Are Digital Marketing Agencies Worth the Money?
1. Digital Marketing Spend
The US Small Business Administration suggests that 7-8% of your gross revenue should go toward your marketing budget. The problem is that this information is from an outdated 2014 article and there haven’t been articles with new data. They’re referencing old articles and old information from during a recession.
According to Web Strategies, a more reliable source, the latest CMO survey showed that 9.8% of total revenue is the average marketing spend. This can vary depending on the type of business. B2C should spend a bit more money at 15.6% of revenue on marketing and for B2B companies spending only 8.6% of revenue.
We can look to various sources for a place to start but each business is unique and times are changing. Digital marketing spend should change according to the results your data shows. Always adjust accordingly and do more of what’s working.
2. ROI of a Digital Marketing Agency
After you know your budget, you need to determine what the return on investment is when utilizing a digital marketing agency. Determining ROI is all about math. There is some data to know to determine the value of your marketing and determine results of ROI.
- What is the average revenue per sale (or average sale value)?
- What is the profit margin?
- What is the lifetime value of a customer?
- What is the allowable acquisition cost or lead cost (not actual acquisition)?
You might not know the answer to any of these questions. That’s okay, you do need to figure out what these are and you have to start somewhere. Also, understand that marketing and sales have to work together. Over half of the sale is done before it gets to the sales department which is why you need a good marketing team. Unless you’re an eCommerce only company, leads that are brought in are being handed off to a sales team. Determining ROI can get complicated because there are layers to the process but it is something businesses need to work through.
3. Digital Marketing Data to Measure
There are a lot of ways to measure different types of digital marketing. To simplify it, when considering your marketing efforts ask both or one of these questions depending on business type.
How many leads am I bringing in?
How many sales are being made?
You can’t just do one type of marketing and omnichannel marketing is very important. To get to your audience, your digital marketing needs to be at the places they are looking at the time(s) they need your product or service. Have a presence in different places and do different types of marketing. When looking at the data and tools available, there are some things that have to be determined. What counts and can be measured? What is the goal of the campaign and ad type? And, what is the end goal?
*But, can you decide by each individual channel whether or not there’s value? This gets tricky and leads us to the next topic… attribution.
4. Digital Marketing Attribution
Attributing a sale to a marketing channel is complicated and this has always been a hot topic for us as a digital marketing agency. Overall, marketing attribution is a hot mess. We recently released an Elevated Marketing Alert discussing how different companies are taking control of the data making it even harder to attribute marketing efforts to a particular channel.
Can the platforms accurately track according to your sales cycle? Some are as little as 28 days and some will go out to 90 days. Google Analytics, which is most widely used, gives last-click attribution. You cannot give the last action a user takes all of the credit for marketing efforts. Attributing marketing to the last channel is like attributing getting drunk to the last beer you drank
5. Digital Marketing Results
When deciding whether a digital marketing agency is worth the money you have to consider when results will start coming in. Understand that there are a lot of factors. Seeing results can take varying amounts of time–It could only be 1 or 2 months or could be 9 months or more. Every business is unique in their target demographics, budgets, and in the channels used in their digital marketing strategies. We are also at the mercy of the search engines and tracking tools and how they give credit to the work. Organic, SEO (content marketing) and paid strategies work together and may not always yield the results you expect. Keep in mind that Paid Digital Marketing Strategies Don’t Always Get Quicker Results.
Getting results is never as quick as we want it to be. Accurately forecasting digital marketing results is complicated. There’s no magic switch to turn on. When working on results, work with your digital marketing agency to set proper expectations about the time it takes to see results.
6. Hiring In-House vs. An Agency
Depending on the size of your company, you could hire someone in-house. When considering in-house talent, think of all the things necessary to do digital marketing and compare that with what an agency offers. Compare the type of individual you would need to hire and what they have to be skilled at. There are so many types of digital marketing to manage and it takes a vast skill set.
Question: Is digital marketing art or science?
Artist: “Digital Marketing is about creatively engaging with your audience on an emotional level.”
Scientist: “Digital marketing is about measuring data and using it to take action towards consistent improvement.
It’s rare to find one person who can utilize both the right brain and the left brain for detailed marketing strategy. Both the artist and the data scientist have to be engaged for the best digital marketing results. So, if this person exists in your organization can their skills be afforded? And for those thinking, could I just do it myself? Follow up with these questions: Do I have the time? Do I know how to do it? How much is my time worth? Could my time be better spent doing something else?
Your business needs digital marketing. Don’t let not knowing the answers to all these questions stop you from getting started. Even large companies sometimes cannot answer all of these and start somewhere. If you’ve decided you need a digital marketing agency, start the conversation with a complimentary 30-minute strategy meeting. Our advice is to get to know your digital marketing agency before you hire them. Trust that you’re hiring an agency that is in a constant state of improving who will use your data to get results. Don’t buy service packages but rather individualized solutions. Build a relationship with a digital marketing agency that has integrity. Hire slow, fire fast.