attention so that the strategy or decisions that we make or recommendations we provide are based on the most accurate forecast we can possibly give.
And I mean, we're having those conversations all through the year too. It's not a once off, one hit wonder. We like to be across the problems that our clients are facing so we can be with them when they need some help making decisions or they need to turn to us and go, "I've got to make this change. This is what I'm thinking. What do you think?" So it's really important that not only do you use this time of year to review, what's happened over the last 12 months and how do we facilitate growth or stability over the next 12 months, but also just having that open chat dialogue business to business conversation where it's like, "I'm facing this. I don't know where to start with fixing that problem." Or, "The shortage of lettuce is really going to impact the cost of my burgers. What should we do?" Just having that chat, because we can apply marketing solutions through to business problems and that's essentially what we do all day every day.
Give the millennials kimchi on their burgers.
So for those who are trying to plan out their marketing budgets, let's run through some standard costs that we have at April Ford. We'll start with our ongoing service management, which I think you could even say that they're like a fixed fee management cost.
Well, when you look at your marketing costs, you've kind of got two parts, right? You've got advertising spend and that's something that you can have, again, like you've got an advertising spend, and we can talk about expectations in a minute, but an advertising spend is based around what you're trying to generate in sales. So there's one component there. Then you've got marketing costs. So that might be the labor component for an agency to actually deliver the work. So graphic design, web development, web updates, social media management, ad management, all those sorts of things.
And they're sort of ongoing costs because they're directly tied to activities or I call them programs when I talk with clients.
And they can be variable too, one month it can be-
They can go up and down.
... 10 times the amount because it's relevant to a percentage of your turnover.
But then you've got costs which are the same every month.
Yeah. And typically what businesses like to do is to be able to control their costs.
So what we do is provide people a clear understanding around what they need to allocate both in terms of advertising spend, but then also what the management costs are going to be to deliver that. And then what the associated marketing costs are going to be as well, whether it be email marketing through Klaviyo flows or whatever.
And then, so you've got those planned monthly recurring costs that can be paired up and down, but ultimately, you've got a fair amount of confidence as to what they'll be.
In my previous life, as a marketing manager, I would have a monthly budget and it was relevant to sales that the business generated that month.
So I had to control my costs and I had to control, I had to know what I was spending and the easiest way for me to do that was to have these recurring costs that I knew exactly what I was spending every month. It's actually why our agency is built that way today, so you know what that invoice is going to look like every month. There's no surprise there unless you have gone out and you've done things like a new website and that's not even a surprise, but you have forward planned to that cost.
Yeah. There's no surprise invoices.
So if you think about those, they're the recurring things you've talked about, where you can plan for those and control those costs. And then you've got the non-recurring things. And this is a question of things like, do we need to build a new website? Do we need to do major upgrades to our CRM system? Are we going to, a classic example is a TG-
Rebrand. TGA updated some legislation policy the other day. So now we've got redo a whole bunch of marketing for a lot of medical related clients.
That was not something that was planned when we had the discussion this time last year.
So when we're planning for this year, moving forward, we know we've got to do that because obviously the rules have come into effect. So you're going to have non-recurring costs and that's an allocation of capital, we'll go, "Okay, well, in the next 12 months we'll likely rebuild a new website and we're thinking about rebranding, et cetera." And so you then might have your standard recurring budget, which again, going back to the percentage of revenue might be five, 10, 15% or whatever, but then you might have major upgrades.
Website. Even website maintenance, like updating case studies on the website-
... updating imagery to make sure you look relevant, blog writing, blog posting, all that type of stuff.
Adding and taking away new team members on a website.
As much as we might joke about that, that's something that happens constantly, especially in a growing business where you're adding 2, 3, 10, 20-
... if you can find the people, a month.
The right marketing agency will take that into consideration when building the website-
... just FYI, so if you have that problem, please speak to us.
Yeah. Yeah. If you can use online banking, you should be able to use your own website. If you can't, you've got a problem.
100%. So let's talk about kind of fixed fee costs or the ongoing recurring costs that we talk about. I'll go through each kind of major service that clients engage us for. And let's talk about kind of what would you spend. So let's talk about social media content.
And I think for fairness, because not everyone's a client of ours listening to this, we probably should give people a range between what an average agency might charge and what a good agency might charge, and then what someone being ripped off might pay.
Because I think there's actually three points in there.
I actually have no idea what other agencies charge. I just know what we do.
I know you don't.
So you can.
I do, because I get the comparison from new clients when they're like, "Well, I pay this," or, "I'm paying that."
So if you think of social media management, right, if you are paying an agency or a freelancer say sub-two grand a month, you're probably getting a subpar product delivery because, in all honesty, it's very difficult to produce well-designed, well-written, strategically placed content regularly on social media for a client for less than about a couple grand a month.
Yeah. There's a lot more that goes into content than what people realise and the way it's done. When we do content for clients, we have an art director, we have a graphic designer and we have a content writer. It's not one person building it on Canva who's still at university, it is a specialist.
I know. But you've got to be fair. Some businesses aren't at a point where they can afford to get an agency and spend two and a half, three and a half grand a month on social content production because they simply aren't there yet in terms of their business size. But there's no excuse for a business that's established that has the funds to invest in social media content appropriately.
But the big, big difference is when people engage in an agency like us, they get a team who produce their content versus if you're finding someone who's a freelancer or a friend of a friend, or the daughter of someone that your mom goes to crochet club with, then they might only be charging you a thousand bucks a month or 1500 bucks a month because they're a one-man-band or a one-woman band.
And some of those are really capable, but the problem is that they don't have the capacity so the moment something happens in their lives, they get COVID, they break up with their boyfriend or their girlfriend, they decide to go to Europe for six months, all of a sudden they don't have the capability to continue to deliver. And then you find out what 1500 bucks a month really gets you.
Even if you bring it in-house sometimes, with the way the world is at the moment, people are sick a lot. So you've got social media marketing people who are sick with COVID and then they get the flu and then they get a cold, and you still need that consistency in your marketing.
Well, it's interesting actually. So when I'm talking with new clients, a lot of the time, they actually have someone in-house who can do it or had been doing it, but isn't able to do it consistently enough because it's not actually their sole focus. Say, for example, you're trying to compare costs and you're trying to save as much as you possibly can and you go, "Well, it's going to be cheaper for me to put someone on in-house two days a week or three days a week."
You're still going to spend 35, 40 grand a year, which is what it would've cost to have an agency do it anyways. So the interesting thing is that there is no shortcut to good quality content, there are only shortcomings when it comes to content. So the other thing we've got to talk about, which I think people should know is if they're paying five, six, seven grand a month for content production, or content, social media content management, they're probably paying significantly too much.
Yeah. I mean, it depends on what it includes though. So if it's new imagery and photography, if it's videography, all those types of things all come into consideration as well. So whilst yes, I do agree with that comment, that is, I wish we could charge that, but we just can't, and you don't need to either.
