Old-School vs. New-School Advertising Costs…..It Ain’t Even Close

by Marcus Sheridan

burning-money-advertisingThe biggest complaint that business owners have regarding blogging and inbound marketing, at least initially, is that it costs too much and takes too much time. And, although I’d just love to argue both points today, I’ll simply expound upon the former in this little post.

Let’s use my buddies at Hubspot as our inbound marketing model for a second. Although they have quite a few packages depending on the needs of a business, we’ll use their small package for the sake of comparison, which costs a total of $3,000 per year. In comparison with other mediums, (keeping in mind these prices ranges vary drastically regionally and so I really don’t want to hear anyone complain at how inaccurate these numbers are), these are the prices I was paying here in Virginia a few years back before I saw the light:

Billboards: Initial artwork fee of $500-$2000 and then average out to $500-$5000 rental fee per month. In other words, on the very low end, one could expect to pay $6,000 per year on billboard advertising.

Phone Book: Ahh yes, my buddies over there will the yellow sheets of paper. Anyone that has ever advertised with the Yellow Pages knows that the cost can be unbelievably high, with the size of the ad being the biggest factor. That being said, an average-sized ad in the Yellow Pages is going to cost at least $500-$1000 each month, or 6-12k annually. At my peak, I was spending about $40,000 a year on Yellow Pages….which might explain why I hate those guys ;-)

Home/Trade Shows: The dreaded weekend killer, aka—The Home Show. Boy have I seen businesses drop some serious duckies on home shows in the past. Heck, I’ve dropped over 25k on one show in the past myself, which makes me want to barf just looking back on those wasteful days. On average, if a business does 4 home/trade shows a year, the cost will be at least $20,000.

Radio: Business owners typically faint the first time they meet with a radio ad sales rep. In most markets, a 60 second spot is at least $100 during decent hours. Considering that radio is worthless without decent airway saturation, a business owner can expect to spend about $3000-$4000 a month for a normal campaign in a decent-sized market, which equates to 35-50k a year….ouch.

TV: Geez, don’t get me even started on TV. The prices and costs vary wildly in this medium but just the cost of producing a commercial, much less running ads on the air, is an absolute killer—at least 25k-75k annually. (or you could just go buy a $150 flip camera and be viewed by millions on YouTube for free )

Direct Mail: ValPak, Reach, and the rest of the direct mailers have had their day in the sun, but the reality is that they are about as dead as the Yellow Pages. Notwithstanding, most direct mail markets will cost at least $1,000 a month, or 12k a year.

Print: Holy Smokes. I once did a full-page ad in the Richmond Times Dispatch and it cost me $4,000 for that one single ad. To this day, I cringe when I think about how big a waste that was. Heck, I’d have been better off just burning the money in a bonfire with my kids. At least then it would have been a pleasant memory. ;-)

Adwords: Oh boy, now here is a medium (albeit not old-school) that can bring businesses with the deepest pockets to their knees. A little over 2 years ago I was spending $500 every 3 days (50k per year) on Adwords. For a pool guy, this was an absolute killer. What’s crazy is that many businesses out there spend much, much more than this number.

So there’s my take on old vs. new forms of advertising. Looking at these costs, you can see why I’m such a huge advocate of blogging, video, and other forms of inbound marketing to generate leads. Remember, unlike every form of advertising above, inbound marketing is the gift that keeps on giving. Just one blog article can conceivably bring your company leads for the next 25 years. Think about that for a second. The potential is truly unbelievable.

So learn from my mistakes and don’t be dumb. Don’t waste your money. Be great at one thing. Be a great inbound marketer. You and I both know that $3000 is chicken-feed compared to the past. I can promise this will not only be the smartest move you’ve ever made for your business, but it will also save, and make you, a lot of dang $$$ :-)

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{ 22 comments… read them below or add one }

Dave Marciniak October 12, 2010 at 11:40 am

Marcus, I just read an interesting post talking about the ROI of social media and how for small businesses with a small budget it’s not a question of measurable ROI – it just *has* to work. The key for small business is learning how to do it efficiently and effectively, since we’re all positions in the organization including chief marketing officer!

