online marketing

Do You Need An Online Digital Marketing Agency?

You may be starting to think about online marketing, or you’re already aware of what it can do for you and want to get it done better. If one of these apply to you, you’re also probably trying to decide how and who should do the work. The following information should help clear the air and help you decide on the best course of action.

Full disclosure:
I own a full service online digital marketing firm. One of my digital marketing managers found an article on Forbes.com, written by Jacob Baadsgaard that inspired this blog. I have a slightly different take on this subject and thought I would expand on it.

The questions are:

  1. Do you need online marketing?
  2. Does spending money on online internet marketing make sense for your company, and how much should you spend?
  3. At what cost does it make sense to hire in-house employees to do it, opposed to hiring an online marketing company?

Let’s get on the same page
First, let’s address some online marketing jargon and terminology. These clarifications are SIMPLIFIED (so, you experts out there, please don’t nitpick). This should reduce some confusion for the layman and we’ll both be on the ‘same page’ as you read on:

  1. SEO (Search Engine Optimization): A way to edit your website and source code to help search engines know what your website is about, products offered, geographical area that you serve, etc. For some it means only on-page SEO and for others, includes inbound link building and other outside influences that affect SEO.
  2. PPC (Pay Per Click (ads)): You can pay per click by bidding on the top “ad” placements on search engines. Before the organic placements are shown, paid ads are shown, normally 3-4 ads on top and now a few more at the bottom of the page, below organic search results. These PPC Ads can also show up on other websites, in certain conditions. This can cost anywhere from $0.15 to $25.00+ per click. If not managed correctly, PPC ads can be very expensive.
  3. Conversions: Means different things to different entities… For example, for an internet marketer, it means, ‘I got that person to you, and or to contact you.’ To a business owner, it means ‘that person found me on the web, contacted me and paid me money for something.’
  4. Digital Marketing Vs Online Marketing: For online internet marketing companies, it basically means the same thing. In the rest of the world, Digital Marketing includes electronic signage and anything marketing-related, ran by a circuit board or computer, including the billboards at ball games or videos at the gas pump. For this article, digital marketing means online marketing.

OK, now that we are on the same page with phraseology, let’s move on…

1. Do I Need Online Marketing?

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For nearly every company, the answer is yes. But the amount of how much you should spend on digital marketing will differ, as will who should be executing it for you.

“We’re good, we have a great list of clients already. Don’t need online marketing.”

If you have long term clients who love you, they are still obliged to shop around from time to time. Don’t give them a reason to be fearful and leave!

Scenario: An assistant is required to find 3 competitors every three years and vet them versus you. They look at your website and it looks like it’s from 2005. You have no social media presence and are ignoring current online trends. Your clients may think…“Are they getting fat and happy on us?” “Maybe we’ll try something new and someone else?”

2A. How much money are you willing to spend to improve your online marketing?

Whether you hire a digital marketing agency, or hire and manage marketing in house, you’ll have to be willing to spend some money…

CAUTION: Unfortunately, we’ve  observed over the last few years, for a price point of about $300-$500/Mo, business are willing to pay for no tangible results or proof of conversions. Some business owners seem to think “checking that box” is good enough and that they don’t need to understand it or what it means. “Yeah, we are doing online marketing.” “Results…what does that mean?” I know, it’s crazy, but it’s happening all the time. I think many small businesses who try to get digital marketing and or SEO done cheap, are in this sinking ship.

If you’re in this sinking ship now, don’t feel bad, you’re in good company, but get out now! It’s like the choice of paying a good BMW mechanic $350/Hr or a tire shop $150/Hr to fix your water pump. The pro does it in 2 hours for $700 and does it right. The tire shop does it in 7 hours for $1,050 and says it should hold up for awhile.

With that in mind, it’s important to ask yourself the question: How much am I willing to spend on improving my online advertising? The answer will play a big part in deciding whether or not you should hire an agency or hire in-house, or spend nothing.

If you’re a Micro company (low gross hair salon, child care, small eateries, one-person part time professionals who work at home, etc), you may try it yourself.

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Another option for “micro company,” is to consider a flat fee consultant for a temporary hands-on program that runs for 1-3 months. Because most micro companies compete against other micro companies, the online competition can be weak. So if you can get a onetime big burst of digital marketing and you learn how to take it over, it may last for several years. We’ve done this for a one-truck moving company, a flower shop, holistic dietitian, etc. It can work for awhile. They spent a couple of thousand dollars, but the rewards keep coming in after 6+ years. This probably won’t be possible in the near future, so jump on now while you can. CHECK references!

Small Business ($500K-$20Mil Grose/Yr) Marketing

An online marketing firm can do a lot for you with $1,500 – $10,000+ per month. This will allow them to get aggressive and develop an effective online marketing strategy. They can afford to do good solid research, do deep checks on your competition and develop an actionable plan that produces substantial results that can be proven; plus pivot as needed.

If you have multiple locations, plan on about $500-$1,000 per extra location. These numbers do NOT include any paid-for ads you want to do, like Google AdWords, Yelp or Facebook advertising.

2B. How Much Should I Spend On Digital Marketing?

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“What is your acceptable client equation cost?”

Questions to answer:

  1. Do you sell a low cost or high cost item/service?
  2. Do you sell in low or high volumes?
  3. Do you sell a recurring billable service?