There are things that I think in certain types of businesses and in certain types of industries it's warranted, it just depends on what the business requires. And that's something that we go through when we are taking clients on and we are talking to them. Clients, what are they budgeting for content? Our clients.
Yeah. Typically between two and a half and five grand a month is what most clients would spend on social media management. And that just depends on how many platforms, how many posts a week, all that sort of stuff.
And then I guess the next thing that usually carries on from that is Facebook and Instagram advertising, which is something that is in most businesses' arsenal these days, they're generally doing some form of ads on Facebook and Instagram and-
You just can't not do it, to be honest, because everyone else is.
Yeah. And that's the thing is that when you're not doing something, your competitor probably is. Where if they're not, and they figure out that you're not, then they're going to start doing it. So as a business owner, you are competitive, a lot of business owners don't think they are until-
We are all competitive. Business owners are all competitive.
Every business. When a business owner says, "You know, I really want to be like X." They're not actually saying, I want to look and be like that company. They're saying I want to beat that company. But I guess when it comes to Facebook and Instagram ads management, the same thing, yeah, everyone's got a friend, a freelancer, a click funnel specialist, some 23-year-old guy working from his bedroom at home who might be charging 500 to a thousand bucks a month for his ads.
I don't even know how you can do it at that because it's just the industry, especially Facebook and Instagram, they are changing weekly. How do you even... You just can't keep up with that.
You can do it for that amount. You'd just do a terrible job.
Yeah. It's a half job..
Yeah. It is a half job. And I think the problem is, is that-
It's a set and forget job, which a lot of businesses don't realise when they are engaging people at that price point, it is set and forget, and they are not looking at results, they are not optimising, they are not providing recommendations, they are not changing things to improve results.
The easiest way to know if you're getting good value for your money or not, is if you look in your inbox in your email and your phone history and go, "Have I spoken to my agency?" If it's not every other week, it's at least once a month. And if I look at my emails, have I got regular reports? Have I got regular recommendations? Do I have a proactive agency or do I just have someone who sends me an automated report and I never hear from them?
Yeah. I mean, half the time we are providing recommendations, half the time we're having to update our accounts based on the changes that Facebook and Instagram are rolling out. So there's a lot of work that goes on behind the scenes that people don't realise, but it's a moving target, social media advertising at the moment. It just continues to change.
And the biggest issue, the reason why there has been so much change in the last say 12 months, and it will continue over the next couple of years, is third-party data will be gone and we've got to shift to first party, which is fine. We know exactly what we've got to do. We have spent the time researching it and planning and forward planning for all of our clients so we know what we've got to do to minimise the impact on our clients. There will be an impact. Everyone's going to be impacted.
Well, and I think a lot of people probably don't quite understand the impacts of poor advertising management because they've gone through a market in the last two years with everyone, every numpty with an internet connection thought that they were an ad management genius and went and started an agency. And it's only over the next 12, 24, and 36 months that all of a sudden businesses would realise how much money they're actually losing or wasting, which is infuriating when you think about it after the fact.
So if there was one bit of advice I would be giving business owners right now, it would be stress test the agency or the freelancer that you're working with because they might have been able to do an okay job in the last two years when there was heaps of free money circulating in the economy. But unless they really know their shit now, they're really going to struggle to deliver the results that you're hoping to achieve over the next 12, 24 months.
And so what should businesses be budgeting?
Oh, look, a small business probably needs to budget about a thousand bucks a month, going up to anywhere, going up from there could be two, three, four, five, 10 grand a month management, but typically most businesses will spend between one and three grand a month on ad management.
That's assuming they're spending say anywhere from a few grand to 50 to 80 grand a month in spend.
And so what about artwork?
Artwork's charged separately.
Artwork's just an hourly rate thing.
And again, that's the beauty about having an agency who has an art department as opposed to a freelancer who doesn't, is the difference in advertising. So it's interesting. Social media advertising is kind of not really, because it's been such a new space, it's not been treated with the same level of respect, intent, and thought that traditional advertising has. And so there are a lot of throwaway ads on Facebook and Instagram, but the difference in results between a really well planned strategically creative campaign on Facebook and Instagram compared to one that's just a throwaway, which is just like some on-trend hipster type thing, the difference in return is massive.
And so I think what people probably also need to consider is yes, you've got your investment in advertising management, which is a very technical hands-on analytical numbers-based skill, but then you've also got the creative component, which is part of management because the person actually running or managing your ad accounts needs to be able to turn to their art department and their creative team to say, "Can we do some different creative that will actually generate a better response?" And then you have an art director come in, you have a creative director come in, you have a team, a strategist come in and actually create content or advertising that will convert better.
Yeah. We talk about creative-led digital advertising.
So you are investing in that creative piece to generate the results and position your business for what you are trying to achieve.
And so what about Google Ads?
Probably similar costs to Facebook and Instagram ads.
And similar thing where you'll pay for artwork because some businesses need artwork every month because they might have regular sales every week or every month. Others don't need anything for three months.
But typically when we're budgeting, we'll go, "Okay, well here's a management fee based on..." Because management fees usually are a fixed fee plus a percentage of your advertising spend.
Some people try and charge like 20% of advertising spend. But if you're spending like a 100, 200, 300 grand a month on ad spend, that is a ridiculous high management fee. Others are just, you know?
It's also a lot of work.
Yeah. It is a lot of work, but at the same time, again, there's kind of a realm between getting value and not getting value.
At the end of the day, though, as long as your advertising marketing cost is in line with what your percentage revenue that you've allocated, that you feel is fair, and your agency's agreed to as well. Because if I have a client who's like, "I want to spend 2% of my revenue on marketing," and I know it's not possible, I'll just tell them there and then as opposed to be responsible for it down the track.
Because the wrong thing would be is to give them the false expectation that they're going to hit their numbers without adequate investment.
But ultimately, yeah. I mean, there's a big range in what people charge and how they'll charge, but typically you've got a management fee, might be one to three or five grand a month-
... up to 10, and then you've got artwork-
... which might be every month or it might be every quarter-
... but typically you're updating every quarter.
And when we talk about artwork, you obviously, you don't have artwork for search, but you do for display, whether we're building HTML5 ads, which is just another world to live in which we do, which is great. Or you're building YouTube ads and YouTube bumper videos, depends on what you're doing, it will be depend on the cost of artwork for your campaigns.
One question that a lot of businesses probably need to get their heads around is the agency that they've employed, do they actually have the skills in the art team to produce motion graphics and animation and actually proper advertising.
Yeah. Because it's not just someone who's got a year of design-
Oh my gosh, no. I wish.
As a business owner, as an agency owner, I wish that was the case, but it's not.
So yeah. Business owners need to understand or marketing managers need to understand if the agency they've engaged has the skill set within the art department to actually produce really good advertising because they've got people in-house who actually can do animation, motion graphics, all that sort of stuff.
Yeah. And I mean you have creative thinkers or like ideation and then you've got execution, which is, has that team got the technical seals to execute? Do they even know what they are required to execute? Do they have the artwork specs and do they understand the best way to build a YouTube bumper video ad? So you've got all of those things to think about as well.