I looked at newspaper advertising this spring just out of curiosity and was blown away. It’s such a dwindling medium with low impact, I fail to see how they can justify their ad rates. I get in the local paper once a month for free, by writing a column. That works for me.
.-= Dave Marciniak´s last blog ..Low Impact Landscapes =-.

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Marcus Sheridan October 13, 2010 at 9:21 am

You’re spot-on Dave. With the advent of social media, many small businesses that could never have afforded advertising in the past can now have a presence—and a good one at that if they just make it happen.

Regarding print, yeah, it’s crazy the ad rates that come with such a medium, and quite perplexing to me that anyone who is truly in-tuned with marketing would go down that road in 99% of the cases.

Keep up your great work my friend.

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Eric Pratum October 12, 2010 at 11:40 am

The only one that I’m going to back up here is AdWords, but that is largely because you can generally get more data from that IF you do it smart AND because Google will give nonprofits a grant of $10,000/month of free AdWords advertising. So, dealing with nonprofits as I do, it’s pretty decent.

That being said, advertising is most definitely not ideal. Ideally, your employees would live your mission, therefore effectively removing the need for marketing as a separate function or department, and you would have the passion to communicate with potential customers rather than interrupt them.
.-= Eric Pratum´s last blog ..I Guest Posted on The Sales Lion =-.

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Marcus Sheridan October 13, 2010 at 9:25 am

Communicate vs interrupt??? What a crazy concept Pratum! ;-) (now if we can just get the other 90% of businesses in the world to start getting that……)

That is pretty awesome that Adwords does that 10k credit for non-profits. I do believe AW has its place, but as a long term solution for lead-generation, it’s a tough road to walk.

I see Adwords as a bridge to get a business where they need to be in terms of lead gen until they’ve established a strong enough organic presence.

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Eric Pratum October 14, 2010 at 8:27 am

Agreed. It’s always important to have multiple methods to draw in new people, but if you’re doing things right on the organic side, new folks should be drawn in naturally (by things like searches), current clients will advocate on your behalf, and so on.

With the exception of maybe lead gen businesses and probably a select few other types that aren’t coming to mind, I’d rather see many organizations take 90% of their advertising budgets and put them toward marketing, relationships, and thinking about what is actually on the minds of their stakeholders.
.-= Eric Pratum´s last blog ..I Guest Posted on The Sales Lion =-.

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Terez October 12, 2010 at 3:17 pm

That was powerful!

Having worked for a newspaper (on the reporting side, not the advertising side), I know those numbers are true. We in the newsroom always joked about switching to the dark side (advertising) to bring in the big bucks, instead of the pennies we were paid.

Anyways, this post shows how powerful social media marketing can be. Yeah, it takes time. But it certainly does not take a lot of money. I would rather spend my time marketing my business in a way that has the potential to last for decades!
.-= Terez´s last blog ..A Beginner’s Guide To Blog Commenting =-.

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Marcus Sheridan October 13, 2010 at 9:28 am

You got that right Terez– sales guys make the money while the content producers got the short end of the stick.

But this brings me to an important shift that has occured. Today, content producers in a company are the sales guys. In other words, instead of getting shafted because all they do is write, now writers and content producers are quickly becoming the most valuable wing of any company, as they are the ones building the relationships and building all the leads. For a writer, these are exciting times.

Thanks so much for stopping by Terez!

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Terez October 14, 2010 at 12:22 pm

I cannot agree with you more! When I stopped working for the newspaper and started researching what opportunities were available to me online, I was so excited. I feel like there is no better time to be a writer than now.
.-= Terez´s last blog ..Over Cereal And Milk- With Laura Sherman =-.

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Daniel M. Wood October 13, 2010 at 1:06 am

Hey Marcus,

Some good old path always proves the point.
I think the biggest problem for most people is finding the time and the creativity required to blog.

When I started I was worried about this as well.
But if you think about all the objections your customers have (I have a list at home of about 100 objections) you realize how much you can write.

You can write one article/objection, once you are done, you go back and start with the first one again, just with a different twist.

