Legal Recruitment from Ten-Percent Legal

Saturday, May 10, 2008

How much should a company spend on marketing?

How much should I spend on my marketing budget?

This question is probably asked by every business owner in the UK of any business consultant they meet and the answer is almost guaranteed to be, “I haven’t a clue”.

There is no rule of thumb or guide as to how much you should be spending on your marketing or advertising budget. It should obviously not bankrupt you, or eat into your profits sufficiently to affect you, and every piece of advertising or marketing must be audited and measured to determine its effects.

I was looking on the telephone directory this morning and noticed that a conservatory company had obviously paid a fairly substantial amount of money to be placed on the front of the telephone directory at the bottom of the page. I was thinking about this afterwards and wondering whether this was effective marketing or a complete waste of money, as if I was thinking of buying a conservatory I am not sure that I would look on the front of a telephone directory for a conservatory company, rather under conservatories. I am not even sure if I would have noticed the advert sufficiently to pay any attention to it or to recognise the brand name, as it was the same colour as the colour of the directory front, and did not really stand out.

This got me thinking about marketing, particularly amongst law firms.

On our website (www.ten-percent.co.uk) we have a number of Google Ad word banners and also search boxes that generate a small amount of income for the company every time somebody goes onto the site and clicks through on an advert. It is a quite amazing the number of solicitors firms that advertise on our site, possibly without realising that they are. Costs of a click can vary widely, but some clicks are now costing in the region of about £4 to £5. I wonder if any of the firms who are using Google Ad words have actually audited the effect or usefulness of it or whether they have in fact picked up any clients by being on it.

Perhaps another example is the lengthy radio and television campaign run by some local and national firms of solicitors looking at personal injury claims.

In recent years, a firm in Liverpool ran a campaign on our local radio station that was extremely well presented and seemed to present their case quite nicely for being a market leading company, one that you could trust and use.

However, the cost of that campaign must have been phenomenal, and I wonder to this day whether or not it was justified for that solicitors firm and how much extra business it actually picked up for them.

I have also seen advertising on the backs of buses, or in years gone by solicitors firms providing custody sergeants in police stations with pens, cups or mouse mats so that they remember the name of their firm when a prisoner was asking about local firms of solicitors. Quite a lot of marketing I have found is more a test to see what works and what doesn’t. For example, in the legal recruitment business I occasionally dabble with the notion of spending a lot of money on advertising in the Law Society Gazette with big advertisements on a regular basis with all our vacancies on. I also spend a fair amount of our advertising on Google Ad words, but I avoid as much as I can the content network, which is where Google place the advert on other sites like ours for people to click through on as I remain very suspicious as to whether some of these sites are actually fraudulent and are spending a day clicking through themselves or getting others to click through for them.

As a rule of thumb I reckon that every company, regardless of field or area, ought to be spending in the region of ten to 20 percent of its turnover on advertising or marketing. This has certainly been the case for us. There was a legal recruitment company called Integral Legal Recruitment not so long ago that was running full page adverts in the back of the Law Society Gazette quite regularly. There then followed a news report that Integral had gone into administration and that their database of clients and candidates was up for sale. That has always stayed with me since and I am aware of the danger of overspending on advertising like Integral did. We had a marketing review done of our business, and the research had discovered that if Integral had been paying full rate for their advertising in the back of the Law Society Gazette, they would have spent in the region of about £270,000 in one year, would mean that in terms of placements, they would have to be making over 80 placements probably just to pay the cost of the advertising which is quite a substantial amount for a legal recruitment consultancy!

Jonathan Fagan is Managing Director of Ten Percent Legal Recruitment. He is also a management consultant working for the Ten Percent Business Improvement Service. If you would like to contact him, please email cv@ten-percent.co.uk

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