And I think it's obviously without getting too technical about the requirements of different advertising platforms, it's an interesting point to be able to, when you're trying to compare apples for oranges and engaging agencies, because that's one thing that often happens is someone might go, "Well, these guys are $500 a month and you guys are two grand a month. What's the difference?"
And it's like, well, you've got access to this entire team who can produce X as opposed to this one-man-band working from home who might be a...
And what I know after doing this for the last five years is that one person cannot do everything even if they say that they can.
Yeah, they don't exist.
They don't exist. So you hire different people for different skill sets and different experiences and different ways of thinking. And so all of those together can create really, quite amazing campaigns that can come out.
So what about email marketing?
Yeah. Everyone should be doing more of it.
I mean, we're a bit old school because we kind of grew up in the marketing era of growing a list of marketing to it.
Yeah. I mean, I come out of lead generation, so that's my background.
Yeah. And that was because in the earlier 2000s and in 2010s and so forth, you actually had to build loyalty and engagement with the prospective customer before you could sell something to them. It's actually only been the last couple of years you could just switch an ad on and people will buy stuff.
And I think we're returning to that. So as hard as it's been, as crazy as people have looked at me in the last couple of years, I've been saying to people, "Yeah, look, let's keep running campaigns to generate now money." But future-proof yourselves, build a list because at some point you're going to want to reduce, advertising costs are going to go up in digital and to get more efficient use of your spend, build a big list and then use email marketing to get sales.
Yeah. I mean the thing is, is what people don't realise with email marketing is you're advertising and email marketing go hand in hand. So quite often we are pulling lists of people that, a segment where we're are sending an EDM out to that person, we may even have sent SMS out to that person as part of that campaign, but we're also placing remarketing to those people via social media channels and Google display channels as well. So everything does link together and impact the message and their actions. So it's like it's a nice reminder.
And it's hard for a lot of clients who aren't exposed to this on a regular basis to understand why you might have a line item in your ad budget for email growth because you've then got to understand three steps in the strategy later. It's actually about trying to generate a sale cheaper based on that remarketing ad, running to your email audience on Facebook.
To be honest, the return on investment of email marketing is astronomical.
Oh, it's awesome.
But I think the old school thought, and we've seen a shift in this in the last probably 24 months, I think, especially with the rise of eCommerce and the competitiveness of eCommerce where people are having to invest more and more into their email marketing. And there are some amazing platforms out there, where if you combine it with great design, great copywriting, and great campaign planning, can nurture your clients on mass, and they convert. You know what I mean? So you've got things like Klaviyo, which we are really big fans of.
We love Klaviyo. It's something that we are rolling out across for a lot of our clients at the moment, both in email monthly or weekly or daily email management, but also in automation as well. And then you've got other softwares like MailChimp, HubSpot, Keap, things like that also offer those email marketing solutions. But when you combine email marketing with your advertising, with your content, with your blog writing and it's like a continuous loop, they might see the social media content piece, but then they haven't opened the email marketing piece.
You know what I mean? Or they saw it on social and then they got an email about it so then they've converted off the email, but technically they saw it off social.
I mean with email marketing there's yes, there's some ongoing, you can have recurring deliverables every month-
... where you might engage an agency to produce a monthly EDM or a weekly EDM or something like that.
There's not a lot of ongoing per se management. Like the other week, I saw a comparative quote from another agency who, for Klaviyo and they were charging the client like three and a half or four grand a month to manage their flows. They weren't actually doing anything for it though. I'm like, "Do you know what they're doing?" They're like, "Well, they're managing the flows." I'm like, "Yeah, but what are they actually doing?" And it turns out-
Oh, FYI, the flows manage themselves.
It's set up.
Yeah. That's the whole purpose. That paints the purpose of automation. So the poor client had been getting screwed over for like 18 months. So, but ultimately, you might have a fee that you pay an agency to produce a monthly or a weekly EDM or a sales-based EDM and things like that, but then you also have your initial setup cost a bit like artwork for advertising. Well, you might spend a few grand designing, beautiful automation and flows that might be three, five, or seven parts in series-
... based on the action or the activity of the customer. And you might do that once or twice a year, but typically once you've got a good flow set up, you do small things to refine it-
Yeah, tweak it. So, we were talking about a couple of things this morning, because I've been buying a lot of stuff online in the last couple of weeks.
This is for a baby.
This is for a baby, yeah.
You're not like a shopaholic.
Yeah. Well, yeah. And so, I was explaining a couple of different brands that I've purchased from and the different nurture sequences that I've been in. And some are amazing where you just know exactly what's going on at every point in time and they use their email marketing to stop their customers from wondering what the hell's going on with their purchase.
Do you know what I mean? So, you're educating people and managing their expectations without them getting upset, wondering where their orders are, them calling and speaking to someone, a quick email to go, "Okay, this is the next step," is very powerful in self-service.
The difference between those who have got really good marketing and in particular email marketing-
... and communication versus those who don't, is like night and day.
The consumer experience, when you buy something from a brand that's nailed it, you're just like, "These guys are amazing."
And there's a website that I buy spearfishing equipment from.
Yes, you do.
Yeah, not that much in comparison, thank you very much. But the guys at Adreno, Adreno in Brisbane, and they've got stores all over the country now, that is a business that absolutely smashes it. Their marketing is first-rate. So, they're an amazing example of a brand in an industry that you probably wouldn't necessarily think has the sexiest marketing, but they are a marketing machine as a business.
Yeah. And you have mentioned them quite a bit to me over the last couple of years. And they're someone that you not only do you buy their products, but you enjoy their content and subscribe to their newsletter and watch their videos, everything you kind of consume because they do put the effort in and it's a long term reward for them.
Yeah. They do so much for their audience-
... that it's no wonder they've built such a large dedicated audience, but at the same token, there's a heap of people in that space, but no one comes even close because they just haven't nailed their marketing like those guys.
Yeah. What would you budget for email marketing and SMS, which should be considered, but should be used, a lot of consideration should be used when using SMS marketing as well. So what would you budget?
Well, like not sending SMS’s out on the morning of an election.
Yeah, yeah, yeah. Well, you don't want to upset people.
Yeah. Don't use SMS for the wrong reason.
So let's talk about email specifically. There's three costs, right? You've got subscription costs of the platform that you're going to use.
And that's calculated based on the size of your list. So, some are like literally up to a certain amount, others are based on how many hundred or how many thousands you have. So if you've got a 100,000 on a list, you might spend a grand or two a month in subscription fees.
But if you've got a 100,000 on your list-
Which isn't that much when you're communicating to that many people if you think about it.
No, no. That's right. But if you've got 100,000 people on a list, you're probably doing pretty bloody well-
... out of your list. And if you're not, you're with the wrong people.
So typically people might spend anywhere from a hundred bucks a month to a thousand bucks a month and maybe a little bit more when you get into the bigger leagues-
... in the subscription fees to a platform like MailChimp, Klaviyo, whatever it is.
It's our preference.
