Accounting firms are spending more than ever on marketing, but they’re also shifting their priorities, as the discipline becomes more embedded in the profession.
The average firm budget for marketing is up from last year at 3.94 percent of revenue, according to the Marketing Budget Benchmark Study recently conducted by the Association for Accounting Marketing and the Hinge Research Institute. That 3.94 percent includes the compensation of marketing staff, and is based on standardized spending categories for an apples-to-apples comparison.
“The landscape continues to be very competitive — it’s very difficult for firms to differentiate themselves, and in general it requires more spending,” said AAM executive director Lauren Clemmer. “That’s not the only reason — firms are also increasing the quantity of consulting services that they’re providing, and those are typically project-based, so that means that they’ll have a large pipeline of projects that they have to do year over year, so they’re always looking for new projects to replace the ones they did last year and to increase their pipeline. So it costs more to get those leads.”
Another factor contributing to both the greater effectiveness and the greater cost of marketing is the plethora of new tools available. “The increase in technology is a blessing and a curse for firms,” Clemmer said. “It certainly helps, and it’s increased the number of tactics we have to deploy, but there are a lot of tools out there for us to use. The biggest increase in spending we saw was in Web sites — in 2014 it was 2.9 percent of the average firm’s budget, but in 2015 it was 7.6 percent.”
Some of that increase was undoubtedly due to firms scrambling to implement “responsive design” to make their Web sites more mobile-friendly in the face of Google’s mid-year shift to favoring those kinds of sites in its search rankings — but it also reflects a larger change in priorities.
“Technology is booming because it helps you measure ROI more easily,” Clemmer said. “With a lot of the things we’ve done in the past, such as advertising, it’s hard to correlate to an actual sale that you had. It’s almost impossible to prove that value, whereas with technology and CRM and the other things firms are doing out there, you can actually provide ROI.”
The survey results bear this out, with high-growth firms focusing much more strongly on online content and Web site expenses, and low-growth firms spending more on “old-school” tactics like advertising and group memberships. “This is a place where firms struggle,” Clemmer said, “because you have the partner group saying, ‘I want to spend on sponsorships’ and there are certain projects and certain clients they need to support, but the spend needs to be different. Certain marketing tactics produce a higher return, and therefore they can actually prove that they’re making more of an impact.”
“Advertising is still a big spending area,” she noted, “but they’re pulling back and re-evaluating their budgets and figuring out where they are going to get the most bang for their buck. You’re seeing partner budgets dropping because the money’s going more toward spending where it makes sense.”
The benchmarking study, which included a representative sample of almost 70 firms of all sizes from all over the country, found that there is an average of one full-time marketing employee for every 54 employee — though that ratio drops significantly at high-growth firms, to one marketer per 34 employees.
“I think you’re seeing a bit of a turning point,” said Clemmer. “Accounting marketing is still young. … Marketers are taking a more strategic role, and finding their way, and I think firms are noticing. They’re noticing the firms where marketing has made a difference, and they’re trying to emulate those firms.”
FROM MARKETING TO MARKETERS
Just over a quarter of firms’ marketing budgets are spent on salaries/compensation, but a separate survey released recently found that that’s one of the few areas where accounting marketing professionals aren’t all that satisfied.
Beyond the Paycheck: 2015-2016 Compensation Trends for Accounting Marketers, by AAM and Inavero, found that only 30 percent of accounting marketers agree that they are fairly paid compared to their peers at other firms — but 65 percent reported “high levels of pride in the firm’s success due to their marketing initiatives,” the report said.
In 2015, accounting marketers saw a median increase in total compensation — including bonuses and incentive pay — of 5.2 percent. Marketing partners saw the largest boost, at over 9 percent, while business development directors saw the lowest, at 1 percent.
“The business development role is newer to firms — firms have dipped their toe in the water and then pulled it out, and then gone back,” Clemmer said. “It depends on the firm and whether the business development role works for them. That’s an emerging and developing role in firms.”
She offered this advice to marketing professionals in the field: “If marketers want their salaries to increase, they need to take a more strategic role in growing their firm — some of it’s on them.”
There will be more and more room for that in the future, she suggested: “I feel like it’s grown by leaps and bounds — my experience in the last eight years is that marketing has gotten more recognition and is much more accepted than when I joined the industry. It continues to grow, and as we are gaining marketers that are chief marketing officers and partners with their firms, I think that adds credibility to the marketing profession. … The effectiveness of it varies firm by firm and with the leadership of the firm — it’s very dependent on how willing firms are to accept marketing and the ideas and the opportunities that marketing can offer to firms.”
“The greatest challenge is that firms that empower their marketers tend to get great results — firms that don’t are less effective,” she said.
Both surveys are available on AAM’s Web site, under the Publications tab. For the budget benchmarking survey, the executive summary is free; the full report is $300 for AAM members and $600 for non-members. The salary survey is $150 for members and $300 for non-members.