Outsourcing Marketing Yields a Positive Return on Investment

EAG, August 24, 2020

Before we get to the good stuff on why outsourced marketing yields a positive return on your investment, let’s first address the elephant in this blog.

Determining ROI on marketing is difficult. Not all marketing efforts directly result in a sale or they lead to a sale in a different path than anticipated. Take this blog for example. You may read it now, take no action and go about your day. An indeterminate number of months go by and outsourced marketing pops in your head as a solution to your non-existent or overburdened marketing manager.

You contact us. We become your outsourced marketing firm. Can we attribute your business to one blog you read long ago? A billboard. Social media engagement. A video. An email. The list of marketing opportunities goes on, but it’s tricky trying to trace every sale back to one specific marketing campaign. However, you can get pretty close to your actual marketing ROI with the right reporting tools in place. And, of course, asking how customers found you.

Marketing ROI is a calculated, but not an exact science. The elephant can move aside.

Realistically, What Should I Expect as ROI on Outsourced Marketing?

We’ll answer that question with a question because it is different for every business owner. What is your customer’s lifetime value? You should know this figure by heart. If you don’t, here’s how to calculate it:

Multiply your average customer’s sales (or income) by the average number of years you retain a customer.

Knowing your customer’s lifetime value, look at your sales pipeline and determine how many new customers will you need to pay for your marketing investment. Remember, it’s cheaper to retain a customer than to acquire a new one.

Your total marketing investment should result in greater customer retention and business growth over time. Of course, allocating marketing budget to the right channels is essential to yielding positive marketing ROI.

How Much Should I Invest in Outsourced Marketing to See Positive ROI?

Experts might suggest using the percent of sales method to allocate a fixed percentage (say 5%) of your anticipated sales revenue to advertising and marketing. It is based on the erroneous assumption that sales drive advertising. The reality is just the opposite. Advertising and marketing are in the driver’s seat.

The problem with that method is that no two businesses are alike. Not even in the same industry. There are too many outside factors that produce flawed data. If your sales decrease, marketing is cut. When marketing is cut, sales can decline. Eventually, with nothing going into marketing, theoretically, no sales are coming out of it.

If you’re determining a budget for outsourced marketing for the first time, you can use your industry’s averages for percent of sales invested in marketing as a starting point. Trade associations are a good source for getting industry averages. Averages are a benchmark, but not an absolute because your business is different from others in your industry.

The percent of sales method is a helpful way to track year-over-year or period-over-period marketing expenses. Nothing more.

Is It Possible to Spend Too Much if I Outsource My Marketing?

No one wants to spend more than they have to on anything. So, if your outsourced marketing costs increase faster than your sales, you might be overspending. Then again, you might not be if you’re business is in early phase, going in a new direction or launching a new product or service.

Closely track marketing costs to see if the trend is short-term and justified or indicates a bigger problem, like you’re spending too much. Compare your sales growth rate against your marketing growth rate. Sales should grow at the same rate or faster than your marketing investment.

Be careful not to compare periods that are too short to accommodate trends. If your business is seasonal or has a long sales cycle, creating peaks and valleys, yet your marketing expense is spread evenly over the years, this comparison won’t be accurate in a given month, but it has long-term value.

Marketing is Marketing. Why Outsource It?

Because outsourcing marketing yields a positive ROI compared to hiring an in-house marketing team that is well rounded in today’s necessary marketing skill sets, including:

  • Marketing strategist (CMO, marketing manager)
  • Web developer
  • Web designer
  • Content writer
  • Search engine optimization specialist
  • Graphic designer
  • Videographer
  • Social media strategist
  • Pay per click campaign manager
  • Media buyer

These marketing skills are niche, meaning a great content writer isn’t going to be an equally great web developer. Outsourced marketing means you get a full-service team of subject matter experts for equal or less than the cost of one full-time marketing employee who most likely has one or two skill sets listed above.

Here’s where the positive ROI on outsourced marketing comes into play… by the numbers.

An experienced marketing manager based in Kansas City easily commands a $60,000 to $75,000 annual salary. This number varies depending on the person’s marketing skills and the size of company for which they work. Add employee benefits and the tangible costs of keeping an employee on staff and a conservative cost for hiring a mid-level marketing manager can run as high as $85,000.

Content writing and digital advertising are important to you, so you hire a marketing manager strong in those skills. Expect your marketing investment to increase when you must hire freelancers or specialized marketing firms to handle marketing tasks outside of your manager’s expertise, such as updating a web page or developing a brand-new website, creating videos and posts for social media, design and mail services for direct mail, improving SEO, etc.

What Does the Same Outsourced Marketing Budget Get You?

A positive yield on your investment. For any given of our B2B or B2C clients, their outsourced marketing programs had all or a combination of the following advertising and marketing services:

Marketing leadership experience

  • One point-of-contact account manager with an average of 10 years of experience
  • Strategies, plans and budgets from senior marketing professionals with 10 years or more experience

Digital lead generating programs that can include one or all of the following (including ad design and copywriting):

  • Retargeting digital ads to engage site visitors over time
  • Paid search marketing using the Google Ad Network
  • Targeted lead generation campaigns via LinkedIn
  • Email campaigns to one or many targeted prospects
  • Social media management, content development and paid campaigns
  • Ongoing strategic recommendations and campaigns
  • Detailed monthly analytics and competitive reporting

Web development that can includes one or all of the following:

  • Website hosting
  • Website design and performance evaluation and recommendations
  • Web design and development
  • Website copywriting

Content marketing that includes one or all of the following:

  • SEO ongoing blog content
  • Press releases
  • White papers
  • Case studies
  • E-news
  • Social media posts

Graphic design services that includes one or all of the following:

  • Traditional (brochures, direct mail, etc.)
  • Digital
  • Video
  • Trade show materials

Flexibility and Scalability are Outsourced Marketing’s Greatest Advantages

With ongoing, real-time reporting and a team of marketing professionals just a phone call or email away, outsourced marketing brings you a level of flexibility you’ve never had before. Last minute need? Company or industry news to get out and on which to capitalize? Marketing collateral for a surprise sales meeting? You have a team on it.

$75,000 is a baseline figure. Outsourced marketing may still be a realistic solution even if that number isn’t feasible for your small business. Outsourced marketing services are often scalable, fitting any budget or business need. The cost of services is spread among an entire team of marketing experts, lowering the cost and enabling you to gain marketing services long before hiring a full-time employee. The pandemic also proved the value of scalability. Companies using outsourced marketing were able to scale back marketing rather than lay off employees or stop marketing, period.

Ready to reap the ROI of outsourced marketing? Let’s talk.

 

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