Yeah. Well it's just a better system, right?
Yeah, yeah, yeah. It's very good.
And then you've got the cost of an agency to produce the initial automation and flows, your email marketing sequence.
So that, you could spend a couple of grand, you could spend 10 grand, it just depends on the scale. If it's two emails or 20 emails that are professionally designed and copy written and then set and all those sorts of things. And then, ongoingly, you might spend nothing at all in a month or you might spend a thousand bucks a month. It just depends on the scope of something. We've got a 12-
That's what needs to be done, you know?
Yeah. And look, we've got a 12-month campaign we're about to launch for a very, very large specialist group, like a surgical specialist group and it's very educational based. It is really copy-heavy about some really specific conditions and treatments and surgeries, which requires a heap of research from our copywriting team.
A lot of research, a lot of thought.
Yeah. And you've got to interview each surgeon because it's a specialty of that specialty. It's so many layers deep. So that's going to be an expensive exercise. They'll probably spend a couple of grand a month doing it. But the value to them is huge. Like absolutely massive.
Yeah. And for them, once you've done that one surgery type or whatever, that's your investment there for quite a long period of time because it's not like e-commerce, they're not running out of stock, they're not changing methods every two seconds.
But the interesting thing about that though is if you've also got to think of what uses you'll get out of that. So let's say hypothetically, someone spent a thousand bucks a month on their subscription costs for the platform they're using. They've spent say 10 grand doing the initial sequence or five grand doing the initial sequence. And then they're spending a thousand bucks a month on a really, really, really good monthly EDM that's educational. That EDM also would probably become a blog on your website. And if the people writing it are half smart, they've done it with some SEO structure, and SEO benefits in mind. So that content that's being produced isn't just being produced for an EDM that may or may not be read, it's also then becoming an asset added to your website, that's providing long-term SEO benefits.
And then they're including it in your social media content and then they're placing advertising about it. So we talk about that continuous loop.
So you're investing in it and the thought about the longevity of that investment is thought about. And I think one other thing to consider with email marketing is the industry that you're in. Obviously, costs and automation, how much automation you need varies. I mean, eCommerce is a really good example of an industry that needs really in-depth processes with their email marketing and thought and effort purely because you can fire off emails at all different steps along the purchase journey. So, you know, "Is there an abandoned cart email? Have they engaged in an email in the last 30 to 60 days? What are you doing for those people? Have they visited this category on the website? Are you going to send an automated email to people that didn't buy that visited that category two days later?"
But then it could be something as simple as a forensic accounting firm emailing a big list of people to say, "Hey guys, the moratorium on ATO collecting GST and income tax has now ended. Pay up."
Yeah. Or call us.
Or, "Be at risk of being wound up-
... and if you've got problems, call us."
They might only do that once every quarter.
That's got to be very well thought about and the wording has to be bang on.
So, in the case of a forensic accounting firm, they have a very, very different way of engaging, using email marketing to their database than say e-commerce does or the way medical. And then also, we talked specifically about sales, but also email marketing to educate your audience for a couple of reasons. One is because yes, that can help with the conversion of sales. It can also substantiate value. So it can be a value signal because if the customer experience is so good, then they're more likely to pay more for the product or service that you're offering. But then also, you can alleviate pressure on communications into the business. So inbound coms-
... with intelligent outbound coms.
So if your phone lights up with dumb questions all the time that you think are dumb, but realistically it's just that you haven't preempted those questions.
So, who's the dumb one, by sending appropriate communication to that prospective customer when they first engage with you to explain how the process works, what they need to do, what they need to think about, et cetera, you can then alleviate pressure on your front of house receptionist or sales team or whatever it might be, purely by using automation and email marketing. So it can be used as a communication tool to reduce the burden of human resources.
I mean, even little things. Well like even little things. So if you inquire with our business on our website and you put your details into the form, we will call you back, but we will also send you an email, which has a link where you can, if you really like, if you're busy, you can book your own appointment.
Yeah. Well at probably 50% of the time people who inquire with us, they'll often book themselves to an appointment because I make my calendar accessible to people. And often it is a little bit like playing calendar Tetris where they're trying to jam things in all the time. My team think it's a game, but ultimately-
But if you're a busy person, that's a great way. That self-service is so valuable.
Well the phone tag is the killer, right?
So in the case of the way we're using email coms, someone inquires, they get an email saying, "Thanks very much. Here's my calendar. Book in a time that best suits you," is so much better than farting around with 15 phone calls back and forth.
Yeah. And then you can be prepared for the call or you know that you can lock out 15 minutes where you've got time and you won't be interrupted or you'll be interrupted less.
Yeah. It's exactly. I mean, imagine if you just rocked up to the doctor, the GP, expecting to be seen because you've got an urgent matter. It'd be chaos.
Yeah. So you can use email marketing for that. What are the other major investments that... They could be fixed costs because we can forward plan those things. So we talked about social content, Facebook, Instagram ads, even like LinkedIn ads, all that type of stuff. Any ad management, Google ads, YouTube ads, et cetera, email marketing, but what are the other major investments that a business might need to consider when they're planning for their next 12 months?
Website is probably the big one.
Everyone really should be having a close look at their website and going, "Is it fit for purpose or not?" I would probably say that 50 to 70% of websites out there are not.
I reckon it's higher, to be honest. I feel like the biggest complaint that we get from people, even clients coming into us, engaging us for marketing services, how many people do you speak to that are 100% happy with the state of their website?
No one. Everyone hates their website. But the interesting thing is how stuck on it they are. A bit of advice I would give people is, and I'm saying this from experience, we build a new website every 12 months and a lot of people are going to listen to that and go, "You're mad," and that's true, but the reality is, is if you want a really good functioning website that you can constantly be top of mind with people, that's got a great user experience, et cetera, et cetera, you do have to update it regularly. So I would say a lot of people do need to either update or build a new site. To be honest, most people, and this is because of the legacy platforms. People have been building websites on how they've been built, sadly the five, the 10, even the 50 or a hundred grand that you spent building your site a year ago, two years ago-
It's out of date.
... it's kind of going to be out of date, yeah. And the big, big thing will be the platform it's on and the customer experience that it offers. And the customer experience is both you from an internal perspective of how you update that site, like I said before if you can use online banking, you should be able to use your own website. And also the customer who's actually navigating their way through the site. So the website's normally one of the biggest ones and we look at what they've got, what they might need, et cetera. And sometimes it's not as straightforward as going, "Sure. We'll punch out a new site in the next few months." It's something where we've got clients we've been planning for 12 months before we start building their site because so much thought and planning has to go into it.
The execution now that we've got through that planning stage is very fast. We'll get it done in a couple of months.
But the reality is, it's still something that's got to be thought about.
Because if you don't really, really, really think about your scope, you'll end up with scope creep, which-
Yeah. And sometimes as well, it may not be a whole new website, we might build a single page-
... landing page-
... to drive, to see whether that would generate the traffic that they require and the results that they would require. And then you go, if that works, then you might then consider doing a multi-page depending on the type of business you're in and what you're selling, all that type of stuff as well.
