Page 130 - Duct Tape Marketing

114 Part II: Sharpening Your Marketing Focus

Can You Afford to Hire
Professional Help?

When advertising agencies first came into being, they sold their services in
return for the 15-percent commission that newspapers, magazines, and radio
stations offered when agencies provided the media with ready-to-use ad
materials. As an example, if an agency provided professional material when
placing a $1,000 ad for a company, the media let the agency keep $150 — or
15 percent — as the agency commission. The agency then used the $150 to
cover the cost of its effort on behalf of the client.

Today, businesses communicate their marketing messages through television
ads and in many other forms that involve production costs that far outweigh
15 percent of media costs, and agencies can no longer perform under the 15-
percent formula.

Still, 15 percent of your marketing budget is a good place to start as you try
to decide whether your budget is big enough to cover the cost of outside pro-
fessional assistance. Table 9-1 shows examples for companies with sales of
$100,000 to $2 million. The middle column shows the marketing budget if the
businesses allocated 5–10 percent of sales revenue for marketing. The third
column shows how much the companies would spend if they allocated 15
percent of the marketing budget to the purchase of professional services.

Table 9-1 Should You Bring in Marketing Pros?

Sales Marketing Allocation Professional Services Allocation
(5%–10% of Sales) (15% of Marketing Allocation)
$100,000
$200,000 $5,000–$10,000 $750–$1,500
$500,000
$1,000,000 $10,000–$20,000 $1,500–$3,000
$1,500,000
$2,000,000 $25,000–$50,000 $3,750–$7,500

$50,000–$100,000 $7,500–$15,000

$75,000–$150,000 $11,250–$22,500

$100,000–$200,000 $15,000–$30,000

As you hire pros, be aware that fees range upwards from $50 an hour, depend-
ing on whether you are hiring freelance writing and design services or whether
you need marketing consultation and advice. Here are a few practical guide-
lines for hiring outside professionals: