The True Cost of Free Marketing, and How to Choose the Right Marketing Tactics for Your Business

Years ago, I worked with a small business owner who had a love affair with "free or cheap" marketing and advertising. Just like someone who is addicted to coupon shopping...If it wasn't "free or cheap" she wasn't going to do it. And if it was, you can bet she would jump at the chance-no matter what the opportunity was.

She simply could not seem to help herself.

She advertised on a bench at a golf course because it was only $200. She had a "free" column plus an ad in a community newspaper because it was only $50 a month. She put together a packet to be handed out by someone else to their clients, because it was "free".

Her goal with all of these was to get new clients now.

You see she had started a new small business, and was badly in need of clients. Plus she didn't think she could afford to do anything else. As a result, she ended up spending thousands of dollars on the wrong ideas.

How so?

Well, the graphic design and copywriting for the bench cost money. Plus an ad on a bench is more of a branding piece-like all the McDonalds or Coke ads you see. It was not the type of marketing that gets someone to take immediate action. So if she needed new clients now, the bench was probably not going to do the trick.

As for the free column and $50 ad, well...She wasn't a writer. So she paid a couple hundred dollars a month to have the column ghostwritten. Plus she paid for copywriting and graphic design for the ad.

Not a bad idea, if you are looking for a way to gain visibility and build a reputation as an expert over time. Unfortunately, she did not check the paper's circulation, where it was distributed or who the target audience was. So she ended up promoting her business to people who would never buy what she was selling. 

The packet had the best chance of getting new clients in the door because it included a special, limited time offer. But it was far from free. She still had to pay for copywriting, graphic design, printing and materials costs. Plus spend time folding and putting the packet together (it was pretty fancy).

In the end she was easily spending over $1000 a month on "free or cheap" marketing and advertising.

And you know what the saddest part was? None of it was working.

Because she was choosing her tactics based solely on the up-front cost. Not on whether they were actually the right fit for her and her business, or would reach her target market. Or whether she really had the time to execute them well. And certainly not on whether they would help her achieve her number one goal-get new clients now.

The moral of this story? There is no such thing as "free advertising", and even cheap advertising usually isn't.  So don't base your marketing and advertising decisions solely on initial cost.

To create a good marketing strategy, you have to consider your goals, the true costs and the potential gains or ROI of every tactic. Not sure how? Try using the quick list of questions below to help you make your decisions.

 1) Will this get me in front of my ideal client or target market?

 2) Will this help me achieve my end goal or desired result?

If you answer no to either of these, stop right there and pass on the opportunity. If you answered yes to both, then it is time to calculate true cost.

 3) What is the initial, up front cost?

 4) How much time will it take to put everything together? 

 Now add on 1/3 more time than you think you will need, then multiply the  number of hours by your hourly rate to calculate your time cost.

 5) Will I need any professional services like printing, graphic design or  copywriting to complete the project?

 6) If so, how much will it cost to get my project done by the due date? Not   sure? Call around and get estimates.

 7) Do I have time to do this right, or will I have to pull an all-nighter to get  everything done?

If you have to work late, count it as time and a half and multiply  by your hourly rate.

 Now add up all these costs and ask yourself...
 
 8) Does this fit my budget?

 9) How many new clients would I need to break even on the investment (Divide  the total cost by the average revenue generated by one new client)?

 10) Is that even possible, let alone probable?

Now you should have a reasonable idea of the true costs of your opportunity. And I bet it is more than what you were thinking when that "cheap or free" ad, trade show booth, or marketing opportunity first came your way.

The bottom line is...never make a marketing decision based solely on cost. After all which is more expensive: A $5000 campaign that brings in 20 new clients who each spend $300 (net profit of $1000), or a "free" ad that really costs you $800 to create but does not bring in any new business at all? You decide...