So really there is no reason not to write.
You have the ideas (if you don’t, you either don’t care enough about your business or talk to customers enough) and like you proved, you can afford the money.

//Daniel
.-= Daniel M. Wood´s last blog ..How to Set Goals That Will Make You Rich =-.

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Marcus Sheridan October 13, 2010 at 9:31 am

Yeah big D’, you’ve definitely become a writing and content producing machine. The fact that you’re able to produce quality articles in the niche of sales and motivation 3-4 times a week is something that most people quit at after a month or so. But like you said, with a system, and some discipline, anything is possible.

Keep being awesome my friend.

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Jim Mueller October 13, 2010 at 12:53 pm

Marcus, great points you make on traditional marketing and the costs, however, what is not addressed in this scenario is the “labor” to implement all of those great things that you can do on Hubspots platform. (or any other number of platforms)…not to mention the “skills” to implement them. In fact, Hubspot themselves came up with a term called “Return on Effort” or ROE. It’s the measurement of the amount of time/labor it takes to implement these marketing strategies. I think it is brilliant of Hubspot to identify this area of ROI…because it’s so easy to overlook one’s time invested into something…but in reality our “time” is our most precious asset. I used Hubspots platform for a while the tools are really great…the problem is, most small business owners can’t or won’t take the time to learn how to use them…and if they do they usually fall off the wagon with regard to using the tools systematically.

I really see a need for companies to offer actually “doing” the implementation of all these great online marketing tools for customers. Sure it costs to have someone doing your marketing for you but it’s better than spending $3K – $6K per year and not using the tools. My company http://www.reignnet.com does just this…we have helped 60+ clients, 25+ on a monthly basis, by actually doing the marketing for them. We like to teach them what they need to know, create a plan and implement that plan for them.

Jim Mueller
Founder & CEO
ww.reignnet.com

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Marcus Sheridan October 13, 2010 at 6:48 pm

Hi Jim, and thanks so much for leaving such an excellent comment. I think the majority of web companies out there share your vision of helping inbound marketers overcome there own skill deficiencies/ laziness/understanding/etc…..In many cases, this is true and a very valuable service, certainly better than someone doing nothing at all and expecting results.

Notwithstanding, I do not share such a vision for the majority of small businesses owners in the world. My vision is one of empowerment. It’s one that says if small biz owners truly ‘get’ inbound marketing, then they’ll either do it themselves, hire someone in-house, or combine a group effort within a company. By so doing, they will establish a culture of education within their business and watch karma take over….ultimately leading to tremendous success.

Despite this though, you and I are clearly speaking the same language Jim, and the first step is to get biz owners to start saying:

“Yes, the days of doing it like Daddy did are over. It’s a new world, and I need to accept that.”

Again, thanks for stopping by Jim. Hope we speak again.

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Jim Mueller October 13, 2010 at 9:19 pm

Marcus, I appreciate your vision and actually agree with you…I just think it’s really EARLY. What I mean is this, I believe one day most companies will have a staff of bloggers, content creators and staff to get the content out to the social networks. But we’re a ways off from that being a reality. Eventually, people will go to school and get degrees in that stuff but right now it’s the wild west…people for the most part learn this stuff on the fly and the ones who know the most get to do some of it in their company. I think you have a great vision, just make sure you check the oil and fill the tank full of gas…or give it a full charge :-)

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Marcus Sheridan October 14, 2010 at 8:54 pm

Very nice points Jim….I see you’re seeing the vision as well. The idea of content marketing and the like being a part of the college experience in the future is quite exhilarating.

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Dawn Lowndes October 13, 2010 at 7:09 pm

As a newly on-board Hubspot Blogger, I would be remiss to not report a little of my experience on the topic. Our company has chosen not to renew its grossly overpriced Yellow Pages advertising. we found the the on-boarding of the Hubspot platform was easy and effective. We have quickly moved up the Google search engine. That was our primary goal because we are keenly aware that few people actually look at a phone-book these days. So much for the immediate benefits of costly Adwords. The content of this article is a reinforcement of experiential research our company had already done… It may sound trite, but the cost of doing business is the cost of doing business.