A lot of the time we're talking about websites with clients because I would chat, probably two clients every day about their website-
... they hate it, but they want to update it. By the time you go and update something-
It's out of date.
... it's out of date. Yeah. The way to think about it is you've got an old car that needs a heap of work done to it and you're holding onto it with emotional attachment. Now, unless it's like a classic car that you're going to keep forever, let go of it.
Because the reality is you're throwing good money after bad down the drain. A lot of the time when you're trying to update an old site, and you're also compromising, and that's one thing a lot of people don't understand is, well, think about it, yeah, it stings to go and spend 10, 20, 30, 40 grand on a new website, let's say it's 15.
That's a palatable amount for a lot of people. And to be honest, 15 to 20 grand gets most people a sick website.
Yep. That is easy for them to use and manage themselves.
Yeah. Unless you need highly customised functionality-
... which most people don't, and that's not going from 15 to 20, that's going from 15 to like a 100 to 2 or 300.
So people need to really think about that.
But ultimately, you really should just consider having the best fit for purpose that you can, and you need to let go of the emotional attachment to what you spent on your last one-
And how long it took you to do the last one as well.
Yeah. Well, I mean websites now are a less than two-month exercise-
... when you do them, right?
Yeah. Oh, they're a less than one month exercise if you do them with us.
Yeah. But that's an intense process that we run. We can't expect that everyone's going to deliver a site like that. I mean, most people are preparing themselves for six months of absolute pain.
Yeah, which is crazy. And we've all got a bit of PTSD from doing the website.
Anyone who's ever built a website that's taken some time and spent a decent amount of money, just cringes. And to me, branding as well is the other thing, right?
Because heaps of people will spend six months farting around doing branding.
Oh, my gosh.
If you've got north of like a 50-page brand guide where there are 40 mockups of billboards and you don't use billboards, or business cards and you've never printed them, all the things that an agency puts into substantiate the 80 grand that's stung you, it's kind of a waste and you're exhausted by the end of it. So the other thing is, a brand and web are two big things, but not actually that big a cost in reality that they should be thinking about, we would do two to three repositions-
... which is kind of similar, it's a branding process. So it's not dissimilar to a new brand, but we'd do two or three of those a month with clients who could be going for two years, they could be going for 20 years and they've just reached a point now where their brand doesn't accurately reflect what they do and where they want to go. And this is the whole thing about planning say for the next 12 months is by sitting down and going, "Hey, what do you think you're going to do in July next year or June next year or may next year?" It makes people think longer-term and brings up all these things along the way like, "Oh, actually I'm not happy with this," or, "We really do need to do that," or, "We've got this issue here."
But it also brings light to the cost to do those things. And sometimes it's really scary costs, but other times it's not. Do you know what I mean? So you may have spent $50,000 on a website five years ago, doesn't need to cost that anymore. I don't know. Let's talk about it.
Well, think about it this way. It's a bit like a car in normal markets.
The moment you drive it off the dealership, it's worth half what you paid.
A website's the same.
The moment that you finish building it-
Can you depreciate a website on your books?
We write it off. It's a cost. There's even some proposed legislation at the moment about you can write something off by 120% if you're building a new website. I'm seeing a lot of agencies try and spruik this at the moment. And it's like, well, it's not quite legislation yet, so you might want to just-
Yeah. Be careful.
... be careful of that. You shouldn't be doing a new website for tax purposes.
But I also think with regards to web in particular, there's so much innovation in these low code, no code website platforms now, which allows you to save time, and energy in other places. So if I think of hosting costs and security problems and things like that, where if you use these platforms that are fit for purpose, so let's talk about Shopify, for example, fit for e-com.
You can't compete against it. If you're an e-com and you're not on Shopify, I don't even know what you're doing. Whereas you've got other platforms where things like Webflow or Squarespace, which have had a negative connotation from the old school web developers who promote WordPress.
Well, if your life as a web developer is built around building complex, painful, annoying-
... long-winded websites, then you're not exactly going to be too fond of Webflow coming and-
... going, "Hey, by the way, everything you wanted to do with that highly customised expensive website, you can do in ours for like a 10th of the cost and in like a third of the time."
Yeah. With no code.
Yeah, yeah. And it'll be way better looking, last you longer, and you'll have a lot more enjoyment out of it, then yeah. I'd be probably pissed off if I was a web developer, but you're right. There is a changing of the guard at the moment where-
And these platforms are investing so much money into their innovation and their capabilities. Honestly, you can't compete against it. So why not take advantage of it?
Well, I think there is an appetite for change and I think Tesla is the best example, right?
Tesla's like the first time in history where we middle-aged white guys have been the first adopters of something. That, and Apple Watches. It's really funny to see.
That's very true. I've never thought about it like that to be honest.
How'd they do that?
Actually, I don't know. It'd be good exercise to analyse that.
Yeah, it's actually very interesting when you think about that. Sorry. Anyway-
... we digress.
But it's an example of where middle-aged white guys were the first adopters of a technology and still are today. So I think it gives us hope to say, hey look, and no code is probably getting a bit too technical for-
... in reality.
Do you want me to explain no code?
Can you explain no code because I can be too technical? How do you describe what is no code?
No code is just, it's still code, but the way that you build it is different.
Yeah. We don't need a developer to write custom lines of code to make the website function how we know it should function.
The layman's way of describing is, if you're going to build a house, are you buying timber and building frames piece by piece? Or are you bringing pre-fabricated frames in?
But at the end of the day you still have a beautiful, custom, bespoke, architecturally designed house. It's just how you got there is different.
So what you're actually doing is-
And the pain to get there is different.
Yeah. And the cost.
Because let's face it, and if you could find the timber to start with, let alone the tradies to put it together, it's going to take them 10 times-
You'd nearly be better off milling your own timber, to be honest. Wouldn't you?
Yeah. Well, why... So I was trying to convince a school that I'm involved with to actually mill the timber for some pine trees that we've got to take out and the board thought I was nuts when I was suggesting it, but I'm like, "Guys, do you know how much this is actually worth? There are like a hundred roof trusses in this stuff. We'd be millionaires. We'd pay for the school hall alone." But yeah, ultimately it's just no code websites are just a different way of building a website. They're still built on code, it's just the way the platforms operate-
It's design-focused. Design and functionality and user experience focused.
It is honestly if you're not doing these things, I don't know. Why are people fighting it? I do not know.
I actually don't think-
Or they just think you're crazy, but I am very blunt about those things and-
Yeah, you're strongly opinionated.
Passionate would be the diplomatic way of putting it. But I think you've got to look at it this way, clients, businesses, and marketing managers, don't actually know because it's not what they do all day, every day.
No they don't. You don't know what you don't know.
Yeah, exactly right. And so that's not a reflection on them, it's a reflection on agency and web developers who haven't explained things well enough.
Well, it's a bit like the wild wild west, right?