What does this mean?

  1. If you sale an item for $5, how many would you have to sell to justify the cost of a marketing firm? Are your margins high enough to allow for profit, if you sell and extra 2,000 units per month, but pay $2,000 for online marketing conversions? If you sell, super collider widgets for a Bazillion dollars each, you only need one new sell per decade to justify the marketing cost
  2. If you sell a flashing LED Christmas ornament that costs $10, does it make sense to pay $20 in marketing costs for that purchase? Of course not. But if you sell wholesale and Ace Hardware buys 50,000 units, maybe $2,000/Mo makes sense for a marketing budget.
  3. Do your customer buy once or recurring? Basically it comes down to profit margin, expected volume of sales and length of rebuying relationship.
    A Simple Example: You Spend $2,000/Mo. on digital marketing and you get one new client per month…If the item or service is $150/Mo and the average client stays with you for a years to come. $150 X 12 Months ($1,800) X 5 years = $9,000. In this case, the online advertising money may be well spent. This is referred to as lifetime value (LTV).

In our experience, the clients that have recurring service fees or sales orders, do much better with digital marketing plans. Many times 200%-1000% ROI. That’s not to mean that others should not do digital marketing. It may only mean that you can expect 150%-500% return. Still not bad!

 

3. Should You Hire a Digital Marketing Agency?

What to consider: There are many factors to consider, when deciding if a digital marketing agency is a good fit for your business. An agency that works for one company, may not always work for your company. Finding an agency with expertise in your field, or one with a passion for what you do, can really make a difference.

This is when a good interview with a prospective digital marketing agency can make a difference. They don’t necessarily need to be experts in your field, but if they are fans of, or share a genuine interest in what you do, they will work harder for you. These are both  good reason to choose or dismiss an agency in contention for your business.

I’m ready to grow my business now! Do I hire in-house, or outsource?

If you hire in-house:will online digital marketing help my business, San Francisco, bay area, san jose

  1. Website designer or maybe just an editor: $40-$130K
  2. SEO specialist: $60-$80K
  3. PPC/AdWords specialist $50-$60K
  4. Social media specialist- $38-$60K
  5. Content writer/blogger $65K
  6. Recurrent training, workstations, software Lic, etc. $100K
  7. Someone to manage these people and report to upper management: $110-$210K

Annual cost: Up to $700K+/Year. It’s true that some of these tasks may be combined or overlapped if you’re lucky to find those people, but you get what you pay for.

Pros: Possible better inside knowledge of product, will not fight back when they think you’re making a wrong move. 24/7 commitment to “the cause.” Live event coverage. Better in-house coverage of staff daily routines. At your immediate beck and call for posting.

Cons: Cost is huge, when compared to outsourcing. Staff lives in a bubble and they don’t learn from other client experiences with regard to what works and what doesn’t. On going training costs and seminar costs. Taxes, space, etc.

What if you Outsource your Online Marketing? Should You Hire a Digital Marketing Agency?

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Online digital marketing companies are able to give your company valuable expertise and be available as if they are full-time employees, because each marketing expert works on multiple accounts. In reality, you probably only require each discipline a few hours per week. So why pay for a full time webmaster or SEO person, when you really only need a few hours per week.

Pros: Save lots of money, work with pro’s who are always current and sharing ‘lessons learned’ from other clients.

Cons: Slightly slower response times, shared attention among other clients.

What to consider: There are many factors to consider, when deciding if a digital marketing agency is a good fit for your business. An agency that works for one company, may not always work for your company. Finding an agency with expertise in your field, or one with a passion for what you do, can really make a difference.

This is when a good interview with a prospective digital marketing agency can make a difference. They don’t necessarily need to be experts in your field, but if they are fans of, or share a genuine interest in what you do, they will work harder for you. These are both  good reason to choose or dismiss an agency in contention for your business.

 

You may not need to market online yet. Or do you?

Keep in mind, back in 1999/early 2000s, we used to hear “I don’t do internet.” These companies are gone now. That said, you don’t need to feel like you’re being held hostage or in a racketeering internet scheme by the internet. It just a new medium.

It wasn’t long ago that small companies were spending $5-$10+K on yellow page ads. What do newspaper and TV ads cost. Can you track conversions with them? What does it cost for a booth at a convention? When you think about it, $20-$50K is not that much and it’s nearly all trackable!

Last thoughts

YOU CAN do this yourself if you have time. There is a ton of free information online to help you. Start here: https://www.google.com/business/benefits/

Or you can hire some digital marketing pro’s to help you.

Either way, it’s normally free to meet and talk to a local online digital marketing company. This will give you a chance to meet the people who will work on your project. Don’t expect to walk away with a free action plan, but rather an evaluation of if they think they can help you and some reasons why they can or cannot. Unlike traditional marketing agencies, many good digital marketing agencies normally don’t have time to do a ‘dog and pony’ show at your office. They expect that you’ll want to come to them and see they’re really here locally, accessible and actually have an office, with on-site staff that you will be talking too.

Conclusion
Each company is different, but we hope this blog helped educate you and help you decide whether or not your business needs an online marketing agency. If you have any questions, please use our contact form on the right or give us a call at 510-276-9902.