Justifying Digital Marketing Investments

Corey Northcutt    By under Digital Marketing.

Here's a topic that we visit every single day. As an online marketing agency, our two greatest priorities are:

  1. Make our clients more money
  2. Distill the data that shows how it's done

It's as simple as that. Having been an owner in a few other types of companies before starting Northcutt, this is a conversation where I've repeatedly been on either side. As a marketing consultant, it's not just as my responsibility to execute, but to decide what's a worthwhile investment as well. That even includes whether or not I should be hired; and often times, the answer to that question is no. But what's important is that this is exactly how online marketing needs to be seen: it's an investment, and your marketing agency is your investment manager. And, just as with any serious investment, there are a four questions everyone needs to ask.

1.) Do I have high risk / high reward capital to allocate?

On the whole, smart marketing works, and it should be yielding you some big, measurable profit. But there are always enough moving targets to deviate from an expert's best estimate, especially in the short term. Just like you shouldn't invest money that you need to survive anytime in the near future, never take out a loan for marketing. Sometimes the most carefully laid plans fall flat for one reason or another, just like the stock market can crash.

market crash

That said, there is also risk in not doing. For investors, it's that ~3% inflation rate that's really reducing your savings anyway if you don't take these risks. In marketing, it's the fact that your competitors are eventually going to leave you in the dust if you never develop and maintain a worthwhile marketing process. And with persistence, we do recover from from the worst of times (and in marketing, it happens a bit faster than this).

market recovery

2.) How do past performance records look?

A great investment manager might yield you 20%-30% gains in the course of a year, while a great SEO / content marketing firm might increase targeted traffic/conversions by 100%-500% in six (in fact, our average is currently hanging around 236%). Any reputable investment manager should gleefully willing to show you their track record, and online marketing is no different.

While many of their clients will likely be under privacy agreements, certainly not all will. At very minimum, it should be possible to share anonymous performance statistics, and if the firm says they're not gathering that kind of data, well, you have a whole new host of things to be concerned about. A great example of how I'd view it is to look at a site like Covestor, who shows such numbers as openly as I'd one day like to be able to here:

covestor graph

Now, substitute the S&P 500 with a Google trends chart for a control group, or other generic demographic research over time. Then switch the investment manager's graph with aggregate keyword rankings, visitors, or cost/conversion metrics. The "ride" that you'll no doubt be taken on is extremely similar, and the long-term trends should hopefully look a lot more like this.

3.) Am I safely diversified?

A smart investor mitigates risk by splitting their investments up. A smart marketer does it by splitting efforts between a variety of marketing strategies. An SEO that's worth your time will split between varieties of keywords to get your site ranking, and varieties of methods of building backlinks. They'll also be building great links through content marketing and managing relationships, sending you targeted leads in the event that search engines don't respond right away. The approach is the same because the underlying reasoning is the same: diversification mitigates risk.

Justifying Digital Marketing Investments 1 marketing divirsification

Image source: diversifiedinvestmentadvisors.org

4.) Am I dealing with a trustworthy organization / individual?

The risks that some people will take when it comes to online business is absurd. The investment world is riddled with Ponzi schemes, pump and dumps (not as good as it sounds), and other forms of scams and frauds. Smart investors now look for various pieces of confidence, that absolutely apply when investing in online marketing as well.

  • Associations: FDIC and NCUA memberships should instill a lot of added trust when investing. With online marketing, we have organizations like SEMPO and the AMA. They may not literally insure your investment, but they do require some level of legitimacy and commitment in their members.
  • Jurisdiction: If someone overseas literally ran off with your money, you'd be upset. Realize that this can happen with your marketing investment just as with any other, especially in certain countries.
  • References: We live in an age when you can look up reviews and gather references really easily. Always use this to your advantage, especially when making a significant investment.

Thanks for reading. If you know someone that could benefit from this information in deciding on a new marketing investment, be sure to share!