And digital ads is, I feel the same, it's hard to know when you are getting the right advice because there's so much noise out there. It's not like you're a doctor that went to Bond University and finished at Bond and then went and did your fellowship somewhere and you've got a certificate. Everyone does things their own way, a little bit differently because they have their own beliefs and their own belief structure, and university does not teach you any of it.
Yeah, you're right. The easiest way to describe it is if you're going to go and spend money on a new car, test drive the car, if you're going to spend money on a website, test drive the website.
Simplest thing to do, right? And when I say test drive a website, get whoever's going to build the thing for you to show you the backend and how it works and whatnot. And if, again, it's not as easy as online banking, then you've got problems.
So if we talk about websites, let's say, if someone's going to go and build the one page scroller, they might spend anywhere from say five to seven grand on a comprehensive one page scroller, which looks and acts like a real website-
It's amazing. Yep.
... it just doesn't have separate pages for each navigation option. Whereas like a multi-page it obviously does, someone could spend 15 or 20, right?
And then if it's e-com, they could spend 15 to 50, depending on what they're trying to achieve, etc.
15 to a million. We don't do the millions, but yeah. It depends on the type of business.
No. And like we know where we sit-
... in web development-
... and when clients have a requirement where it's like, "You know what, you actually need a team of 30 people working on this for the next six months to build you the site and you need to budget a million bucks."
And a lot of people would just think I'm making that up and I wish I could say I am, but I'm not.
We will refer you-
I mean, we turned a job down this week purely because we did not have the capability to do the custom work that they required because our business is not built that way.
Well, our business is built around delivering what 95%-
... of clients require. And the 5% that we can't help, we'll still be able to help them with their digital ads and content and all that sort of things.
Yeah, yeah. Yeah, we partner with another.
But we'll refer them to the best of the best to do what they need to do. And that's what it's like, agencies need to get better at being honest with clients about what they can and they can't do, and you need to know where you're really, really good and where you cannot deliver. And if we think we cannot deliver something that we personally will be happy with, we'll be man enough slash woman enough-
... to say, "Hey, we actually want to introduce you to XYZ because they are the people you need to do it, but you need to think about not tens of thousands, hundreds of thousands to build what you want to do."
And what about branding? What did you say about branding or rebranding?
I think if people are doing branding, again, it comes back to the one-man-band versus agency. So, one-man bands, you've got everything from Fiverr on the internet that do a logo, which-
Yeah. For $5.
For five bucks, which you get all the five bucks worth, to say freelancers, who might be charging one or two or three grand or something.
And then you got agencies charging 4, 5, 6, 7 up to say 10. And then there's actually a quantum leap. So, the interesting thing about branding is, that there are branding agencies who will charge mostly somewhere between 20 and 60 grand.
20 and 80 grand actually for a brand. Now their business is based around doing just brands and charging a lot. And the way they substantiate it is they have the brand guide and the branding, which is exactly the same as what you would get with someone spending five and a half or six grand on branding, which is still the strategy and the thought and the creativity and your colours and your fonts and your actual brand, your brand mark, and all those sorts of things. But then the other 50 grand that you spend with them is basically for all the mockups that go at the end of the document.
And there are like 60 pages of mockups that no one ever uses. When I see these documents, I just piss myself laughing because no one will-
I mean, it's important to have application.
Right? So application is important. So in two years' time, when you've hired a new graphic designer, someone can pick it up and know exactly what to do, what we stand for, all that type of stuff. It comes down to what you require. What do you require?
Well, you're right, but let's face it, you probably don't need to spend much more than five or 15 grand doing branding because-
I think it depends as... So the other thing with regards to that pricing is how many decision-makers are involved as well and how long's the process required to be, do you have to run this through boards of directors or that type of stuff? So we try to sit between what, five and 10?
Yeah. Five and 15. And we've got a set process that we run that works really, really well for clients.
Yeah. But I think before we get into that, what we should actually explain so there's some context to this, is our philosophy is your brand is everything-
... but it's only as good as the rollout and application and execution of that brand.
So there's no point doing the world's greatest brand if no one ever sees it.
Or if the world's greatest brand never generates a sale. Or if the world's greatest brand never achieves what it's set out to do, because all the money was spent on mockups of billboards.
So the way we approach things is branding has to be very well thought out. There has to be a meaning and a why, because the difference between a really well thought out brand that's directly connected to the business objectives and one that's not chalk and cheese.
But we don't believe in dragging things out over months and months and months.
We literally say, let's dive into this deep for the next few weeks and let's nail it with absolute focus because that will get a better outcome than death by a thousand pay cuts over six months.
And very collaboratively with the client as well, mind you. So we collaborate quite extensively with the client on the entire process.
Well, if you don't, what happens, and you often see it in branding, actually, if the client is not innately involved in the process and what you're actually doing is producing an authentic representation of what they want, even if they don't know what they want, it's your job to coach it out of them. That will be an amazing brand at the end of the process when the client is involved.
Because you understand the industry.
You understand the business.
Yep. Or you end up with what we often see in marketing, which is embarrassing, is brands that are totally disconnected-
... from the client, doesn't sit naturally, is an epic fail. And I won't name names, but there are some government departments recently that got in trouble for this, where there is a huge disconnect because the client wasn't directly involved. And the client doesn't always have to be an individual, it could be an organisation, it could be a committee, a board member, whatever. But ultimately, yeah, clients need to be involved and branding is not an opportunity for an art director or creative director to try and win themself an award.
It's an opportunity to build a brand that they can be proud to say because the business was so successful that their grandkids are going to get to experience it.
So I think the whole chest-beating exercise that goes on in design-
Oh my God. Yeah.
... with creative dictators is hilarious, when in reality it's not about them, it's about the client and creating something that's going to provide them longevity that they can build a business around.
So yeah. Costs like five to 15 is what they probably need to budget. Any more than 15, they've got problems-
... I think.
And then you've got rollout costs. So, you know, "Are you doing signage? What about things like photography and videography?"
All that type of stuff, where assets, investments that you make because you are using that to apply the brand through all of your ongoing marketing.
And because no one's probably had a notebook writing all this crap down for the last 45 minutes, I think what we should probably do is just give them a quick summary to understand what you should allocate based on say some example industries and what percentages might be relevant to your turnovers and then also stages of life. So just quickly, if you are a new business, so say you are less than three years old, you're a new business, you might be spending in the first year, you'll spend two to three times more on marketing than what you will as a percentage of your revenue. So you might spend 20 or 30% of your revenue in your first three years, you might spend 200% of your revenue in the first year. As in you spend more than you make, which is not uncommon because you're trying to get off the ground.
But then over time, that might come down to say 20%, if you're in say hypothetically e-com, if you're in a super competitive field in e-com, you might be sitting as an established business at like 15 to 30%.
30% if you're doing a bad job, 15%, if you're doing a good job. If you're in professional services, you're probably spending between five and 10%.
If you're in food, you're probably spending about 10 to 12% of your revenue.
