Does Internet Advertising Drive Work for Online Businesses? Lessons for Virtual Law Firms, Courtesy of E-commerce
How do you find clients for an online business – whether it’s an e—commerce shop selling a product like shows or magazines or gift baskets, or a website that offers services like web design or job placement or even legal services, through a virtual law firm?
Not surprisingly, many online business’ customers come from heavy investment in straight-up search engine advertising rather than social media, as discussed here in New York Times’ You’re the Boss Small Business Blog. And somewhat counter-intuitively, there are some online businesses that don’t spend money on online ads at all.
Two of the online proprietors quoted in the article — Paul Shrater, co-founder Minimus, a site that sells travel-sized toiletries and other mini-products and Sam Zaila, chief executive of SubscriptionAddiction that sells discount magazine subscriptions — are big spenders on Internet advertising campaigns. Zaila, whose company had $1.3 million in 2013 reported that he spends:
…about $400,000 a year on online advertising — 70 percent on Google AdWords, 20 percent on Bing/Yahoo, 5 percent on Facebook ads and 5 percent on “display remarketing,” which helps businesses reach consumers who have previously visited their sites. Mr. Zaila also attempts to engage existing customers with a custom email marketing platform.
Meanwhile, Shrater also found that Google AdWords has been the best source of referrals for his web business, which had $5 million in revenue in 2013. Shrater describes:
We started with public relations,” he said. “Then we advertised with Google, Yahoo and MSN. Our products have such low margins so traditional advertising didn’t work for us[…]Mr. Shrater said he spends $3,000 to $5,000 monthly on Google AdWords, but the strategy has changed over time. “At one point, our spend for one year was 10 times what it is now, but analytics showed that there was a lot of money being wasted.” Now the company focuses on the most lucrative keywords. “It means less sales but more profitable sales.”
Interestingly, for all the buzz about social media as a tool for marketing, Zaida and Shrater hardly touch the stuff. Zaida spends only five percent of his online advertising budget on Facebook ads, in comparison to 70 percent on Google Adwords and 20 percent on Bing/Yahoo. Meanwhile, Shrater discovered that “It’s hard for distributors to leverage social media the way brands can.”
By contrast, Mitch Goldstone, CEO of ScanMyPhotos — which generates $5 million in annual revenue — opted for a different approach. Goldstone explained that:
“For years my company invested thousands of dollars in Google AdWords, Facebook ads, Referral Candy and the return was only 2 to 3 percent, and it was so expensive[…] After he looked at his analytics, he realized his best referrals were coming from satisfied customers — word-of-mouth referrals. In 2013, he took his online marketing budget of $40,000 and invested it in customer service […] Rather than advertising, ScanMyPhotos offers live support 24 hours a day and seven days a week, and it tries to respond instantly to customer inquiries. Goldstone concluded that: Having tried it all, from AdWords to Facebook,” he said, “the single best way to promote our online photo digitization service is investing in customer service. Online businesses are all about credibility and word of mouth.”
So what are the take-aways for virtual law firms? First, Internet marketing can be effective — but even though it’s less expensive than traditional tools like print ads or PRs, it still doesn’t come cheap. Zaida, whose online magazine subscription site arguably faces the most competition of the business owners interviewed – spends roughly 30 percent of total revenues on advertising. Shrater’s spend – just $60,000 a year – is now comparatively small to annual revenues. But starting out, Shrater spent 10 times as much – roughly $600,000 a year. Extrapolating from those figures, a virtual law firm looking to rely on online advertising to find clients to generate $100k in revenues would need to spend between $10k and $30k each year. Yet as this recent ABA Journal (April 2014) piece describes, many virtual law firms rely on websites and Internet presence as a primary source of business – and admit that building a virtual firm takes time (partly because most online firms don’t have a large enough ad budget starting out to drive business).
From my perspective, virtual firms might be better served adopting Goldstone’s approach and offering top notch customer service. Perhaps a virtual firm couldn’t offer the same live 24/7 support that Goldstone’s business does, but it doesn’t cost much (except time) for a lawyer with some hustle to make service available at odd hours and invest in a reliable live answering service for the remainder of the time. Virtual firms should also heed Goldstone’s observation that “Online businesses are all about credibility and word of mouth,” – and work to serve clients professionally ethically.
