A lot of people ask us how much digital marketing costs. In short, there are a lot of factors involved, but at the end of the day it depends on how much you’re willing to pay. While it may not be as easy as more money = more leads, there definitely is a correlation there. Thankfully, there are other ways to beat out the competition that don’t involve using more money, such as creating better quality campaigns.
The basic way in which digital advertising platforms like Facebook and Google work is called the ‘ad auction’ – advertisers ‘bid’ for each time the ad will show to a specific audience, and the ad with the higher rank (higher bid vs. better quality) gets shown. Advertisers can choose to pay for each time their ad shows, or for each time someone interacts with it.
The two main factors in creating effective ads are the creative (ad design) and the audience (targeting), and that’s where businesses like ours come in – getting the right combination takes experimentation, creativity and experience. Incidentally, this is the reason that traditional media like newspapers and television are dying out – they require advertisers to throw large amounts of money into an abyss that is hopefully seen by the right people, with no way of tracking the effectiveness of the ad. With digital marketing, you know exactly where your money is going, and you know exactly who sees your ad.
Determining your marketing budget
Wolf & Halo caters to both B2B and B2C clients, and our pricing is based on the specific needs of our clients. But how much should you be setting aside for this?
Many businesses set aside a fixed percentage of their revenue for marketing, but this percentage varies between companies and industries. Some companies invest as little as 5% of their revenue to marketing, while others spend upwards of 20%. A survey recently conducted by Gartner CMO shows the average percentage of revenue that firms spend on marketing as around 10%.
From the same survey, they saw that B2C companies (companies that sell to customers) spend more of their revenue on marketing than B2B companies, with service-oriented B2C companies spending almost 16%. If you’re not sure how much of your revenue you should be setting aside, we recommend either starting with a low amount (like 5%) or use our suggested pricing models at the bottom of the digital marketing page. Essentially: ad spend + retainer fee = marketing budget.
Irrespective of all other factors, our long-term goal is always the same: get more leads at a lower cost per lead, while raising the quality of leads over time. It’s important to think of advertising as an investment in your company’s future, not an expense. The more leads you get, the more your company can grow.
Hourly rates vs. project-based vs. monthly retainer vs. employee
Over the years, we’ve had the opportunity to engage with clients through various models – project-based, retainer, and hourly rates. What we learned is that the retainer model is a win-win for both parties involved: you pay the same every month independent of varying workload; we gain a solid understanding of the amount of staff and resources we need to dedicate to your account each month. Besides this, both parties benefit from not having to spend time jumping between service providers. But let’s look at every option.
According to SAFREA (Southern African Freelancers’ Association), the average hourly rate for social media management is R450 – R600. This freelance job usually doesn’t include content creation, which is charged separately: R400 – R600 per hour for copywriting (or R3.00 – R4.00 per word), plus any design or animation costs for images and videos. This amounts to a large expense when added up, especially since with hourly rates, every hour spent on your project is billable – including communication with you.
The advantage of this model is only paying for what you use, while the flipside of this is that it requires a watchful eye to prevent costs from spinning out of control.
The main problem with project-based fees is the lack of follow-up. Digital marketing campaigns are something that require consistent effort and management over long periods of time for maximum optimization. We’ve run a few one-off short campaigns before, and not only do we know that we weren’t able to arrive at the best versions of the campaigns, but we also know that the clients’ traffic and leads dried up afterwards. Thus it ends up being far more expensive for the client, because the cost per lead during such a short period isn’t yet as low as it could be, and the lack of leads afterwards means a lack of business. In the world of digital marketing, persistence is key.
Retainer fees can range anywhere between R2000 and R1 000 000, depending on the size of the marketing budget (and thus the size of the company). This is because of the inherent flexibility of using a percentage-based system – Wolf & Halo makes use of a combination fixed-interval and sliding-scale system to calculate our fee. Because a lot of our new clients don’t know how much to set aside for monthly marketing, the lower budgets fit into specific levels of spend, while larger budgets are calculated percentage-wise.
The most beneficial aspect of monthly retainers is that you pay for an agency’s services once a month at a fixed price, without having to jump between service providers every time you need something done. The retainer includes all the services you might need in terms of your website, social media presence or digital campaigns, so no extra cost is required either. The scope and monthly cost is something that we agree on beforehand, making your monthly expense predictable and consistent.
The only downside to this model is that it comes with a monthly bill for the same amount, which isn’t necessarily a good fit for seasonal businesses. For these clients we usually sign a limited retainer for specific months of the year, as they don’t have a full-time need for advertising.
Hiring a full-time employee instead
A lot of businesses make the decision to hire a full-time digital marketing employee instead of outsourcing to an agency. This single person with their single skill-set and level of experience becomes responsible for all the marketing needs of the company. If the person’s specialty happens to be websites, they’re not likely to be as good at running digital ads or managing a social media presence.
On top of that, the cost of hiring a full-time employee is pretty high – you essentially pay for every hour of their day, plus any benefits your company may have, irrespective of their performance. If the latter becomes an issue, then you have to follow procedure to let them go and replace them, interviews and all. Employee salaries for digital marketing-related roles could range anywhere between R10 000 to R60 000 per month, depending on experience. Add to this the cost of paid vacation, sick leave, any other benefits, and office resources.
Besides these limitations, if something happens to this employee, or they jump ship at some point, you’re left without their expertise and need to start over, finding someone new to replace them. The one advantage, if they don’t work remotely, is having someone on the premises.
So what is the final cost?
Basically, the two main factors are Rands spent (ad spend) and time spent (our fee). While the ad spend amount will vary slightly month-to-month, the fee will remain the same. As we offer a full-service package, the only elements costed separately are things like animated videos or creating a new website. Here is everything our digital marketing service includes (unless extra platforms are required, like LinkedIn or Twitter):
- Website: implement conversion tracking, setup Pixel tracking events, SEO analysis, minor edits
- Facebook & Instagram: define audiences, create lookalike audiences, create ads (including static creatives and copywriting), run split tests, maintain campaigns
- Google: define audiences, topics, placements and keywords, create ads (as above), maintain campaigns
- Growth management: drive social content strategy and manage timelines, maintain 24/7 live ReportGarden dashboard, monitor ongoing campaigns and review performance, detailed monthly reporting
Before getting started, we provide our potential clients a free-of-charge ten-point digital marketing audit to see what you already have, and what we will need to setup:
- Website performance test
- Website security test
- SEO analysis (meta tags, broken links, sitemap)
- Google Search performance
- Competitive analysis
- Check existing platforms – Google Ads, Google Analytics, Google Tag Manager, Facebook (including Ads Manager and Business Manager), Instagram, LinkedIn, Twitter, etc.
- Google My Business
- Blog and reviews
- Schema Markup
- Organic presence
What do I do now?
Either chat to us on Whatsapp or fill in the contact form. Try to fill in as much detail as possible, as this will help us figure out your specific requirements. After this first contact, we’ll carry out our ten-point digital marketing audit. Once we’ve sent you a proposal and you’ve approved it, we’ll send you a Service Level Agreement. Once signed, we can get going!