Profit-Driven Digital Marketing: Liabilities

Profit Driven Digital Marketing: Liabilities image digital marketing costsProfit Driven Digital Marketing: LiabilitiesIn case you missed my previous posts in this series, we’ve been talking about making your Digital Marketing Department or Agency profitable by treating it like a business. First, we talked about the goals and metrics, then moved into revenues. You can think of this as a pro forma balance sheet, complete with Assets, Liabilities and Equity. In today’s post we’ll take a look at the Liabilities, the cost side of the ledger.

Target Asset (Revenue) Scenarios

We have looked at several possible scenarios for growth in primary KPIs. Here’s a summary for Year 1:

Scenario Traffic Visit/Lead Lead/Cust. Churn Revenue Growth Base Case 10000/mo 1% 1% 20% $181,188 0% Case 2 +25% 1% 1% 20% $181,188 0% Case 3 +25% 2% 1% 20% $209,274 16% Case 4 +50% 3% 3% 10% $396,991 219%

Resources Needed for Each Scenario

Financial Assumptions

Hourly rate – $100/hour: an average that includes benefits and overhead (office, electric, other services) for each participant in executing the project. NOTE: This estimate does not include profits—just the costs for an average employee involved in sales and marketing. Your rate will vary depending on salaries, overhead, turnover, etc.

Base Case – Activities & Deliverables

In this scenario, we need to maintain basic website metrics, 10,000 unique visits per month and a 1 percent visit-to-lead conversion rate. Depending on your industry and current online visibility, this scenario calls for a relatively light effort to maintain that profile. For example:

  • 1 blog post per week
  • 4-5 social media updates per week
  • SEO-optimized content
  • 1 demand generation campaign per quarter (email, PPC, social media)
  • 1 new landing page and CTA (for downloads etc.) per quarter promoting existing content (no new advanced content needed)
  • 1 press release per quarter

To get that done, we need the following team, time commitments and technology:

  • Copywriter/Content Specialist – 2 hours per week
  • Inbound Marketing Consultant – 6 hours per week
  • Graphic Designer – 1 hour per week
  • Product Manager – 1 hour per week
  • Marketing Director/Reviewer – 1 hour per week
  • Sales Team – 4 hours per week
  • Software – $500 per month
  • Press Release Fees – $100 per month
  • PPC budget – $1000 per month

Total: 60 hours per month @ $100/hour + $1600 = $7,600 per month

Case 2 (Traffic Growth) – Activities & Deliverables

In this scenario, we need to grow website traffic 25 percent per year while keeping conversion rates constant (or growing slightly). To accomplish this, we focus on brand awareness and thought leadership via content marketing, social media marketing and possibly PPC and/or email marketing.

  • 3 blog posts per week
  • 1 video per month
  • 8-10 social media updates per week
  • SEO-optimized content
  • 1 demand generation campaign per quarter (email, PPC, social media)
  • 1 new landing page and CTA (for downloads etc.) per quarter promoting existing content (no new advanced content needed)
  • 1 press release per month

To get that done, we need the following team, time commitments and technology:

  • Copywriter/Content Specialist – 4 hours per week
  • Inbound Marketing Consultant – 8 hours per week
  • Graphic Designer – 2 hours per week
  • Product Manager – 1 hour per week
  • Marketing Director/Reviewer – 1 hour per week
  • Sales Team – 4 hours per week
  • Software – $1000 per month
  • Press Release Fees – $300 per month
  • PPC Budget – $2000 per month

Total: 80 hours per month @ $100/hour + $3300 = $11,300 per month

Case 3 (Increase Traffic + Visit/Lead Conversion) – Activities & Deliverables

In this scenario, we need to increase visit-lead conversion rates by developing and promoting top-funnel content (inbound marketing). Depending on your industry and current online visibility, this scenario calls for an increase in content marketing, demand generation, landing page and CTA optimization and marketing automation capabilities. For example:

  • 5 blog posts per week
  • 1 video per month
  • 12-15 social media updates per week
  • SEO-optimized content
  • 2 demand generation campaigns per quarter (email, PPC, social media)
  • 1 new landing page and CTA (for downloads etc.) per month promoting new content
  • 1 press release per month

To get that done, we need the following team, time commitments and technology:

  • Copywriter/Content Specialist – 10 hours per week
  • Inbound Marketing Consultant – 10 hours per week
  • Graphic Designer – 3 hours per week
  • Product Manager – 1 hour per week
  • Marketing Director/Reviewer – 1 hour per week
  • Sales Team – 5 hours per week
  • Software – $1000 per month
  • Press Release Fees – $300 per month
  • PPC Budget – $3000 per month

Total: 120 hours per month @ $100/hour + $4300 = $16,300 per month

Case 4 (Aggressive Growth in KPIs) – Activities & Deliverables

In this scenario, we are seeking to grow all primary KPIs in order to drive significant new revenues. We need to optimize the entire sales funnel by increasing our efforts in content marketing, social media marketing, conversion rate optimization, lead nurturing, lead scoring and marketing automation. Our sales team becomes more involved due to higher conversion rates, lead intelligence and CRM integration. For example:

  • 5-7 blog posts per week
  • 18-20 social media updates per week
  • SEO-optimized content
  • 1 new demand generation campaign per month (email, PPC, social media)
  • 1 new top-funnel piece per month (ebook, whitepaper, infographic, etc)
  • 1 new top-funnel landing page and CTA (for downloads etc.) per month
  • 1 new lead nurturing campaign per month (includes content for 4-5 emails, landing pages)
  • Optimized/repurposed and promotion of ongoing lead nurturing campaigns
  • 1 press release per month

To get that done, we need the following team, time commitments and technology:

  • Copywriter/Content Specialist – 15 hours per week
  • Inbound Marketing Consultant – 15 hours per week
  • Graphic Designer – 5 hours per week
  • Product Manager – 4 hours per week
  • Marketing Director/Reviewer – 3 hours per week
  • Sales Team – 8 hours per week
  • Software – $1500 per month
  • Press Release Fees – $300 per month
  • PPC Budget – $4000 per month

Total: 200 hours per month @ $100/hour + $5800 = $25,800 per month

Annual Cost Summary – Year 1

Scenario Revenue Cost Net Revenue Base Case – No Growth $181,188 $91,200 $89,988 Case 2 – Grow Traffic $181,188 $135,600 $45,588 Case 3 – Increase Visit/Lead $209,274 $195,600 $13,674 Case 4 – Aggressive Growth $396,991 $309,600 $87,391

Discussion

Estimated levels of activities, time commitments and costs are all based on our experience as a digital marketing agency, with an eye on our clients’ marketing budgets, as well. You will need to calibrate these levels and costs based on your industry, competition and internal practices, but they should serve as guidelines for planning and setting expectations for success. I realize that these scenarios will not be relevant to a small business with a limited marketing budget, and that good marketers can (and often do) fulfill several of these roles. But I think the manpower efforts still apply if you want to achieve these targets.

It’s also tempting to jump to the conclusion that less ambitious goals and budgets are likely to be more profitable than more aggressive scenarios, but remember that this is just Year 1. In my next post we’ll run these scenarios out over the next 5 years to look at profitablity and the equity side of the balance sheet.

Many companies will look at these liabilities and decide that the necessary investments in manpower, technology and third-party fees aren’t worth the short-term losses, especially at the beginning of the revenue cycle. As we will see, it’s a mistake to be short-sighted about digital marketing. The long-term benefits will greatly outweigh short-term losses.

Photo Credit: Philippe Put

Profit Driven Digital Marketing: Liabilities image 14c8632a 335d 4895 8387 65955b5f7238Profit Driven Digital Marketing: Liabilities

More Business articles from Business 2 Community:

Loading...
See all articles from Business 2 Community

Friend's Activity