As for social media – well, let’s just say, it may not be your best bet. Don’t get me wrong; I co-authored, with Nicole Black the book Social Media for Lawyers; I blog and Tweet, and enjoy residual visibility and SEO from my social media participation. But it’s always been my instinct – now confirmed by other business owners – that social media is most effective for lawyers or small businesses to build connections and establish a reputation organically by producing and sharing content (which can both be accomplished by blogging or on Twitter). Used purely for SEO, social media is a wasted opportunity (not to mention, an annoying intrusion).
If you operate a virtual firm, what’s your experience been with online advertising – and what’s been your best source of clients? And do you think that these lessons apply with equal force to marketing a “brick and mortar” law firm as well as a virtual one? Share your comments, below.
Nice overview, Carolyn. Speaks to the fact that every business is different and the key to finding a good online ad strategy is usually trial and error. Unfortunately, that can get expensive w/ paid search. From a marketer’s view, I think the key is for firms to fully understand how many targeting/refining options they have when it comes to areas like paid search. You can start with a cheaper search engine, like Bing/Yahoo, focus on one zip code, less expensive keywords, etc. Spending a lot of money is easy, but making it cost-effective takes a lot of fine-tuning.
Dustin,
That’s a good point. One of the entrepreneurs interviewed in the article also emphasized the importance of experimentation.
Another interesting topic. My own perspective on advertising (online or other) is that any client that can afford my rates (which are a little but not much lower than when I was a large firm partner) won’t select counsel based on searching the internet. The narrow niche I practice in reinforces that belief. For pure, paid advertising, I just can see how advertising has an impact on my business development.
Sorry, that was “…cannot see how advertising has an impact on my business development.”
My little experience with Google Adwords (3 months):
1.- It is very difficult to find keywords for lawyers, very, very difficult
2.- There are law firms that occupy any advertisement and cities
3 and Fundamental: The ad text is very short and does not provide an attractive listing: I got many impressions and few clicks
4 .-The ad must be linked to a blog or website, where there must be an interesting post to attract the potential client, and call us.
5. Adwords is confusing at first, but the online help is very good
Regards from Spain
Ditto. Lots of clicks that cost me money, no conversion into phone calls or email. Regarding Number 4: any solo or law firm that doesn’t have even a rudimentary, 1-page website should be ashamed. There is just no excuse for not having a website in 2014. One page, your name, address, phone number, email, and areas of practice, with a photo. How friggin’ hard is that?
Maybe I am cynical, but under Carolyn’s post a few weeks ago about client red flags, I would add “clients who find you through search engines.”
Bill
Totally agree on the need to have a website, but if you have not a good content, potential customers do not spend 2 minutes. Nicholas Carr’s book “What the Internet Is Doing to Our Brains” explains very well what makes most of us when we enter in a web
Oh yes, content really does matter, but in this world of the web, not having a website is like not having business cards. Even a one-page website with basic contact information and areas of practice will separate a lawyer out from all the fogeys that can’t manage that much.
Bill, you are cynical!! My practice is new, only 4 months old, and so far my best client found me through a google search. He didn’t know any lawyers, and he found me that way. I have another potential client (I hope) that also came through an out-of-state referral who found me via web search. There’s a huge world out there beyond “people I know” and “people who know people I know.”
Paul, I think the utility of advertising in general, and internet advertising in particular, is a function of your existing and target client base. Most of my clients are large or mid-market companies; all have in-house legal departments, and use multiple law firms, including some (thankfully!!) solos. The chance that any of them would select counsel from an internet search is effectively zero. Even the few smaller companies I represent either have in-house lawyers or pretty experienced management teams.
I hate FAcebook and what it has done to our society. BUT, it is here and is ripe for marketers. IT is easier to use and FAR better returns than any ad media in history. AS LONG AS you know HOW to use it. IT works very well for virtual companies. 800-289-9098 IF you need help w/ FAcebook marketing.