S4:E7 | 2019 Marketing Budget Study Reveals Accounting Marketing Trends For Firms | AAMplify!

S4:E7 | 2019 Marketing Budget Study Reveals Accounting Marketing Trends For Firms | AAMplify!

Welcome to AAMplify! a podcast series by
the Association for Accounting Marketing. I’m Lauren Clemmer the executive
director of the association and I’m your host for today’s session. Joining me
today is Lee Frederickson. Lee is the managing partner at Hinge, a
marketing agency and research firm. AAM partnered with the Hinge Research Institute
on the 2019 Marketing Budget Benchmark Survey. Welcome Lee. Thank you. Good to be here. Happy to have you. Today we’re going to be talking about the findings from
the most recent marketing budget survey. As we’ve done in past years, we’ve looked
at how firms spend money overall as well as how that spending may differ amongst
the highest growing firms. Lee has compiled and analyzed these numbers for
AAM and is going to share some of those highlights with with us today. So before
we dive into the findings, let’s start by having you talk about how we conducted
the survey to ensure there is merit to the numbers and that we’re making
an apples-to-apples comparison. How did you structure this survey? Great question. You know, one of the challenges in comparing budgets among marketing firms
is understanding. To make sure you’re talking about the same things that are
either in or out of the budget. So we came upon our approach that I think work
pretty well. We broke it down into specific kinds of expenses, like:
sponsorships, website, those kinds of things. So people could get more specific
and we could compare apples-to-apples. And we also looked at it with or without
the salaries for the marketing team in there. That allows a firm to kind of
go in and understand exactly how their spending compares to other firms in the
survey. Ok I got that. So let’s go to the biggest question people have about
marketing budgets, Lee. How much should a firm spend on marketing?
Does that include or exclude marketing salaries and did this number change
since we looked at at 2 years ago? Great question. The the real answer to it
is it depends a lot on the characteristics of the firm. For example,
smaller firms, or ones that are going into more
competitive markets, such as technology or advisory services, are likely to need
to spend more. And we sort of looked at kind of what’s the middle of it and it
generally runs between 1.5 and 3.1 percent of revenues. That excludes
salaries for the marketing team. Now if you look at overall spending. Salaries
are about 25 27 percent approximately of overall spending. But we then we looked
at all of the other expenses, pulling out the salaries, so it’s actually both ways
you can see it. What are these firms spending money on
and do we anticipate any spending category to increase or decrease in the
next year? Yeah, it’s really quite interesting the kinds of things that
people are spending money on. Some of them have remained the same. Sponsorships is still the overall largest category. Memberships, networking events, sort of
the traditional kinds of things that have been associated with accounting
marketing, are still pretty prevalent and they still account for a lot of the
spending. But what you’re seeing is that the high growth firms that are growing
the fastest tend to spend a little bit differently. With a somewhat different
pattern. They really do, and it’s changing over time. I saw that as well. Does spending differ based on the firm size
or perhaps where a firm is located geographically? Yeah. That’s a great
question. It does. In previous studies we looked at the geography and we found
that firms in rural areas tend to need to spend a little bit more to reach the
marketplace. Smaller firms tend to spend more as well, approximately about
another third or more, than the very largest firms do. But the reality of it
is that you’re spending really depends a lot on which markets you’re trying to go after and I think the way to think about
spending is, not just what are other people spending, or whether other firms are spending, it’s what is it gonna take for us to get to where we need to go. So this
can provide some guidance and it can provide a tool to help you take it to
your partner group and say, “Okay. Here’s what the marketplace looks like. Here’s
how people are spending their money. And here’s where we’re spending.” And that
kind of gives you a rationale for making some adjustments. Yeah. I was surprised this morning when you talked about that rural areas are more expensive. Yes. They’re
less expensive in terms of like the cost of living and so forth but
there, you often have firms that have a lot of small offices. So some expenses are
involved, which is maintaining an office and having a presence, get multiplied. And
you’re spreading over a smaller population base. So those are the
things. And you’re not talking about huge differences, but they are important.
Absolutely. Past surveys have shown a big difference
in how high-growth firms spend in relation to their local counterparts did
that hold true again this year? And what was the big difference? Indeed it
did. We broke it down into we take the middle of the average and
then we look at the slowest growing and the fastest growing firms. And to give
you sort of an order of magnitude, fastest growing firms are growing about
ten times faster than the slowest growing. So a couple of percent versus
19 almost 20 percent. So that’s a big difference. Yeah, it is.
And we notice the differences in all three categories of spending. One being
kind of the other spending, which is like discretionary money for indoor or excuse me, firm parties and celebrations and that… There the high-growth firms are
spending less. Then you up to the traditional spending.
The things we have historically done, like seminars and networking events and
that. And there again, the high-growth firms are spending a little bit less
than the slow growing counterparts. And then you get up to the digital spending,
the SEO … There you see the biggest difference where the high-growth
spending is much more than the lower growth. So it kind of there’s differences
all across the categories. But the overall effect is that they’re tilting