If you're in something really niche, the more niche something is, the lower the percentage often is. So we've got some freaks who spend like 3% of their revenue on marketing. And that can be, someone is doing five million a month in rev., so decent business, but it's because they're so niche that their market isn't that large, but they've got a high-value product, whatever it might be.
So, there are different percentages based on revenue. And the reality is that just comes down to a business case because you got to know what your wages are, what your rent's going to be, and what your cost of goods is going to be.
And just to give context, this is actually what Brendan did in his past life before working in agency. So Brendan worked in mergers and acquisitions for quite some time or like the rest of his career before agency.
My former life.
Yeah. Your former life. So, the value that Brendan brings to agency life is that he understands business and what those percentages are per different industry because when he's gone to sell a business or manage and work through a merger or an acquisition for clients that he's representing, he actually knows what those numbers are. And a lot of people don't understand that about Brendan, but that is the information that we are sharing with our team and working with our team to have them understand the industries that we're working in. So they understand why a business is successful and why they're not.
Yeah. I mean, I guess I'm lucky enough that I spent 15, 16 years ironing shirts every day and wearing a suit.
I didn't iron your shirts.
No, you've never ironed my shirts. But as a result of looking at, I don't know, I'm guessing three to 5,000 sets of books over that time.
And representing like hundreds of companies and you learn a lot and doing that through multiple cycles, doing that through GFC, doing that through boom times of '05, '06, which is similar to what we've just gone through, where everyone just thinks the world's just going to keep going up and up and up and up, and then navigating through a down market, and then navigating through a flat market. I think I'm really lucky to have that perspective because very rarely is there a business that I either haven't sold or worked in specifically or I haven't analysed. And it does give you a little bit of an advantage when I'm talking to clients because I can say with experience and knowledge, what they should be doing now, I'm never going to breach confidentiality about-
... specific names or industries, but-
But you understand the problems that those business owners are facing.
And so you understand it from not only a marketing perspective, you understand it from a monetary perspective. And also because you've seen the on flow effect of how that impacts the business long term, how that impacts the business owners, how that impacts the team members of that business. So there's a different level of understanding that a lot of people unless they speak to you, they don't realise that you've had that type of experience. And we're very lucky to have Brendan and because we can link those marketing solutions to business problems that everyday business owners are facing.
As a business owner, you are facing problems whether that's how to grow, that's not a bad problem to have, that's a really good problem to have. Like, how do you grow the next 20% is not necessarily a negative problem, it's actually a positive problem because you're like, "Okay, what do I got to do to get here?" Through to problems like, "I actually can't find enough people to manage the lead inquiry that we have coming in." So you've got a recruitment problem. So you're losing revenue because you actually cannot even service the inquiry that you've coming. What an awesome problem to have.
But the reason why those questions and problems tie into the topic of budgeting and forecasting and planning is because you actually need to have that level of conversation to plan accurately. Otherwise you'll find what you set with best intentions, what you write down at the end of June, that you're hoping to kick off from July, but then all of a sudden get to the end of the year, you've run out of money or your sales aren't where they were meant to be, or you've undercooked and you've missed out on growth. That's another thing that can happen where someone's actually not been able to fulfil their full potential because-
Well, they've fought the marketing.
Yeah. Or they fought with marketing.
They're either fighting it or they're flaunting it.
Yeah. It's kind of like innate human, it's like an adrenal response where they either fight or flight marketing.
It's very frustrating.
Yeah. Well there are those who embrace it.
Those that embrace it, you watch those businesses and you have so much fun working with those clients and it can be in any industry, but because they are succeeding their goals, we're succeeding our goals. And we get to be, even if it's a little bit a part of that success, we're a part of that journey with them, which is the best part.
Yeah. Well, if our clients win, we can't lose.
So I think when it comes to this whole concept around planning, it's as simple as literally ripping out an Excel spreadsheet-
... or sheets in Google, if that's what you use, and write down what you did every month in revenue last year-
... decide if you think you're going to hit the same or if you're going to do less or more. For a lot of people, they're going to do less. And they're probably, numbers this year, as in moving forward, are going to be more comparative to 2019, not 2020 or 2021.
So 2023 for a lot of businesses will be like 2019.
So that's your first thing. Second thing is what do you spend on marketing to do the numbers you did last year and what percentage does that equate to? That's your baseline. Okay. Now you've got a baseline, let's now start doing some forecasts. What do you want to do next year in revenue? And then what percentage are you going to allocate for marketing?
And then based on that percentage, you then start, that's basically the point where the agency goes, "Okay, well, let's start plotting what you need to spend where," so they basically allocate that capital accordingly across the different advertising platforms and activities and programs that they believe is the best use of capital to achieve what you want to achieve. And then talk about other things that might impact that, so, you know, "Do we keep a little pot of money aside?" Often, I'll build into a budget with clients who go, "Hey, look, let's put this line item in just in case we need to use it. If we don't, you know what, that's party funds at the end of the year. But if we do use it, we know we've kept some powder dry." Because it is important. Something could happen when you're like, "You know what? We need to go ham," and you want to make sure that you've planned for that.
Yeah. I mean, quite often we receive phone calls from clients because their competitor is doing something suddenly.
Oh, yeah. Yeah.
So it's like, what do you call it? Your arch nemesis marketing.
Arch nemesis. Well, everyone's got an arch nemesis.
Yeah. So that fact can be used for things like that. I'm not kidding, we get that. We have that phone call from a lot of clients quite regularly. They're like, "Oh my gosh, my competitor is doing X. We now have to do X." So things like that. I've got a couple of things that I want people to consider when they're forward planning their marketing budgets.
This comes from a, not only from agency perspective, but just as a marketing manager perspective. So you really need to involve your CFO and educate them.
Oh, yeah. Yep.
So one thing that we experience a lot is you'll work on marketing budgets with people, but the CFO has usually undercooked their allocation of the marketing budget, or just generally what things cost. You know what I mean? So they don't know what photography costs, they don't know what a website costs, they don't know. And they might be basing those assumptions of that line item about what they paid for it five years ago.
Or 10 or 20 years ago.
Yeah. So involving your CFO and your financial control or whoever that is in those conversations and that planning, is really powerful in being able to get approval for your marketing budgets if you've got that person inside your business.
Have all the stakeholders-
... sign off and understand as well and agree on, they've got to back it. They can't be doing it to prove it wrong.
They've got to back it because they believe it's going to work. So get that agreement from all the key stakeholders when you're doing your marketing budgets.
Yeah. And if that means involving us as an agency in chatting to them as well, that's a very easy conversation for us to have. And we would prefer to have that in the planning stage. So, when we do put something forward, it's not shock and awe, it's actually, "This is what it costs. Regardless of where you go, this is what you should be budgeting." You know what I mean?
Well, I've got to do that with clients-
... who are listed entities.
I have to do it with you.
Yeah. You've got to do what everyone else does.
The other thing is speaking to your customers and getting some feedback about what they think. So whilst you would think this is a logical piece of information, a lot of marketing, especially a lot of marketing managers, don't actually talk to the end consumers of the people that are buying the product or experiencing the service. Having that chat and talking to them about, "How did you hear about us? Why did you call us six months later?" Just having that information really helps you make decisions.
Well, it can uncover things-
... that you didn't know worked or didn't work or that you're not doing, or you are doing well.
Yeah. And you can use things like, I used to use events to do that. So, when I was a marketing manager, I used to run open days for events, which was just like as an anxious person, I'd freak out, no one would show up to these open days, but then I'd get hundreds of people through the door because we had a good database, email marketing system, and that worked. But that was a really good way for me to just have a general chat with people coming through the door. Questions like, "How did you hear about us? How long have you been following us on social media?" All those types of things. So you get an idea as to the customer journey, and how long they might be watching you before they are starting to make a decision. You'd be surprised how many people sit back and just watch what's going on.
And when you have that information, it allows you to, even if it's just in your head, justify the costs of investing in something that doesn't generate a lead then and there. So social media doesn't generate a lead the second that someone watches that post. However, it's a good reminder that when they're ready to make a decision in six months' time, if you're consistently showing up and you're consistently in their feed in a respectful, creative, thoughtful way, hopefully, they remember you. And having a baby is reminding me of this. You know? So I started following baby brands, I'm 23 weeks pregnant, as I started to fall pregnant. Obviously, at six weeks, I'm not going to be buying anything, but at 20 weeks I started, as you know.
And these items are not $30,000 items. They're like a cushion for $100. And so I've been following those brands for a couple of months now. So you got to think about those things and just talk to your customers because it helps you make decisions and provide recommendations. So if you are talking to your CFO, you can actually give them that information as well. And you can have those real world conversations with stakeholders, CFOs, things like that. The other thing to consider, which Brendan did touch on is new trending medias and how does it apply to your customer. So one thing we're working on and we're rolling out for clients at the moment is digital TV, which is kind of a, it's not a new medium, but everyone's watching TV on their iPhones and their smart TVs, digital TV actually allows you to place media through like SBS, Foxtel, et cetera, like you would, if you were buying traditional TV.
Yeah. Well, I mean, we're helping people transition from-
... what? Some medias that are becoming somewhat redundant-
... and very, very costly to those that are fit for today's markets.
Yeah. And you're seeing a lot of eCommerce brands marketing on digital TV.
All day, every day.
They're on YouTube, they're on Facebook, they're on Instagram, but 12 months ago, were they on digital TV? No. Are they sucking budget from elsewhere? Are they adding budget? Are they building in fact for new and trending medias that are coming out, that you should be considering as a business? So that really depends on one, your business, what your customer is. 12 months ago, would people have invested in TikTok? Not so much. Today, how often are you having TikTok conversations Brendan?
Oh, I mean, I've been having them for 12 months, but I've been saying to clients, we need to wait and see, and I'll be the first to tell you when I think it's appropriate for your brand.
And so I'm now having those conversations, circling back to clients saying, "Hey guys, this platform is applicable now. This is how you can use it for your brand."
Yeah. And sometimes you can shuffle budget.
But often, you just have to cop it and you need another line item for that media.
From someone who runs the books in our business, it's not just about copping it. Thank you very much.
You've got to accept it.
Well, no. No, I disagree with that completely. I think what you've actually got to do, so does it do one or two things? Is it an extra cost, but it's going to maintain our existing revenue?
Or is this an extra avenue that will generate extra revenue and therefore you want to support it? So no one in business has to cop anything. Thank you very much.
Says the marketing manager.
Yeah. But this is the kind of conversation you need to be able to have with your agency because agencies are like, "We should do this. We should do this," and that's great. But the reality is that there needs to be a business conversation around, "Okay, well, how are we going to fund this stuff?"
Yeah. And, "Should we be doing this?"
Like, "Where should we be investing our money?" So quite often, clients do come to us with ideas and whilst we want to support ideas and whatnot, we do sit there and think, "What are our recommendations?"
Well, we always bring it back to when we first engage a client, we ask, "What is our number one?" Whether it be metrics or KPI, how are we judge judging the success of this.
And so that way, when we know it's all about how many consultations are booked every week, and if it's 50 consults a week and we are on or off track, that's where everything, every future conversation comes back to. So when they say, "Can we hire blimps to drop flyers?" We'll say, "Okay, is that going to lead to more consults or not?"
Is it going to generate an appointment. Yep. Yeah. From a marketing manager perspective, you do need to consider new trending medias. And that might not be to roll out tomorrow, but it might just be something in the back of your head that you're thinking about and researching and considering whether yes, it can have a positive impact on hitting your goals and whether you should be investing in it or not. So they're my tips. Brendan obviously thinks about it from a costing and business perspective. I think of it from a marketing perspective, but I just know the biggest one is taking those stakeholders, especially the CFO on that research journey with you and talking to them more. So instead of feeling you've got to present everything to them in an Excel spreadsheet, have those conversations, get them involved with your agency so they understand and also understand what's included in that cost and where the value is, is really important.
Can't expect people to agree to things they don't understand.
Don't know what they don't know.
Yeah, that's exactly right. So a lot of this stuff and a lot of the conversations I have with new clients is giving them a base level of understanding around what they're seeking to achieve so that they can make informed decisions. Because that's what it's all about. It's about making informed decisions because it's not about a decision that you're going to back something for a month because these are longer term commitments. And I guess that's the thing to take away from this conversation is, it's not about planning for tomorrow, it's about planning for 6, 12, 18, 24 months down the track. Because personally I'm not in business for tomorrow, I'm in business for the long term.
And if you take a longer term, larger world approach to what you do, then you are not restricting yourselves to potential. You're not restricting yourselves in what you might hit revenue-wise or size of business or whatever, but the idea is take a longer term approach-
... and get the information so that you know, be educated about what you're committing to because you can't make a blind commitment. You might have been able to make a blind commitment last year, but you're sure as hell not going to be able to make it this year.
So be educated about what you're doing, take a longer term approach and have a really business conversation, a really solid business conversation with your agency or your freelancer, which would be funny, but have a really solid business conversation because there needs to-
They're high level marketing consultants, yes.
Yeah, yeah, yeah. Yeah.
That's exactly right. But the reality is that it's about the business conversation because you're there. In most of these businesses that we deal with and there's a few non-for-profits and there's a few who aren't, but very few, it's about dollars in the bank and you need to respect that. And so therefore you need to have a business conversation about how you're going to get there.
Well, thanks so much, Brendan. It's always a little confronting looking at numbers and matching it through to revenue goals. But I think once you have a path forward, you can just get on with it, focus on what's important, which is essentially growing a business.
So if you need any help with planning, please don't hesitate to contact us. You can call 1-300-004-777, jump on the website, review what our services are, what we can help you with, or just call us to chat to Brendan.
My number's on the website.
Yeah, it is.
So if you actually, you've just got a random question, just call us on it.
I'm happy just to give you the advice straight over the phone.
Yeah. I mean, just having a chat to us is a great way to learn how to control your marketing budget costs, and by doing that, you can provide your customers with consistency. So until next time, see ya.