One of the key positive side effects of implementing a blog team within our company was the infectious marketing enthusiasm created by the employee’s investment into the actual blog articles. This has been a pleasant and surprising effect indeed!

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Marcus Sheridan October 13, 2010 at 7:22 pm

Awww shucks Dawn! (for those that don’t know, my web coaching company got Dawn up and running with her company’s inbound marketing…and we used the empowerment method mentioned above)

Even though you may be a little biased, you’re spot-on in your asessment of what happens to a company when inbound marketing and content creation are done the most effective way.

Thanks girl! ;-)

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Deepak Gupta November 22, 2010 at 2:25 am

Dave,

I can’t agree with you more as I used to be a traditional marketer for 8 years at Comcast, AAA and State Farm using all those above-mentioned methods though targeted. It was always hard to get the CFO to approve our budget – I wonder why!

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Marcus Sheridan November 22, 2010 at 10:07 am

You got that right Deepak….when no one can measure actual returns on investment, it’s tough to get the $$$….That’s why I love inbound marketing. It’s perfect because although the investments are small(in terms of $), the return can be huge….and they are measurable, which is a big, big deal. Thanks for stopping by!

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James April 17, 2011 at 4:57 pm

I think Hubspot is an interesting example as the company is not yet profitable . They are spending more to acquire customers through “inbound marketing” than the profit they are gaining from new customers (of course, their VP Sales has said, “[We] could be profitable if we wanted to” http://www.quora.com/Can-HubSpot-become-profitable?q=hubspot).

Hubspot is great in that it’s a marketing / educational powerhouse and it makes things easier for some people by being an all-in-one system. That said, it’s cheaper to pay someone $20 to install WordPress and analytics if you don’t know how, along with $20 a month on social media analytics. I’m interested to see how the “lock-in” effect works out for clients long-term. Most small businesses probably won’t care that they could get the same services because it’s easier to use just 1, even if it’s not the best at any one thing. Also, if you’re spending a minimum $3k a year, it’s a motivator to use the product.

As far as the Yellow Pages…I honestly feel bad when I find out a company is spending for their print/online advertising. Especially the online ad packages – very sad, but most people are figuring it.

Disclaimer: I work at http://www.growtap.com – we do the work to get companies found online, not just track the work you do.

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Marcus Sheridan April 18, 2011 at 3:31 pm

Hi James, and thanks for your comment. Having a blog (this one) on wordpress, and running my swimming pool company off of Hubspot, I can tell you that what you’re saying here regarding Hubspot’s value is rather incomplete and/or misinformed. The HS CMS is way, way easier than wordpress. The ability for a none coder to got into the HS CMS and design their own site is arguably greater than any other current CMS on the market. The value behind this cannot be stressed enough. Also, the lead capture components, with their corresponding analytics, are exceptional.

In fact, I could go on and on about how $250 a month is chicken feed, but you should really talk to some other successful HS users to get a better feel for the product.

Thanks again for stopping by,

Marcus

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James April 23, 2011 at 7:25 pm

Hi Marcus,

I said HubSpot is great and it’s easier to use for some people because it’s an all-in-one system. I mentioned WP as a comparison to HS partly because of HS admitting that its CMS needed a lot of work (http://www.quora.com/Why-is-HubSpot-still-such-a-nightmare-for-designers?q=why+hubspot+). Interesting you mention that as a strong point, but I imagine that is HS is super easy if you stick within their system but if you want to do more/customize (designers) it’s a pain. I didn’t realize you offer HS coaching…Now I get the incomplete/misinformed jab! Haha.

Anyways, Darmesh agrees with you that $250 isn’t enough. http://www.quora.com/Why-is-hubspot-so-expensive?q=why+hubspot+

Take care.

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Marcus Sheridan April 25, 2011 at 8:28 pm

I agree that the Hubspot CMS certainly has its limitation James, but in terms of average Joe business owner who doesn’t know code but want to have lots of control over his website (which is about 90% of all small businesses), I think the HS CMS is tremendous— a less is more benefit.

Either way, I appreciate your thoughts and arguments.

Marcus

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