more towards the digital, which is we’re … Actually seeing more and more
clients are researching, they’re looking for information, you know, you got a
question it used to be you’d call up your buddy or you’d call up someone you
knew. Now, you know, you flip on your smartphone or you google something and
boom you’re finding out what’s transfer pricing all about? Is that something I
should be concerned about? And I think firms are really starting to catch on
that they need to change where they are, because their clients are going to
different places and they’re willing to shop where they never used to. That’s right. Yeah, another interesting number you always come up
with is the number of marketing persons there are at firms. What do these numbers
look like this year and are there any differences based on it? There are differences. This is something that I think every marketing
director should take note of and that is that the faster growing firms have a
much higher ratio of marketing people to overall staff. So they have more
marketing people for the same size organization. And the importance of that, or the significance of that is, that today’s marketing takes more involvement. If you’re going to be involved in social media, if you’re going to do content
development, if you’re going to do SEO, these are all things that take time. They
take focus. And that’s where we’re seeing one of the key differences. It’s not so
much an overall dollar spending, but it’s more in
the talent you put towards the task. They’re getting more specialized. It’s
getting more complex all the time. Competition’s getting much fiercer than
it used to be. And all that is showing in the marketing budgets? Yeah. So what’s the biggest takeaway marketers or partners should take away from the survey and
what should they do with it? Well, you know, I think the biggest key
fact that I think is really important for partners to understand is that the
revenue per equity partner in the high-growth firms is almost a million
dollars higher than in low growth firms. That is very significant. A million
dollars per equity partner. And that’s not the absolute that’s just the
difference between the two. So there’s something that’s happening in the
high-growth firms is really driving the ability to generate revenue. Now part of
it, I think, is the leverage they’re getting because they have more marketing
people. Because of that, they can cast a much broader net in the marketplace. And they
can find those kinds of clients at are really the best fit with them. So it
isn’t just that not all clients are good fit with every firm. So if you understand who
your best clients are and you go after those and you cast a broad enough net,
you can get a lot more revenue per equity partner. And I think that’s one of
the important things, is that this is an important business decision. It’s not an
expense to be minimized it is an investment to be optimized. And that’s
the route and that’s the real difference and that’s a big shift. I think a
secondary shift, a big takeaway, is that the world is shifting to digital. We’re
seeing here the firms that have more of a digital footprint have a competitive
advantage and when you look at what’s happening in the marketplace, is we have
with some of the other research we see that there’s much likely to
continue. For example, right now the market,
the high-growth firms are spending about 35 percent of their marketing budget, roughly a third of their marketing budget, on digital. But when you look at where
clients are looking for information where how they’re going about getting
information for solving their business problems or evaluating firms about 70 percent of it, about two-thirds of it, is digital. So the clients are still much more
digital than even the high-growth firms are. Let alone the low growth firms who
are really, you know, I’m afraid they’re in in danger of falling behind in a very
competitive marketplace. They are gonna have a tougher time catching up. What I’ve seen,
firms that the smaller firms, be able to reach a larger geography because of
their digital footprint. That’s so true. That is so true. If you have,
you know, some of the best things, two of the things we found were there’s
two service areas where the high-growth firms are more likely to offer these
services. One of them being advisory services, no surprise there. And another
being technology related IT security those kinds of services. That’s where
they’re are offering more of those services. And those kinds of services
require more marketing dollars because they’re very competitive markets and
they’re often relatively short term engagements, as compared to a compliance
relationship where you may go years after years with the same client. There,
with consulting, and those kinds of things, there’s more turnover. And you
have to spend relatively more of your marketing dollars. So I think learning
those lessons and starting to try to get in front of those trends rather than
just reacting to them after they happen, I think is the big takeaway. From what I
will look at it from the perspective of a managing partner or somebody to look
at it, that’s really what you need to be thinking about. How are we going to keep our firm competitive going forward. So, thank you so much for joining us today, Lee. You shared
a lot of great information. I think you know there are many points here that,
especially with the disruption in the industry, and things that are going on,
you’ve really given people a lot to think about.
Yes, I think there’s huge value here. If you want to learn more about the survey
and to purchase a detailed report to benchmark your own spending, please visit www.accountingmarketing.org. This wraps up another episode of AAMplify! Please watch for another podcast from the Association for Accounting Marketing next month. And always remember to AAM High!

Author: Kevin Mason

1 thought on “S4:E7 | 2019 Marketing Budget Study Reveals Accounting Marketing Trends For Firms | AAMplify!

  1. Don't forget to download your free copy of the 2019 Marketing Budget Benchmark Study! https://netforum.avectra.com/eweb/shopping/shopping.aspx?site=aam&webcode=shopping&shopsearchcat=merchandise&productcat=resources&prd_key=03364e8b-3303-47b2-b281-990aa1901b62

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