How Much Do Small Law Firms Spend on Law Firm Marketing?

With increasing competition in the legal industry and an enhancement in the number of lawyers and law firms, gaining visibility can be challenging. Hence, figuring out how to reach the right target audience is essential.

But the problem is where you should begin, what marketing channels you should opt for, and how much you can expect to spend overall and on each marketing channel.

In this article, we’ll discuss how to get the numbers for your law firm marketing budget right.

How Much Does a Small Law Firm Spend on Marketing

As per the US Small Business Administration, firms typically spend 7-8% of their revenues on marketing. This is in line with the Legal Marketing Association, which states that average law firms spend 6-7% of their gross revenue on marketing.

However, Gartner shows a different shift in the marketing industry.

Since the legal industry is highly competitive, you must ensure you spend your financial resources effectively to achieve a high return on your marketing investment.

Why Should You Set a Marketing Budget

Without a marketing budget, it’s easy to overspend on certain areas and underfund others, leading to an imbalance in marketing efforts. Regardless, you can make the most of your marketing spending by distributing your financial resources effectively.

Plus, it encourages coordination and planning in different areas of marketing, such as SEO, PPC, social media, and content marketing. That way, you can ensure you’re not overspending on one area while neglecting others.

Moreover, it also helps you better understand the final outcome of your marketing efforts. For instance, you can track all capital you’ve spent on different marketing channels and compare the revenue they’ve generated. Eventually, know what’s working and what’s falling flat and make data-driven decisions for better results in the future.

How Much Do Law Firms Spend on Customer Retention and Customer Acquisition

Customer retention refers to your efforts to retain existing customers, while customer acquisition is spending your resources to get new clients.

Majorly the law firm’s budget allocation for these two purposes depends on their practice areas. For instance, if your target audience is business owners, spending more on retention can bring better returns than customer acquisition.

Plus, it’s harder and costlier to acquire new clients than to retain existing ones. Hence, before you allocate your marketing spend, calculate the cost per client acquisition, which you can determine by dividing the marketing cost by the number of new clients acquired. This helps in knowing whether you’re spending your marketing funds on the right type of audience.

Besides that, you can calculate the client retention cost by dividing the total cost of all the clients by the number of active clients in that period. This gives the average cost per client.

To determine the average lifetime cost per client, divide the average cost per client by the average customer lifetime.

Upon analyzing these numbers, you’ll know whether you’re making enough from each client to keep them. For instance, spending $500 on a client that earns you $30,000 on average is better than spending $1000 on a potential client that makes you $5000.

How Much Do Law Firms Spend on SEO

Your law firm’s SEO budget depends on many factors. For instance, most law firms with smaller markets and less competitive areas can pay less than $2000 per month.

The different elements that affect the cost of SEO are location, for instance, the recurring price for managing multiple locations campaigns, and acquiring high-quality links, which may cost you around $500 to $1500 a month. Plus, the cost to get citations to ensure you’re on top of the online directories can be $50 to $150 a month.

Here’s a graph that depicts how much law firms spend on SEO for different numbers of clients.

Other factors that affect your SEO cost are:

• Number of service pages you have on your website
• The current SEO status of your law firm
• Your competition
• Building backlinks and authority via content
• Appearing in more organic searches besides local SEO
• Developing a keyword strategy for content marketing
• Optimizing pages and links for maximum performance
• Conducting SEO reporting and analytics

How Much Do Law Firms Spend on Paid Advertising?

In the PPC ads, you’ll need to bid for the right keywords, and the more competitive your practice area and location are, the costlier will be the bid for that particular term. For instance, if the word you place an ad for has a bid of $100, you’ll pay a hundred dollars every time someone clicks on your ad.

Here’s a list of law firm keywords with their different CPC rates for successful marketing campaigns.

Take a look at the most expensive legal keywords of 2022.

Besides that, as per ABA, 49% of law firms say that their best law firm marketing channel is buying web leads from legal directories and PPC Google ads. Here’s the chart for different CPC rates for different practice areas keywords.

What Marketing Channels Should Your Law Firm Budget For

When it comes to marketing channels, you can expect to invest in

• Website development
• SEO
• Content marketing
• Social media marketing
• Branding
• Google Ads
• Paid advertising
• Email marketing
• Event marketing
• Networking
• …and outsourcing.

However, you cannot possibly consider all of these channels and should allocate your budget wisely.

One marketing strategy to distribute your law firm’s budget can be to use the 70-20-10 rule, where 70% of your marketing budget goes into strategies that are known to work well, 20% towards new ones, and 10% towards experimental strategies.

Another way to allocate the budget is to look at how well-established your firm is and which channels are more suitable for the firm’s goals, target audience, and industry. For instance, an established firm may focus on referral and email marketing, while a firm new to online marketing may focus more on website development, SEO, and content marketing.

Here’s the allocation of a marketing budget for different marketing channels as stated by Statista:

It’s important to note that there is no hard and fast rule for allocating your law firm marketing budget. It mainly depends on your firm’s goals, industry, company size, and target customers.

How to Allocate Your Minimum Marketing Budget

As we discussed already, the legal industry is quite competitive. Based on ALM Intelligence 2018 survey, the average marketing budget for 200 law firms in the US was $2,354,946. Hence, you’ll need to spend a minimum of $2500-$3000 on marketing every month to see tangible results.

If you’re new to digital marketing and still figuring things out, begin with a client-centric, SEO-friendly website. Then, invest in digital marketing to generate leads.

The basic idea is to identify your goals, assess your current situation, and determine what type of effort can bring the maximum results with the resources you have to allocate a realistic budget.

The most important thing is to keep tracking your progress and be flexible in changing your marketing budget.

What Does a Typical Marketing Budget Look Like

Here’s a sample marketing budget for a law firm that spends 7-8% of its yearly revenue on marketing.

For instance, if you’re making a revenue of $500,000 and spending 7-8% of it on marketing, which means $39,500, you’ll spend:

• $3950 on traditional marketing
• $3950 on email marketing and automation
• $1975 on organic social media marketing
• $5925 on paid social media marketing
• $5925 on web design and management
• $9875 on SEO and content marketing
• $7900 0n paid search

How to Calculate Your Marketing Budget

One common formula to calculate your marketing budget is dividing the product of company revenue and marketing percentage by 12.

Marketing budget = (Company Revenue x Marketing Percentage) / 12

For example, if a company’s annual revenue is $1,000,000 and they want to allocate 5% of their revenue for marketing, the calculation would be:

Marketing budget = ($1,000,000 x 5%) / 12 = $41,667/month

Another way to calculate the marketing budget is to use the Cost per Acquisition (CPA) formula:

Marketing budget = (Total cost of marketing/ Number of new clients acquired) x (1 + profit margin)

This formula considers the cost of acquiring new clients and the desired profit margin. For example, if the total cost of marketing is $200,000 and you want to acquire 100 new clients with a profit margin of 20%:

Marketing budget = ($200,000 / 100) x (1 + 20%) = $2,400/customer

It’s important to note that these are just examples, and the actual budget will depend on the firm’s specific goals, industry, and target customers. Plus, you must always track the progress and measure the results of your marketing efforts so that you can adjust the budget accordingly.

Set Your Law Firm Marketing Budget With Ease

People need to know you to hire you. Hence, spending on marketing is non-negotiable. But knowing how to do it right can save you from many wrong investments of time and money.

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Article by Sadaf Tanzeem

Contributors

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Sadaf Tanzeem is a B2B SaaS and Marketing writer. She collaborates with overwhelmed content marketers and business owners to take the burden of content development off your shoulders.