Phil Risher (Flash Consulting) presents a short YouTube tutorial showing how local service businesses can audit and optimize digital ad spend using a simple marketing-budget calculator. He lists common acquisition channels (Google, Yelp, Angi/Angie’s List, Thumbtack, Yellow Pages, Facebook, SEO, Bing, postcards), demonstrates entering annual spend and revenue per channel, and uses examples to show how to compute percent-of-revenue and return-on-ad-spend. Key takeaways: target 5–10x return where feasible, typical total marketing spend of 3–10% of total revenue (example: $63,000 on $1,000,000 = 6%), and reallocate funds away from low-performing channels.
Chapters
All right, in this video, we're going to go through a quick marketing budget and how you can look at your digital ad spend and cut the fat and also maybe move some funds around to target other places. My name is Phil Richer. I'm the owner of Flash Consulting, and we work with local service businesses. We help them increase sales and keep their schedules full. We specifically work with local service businesses. So a lot of these marketing channels are going to. You're going to know what they are, and maybe you've never heard of them and you should try them out. So Google, Yelp, Angie Best picks, Thumbtack Yellow pages. Yes, people still advertise in the yellow pages. Facebook, SEO, Bing House Yellow pages. I'm not saying it's the best. Maybe you could do postcards or you could do some other blast or something else. But let's go through these marketing channels and just look at how we can use this tool. It's pretty basic. You're going to figure out what the cost is over the years. You can use QuickBooks or whatever your accounting software is, and you could pull this out and say, okay, in 2022, or whatever the year is, I spent $12,000, $1,000 per month on my Google Ads. And then if you're using a CRM, you can track your lead source to say, where did that. Where did these leads come from? And how much revenue was generated from Google, for example. So let's say that you spent $12,000 and you generated $120,000. Just to keep things pretty simple. You can see that your revenue per month, which would be the. This, let's say it's divided by 12 months, was $10,000. And again, you could just do this manually, or you could look at it like this. And now you can say I spent $1,000 a month and I made 10,000. So that is a 10%. I spent 10% of my money to make that. So 90% is the rest. So typically, we try to shoot for five to 10 times return. So you spend $1,000. 10, can I make $5,000? Can I make $10,000? And so this would probably be a winner. So what I would do is go here and I would select the color, and I would say, this is a winner. All right, let's say on Yelp, let's say we spent a similar $12,000. And let's say on Yelp, we made $24,000. And again, you can see my revenue was 2,000, and I spent 1,000. So my revenue cost ratio was 50% which is, which is 2x, right? I spent a thousand, I made 2,000. Not necessarily a winner because on these jobs, 50% of the job was spent on getting the lead. The other 50%, I had to pay my tax, I had to do all this stuff. So there's not enough money there necessarily to be a profitable job. Same thing with Angie, right? You can go through all these, you can see how this works. And the reason that I really like this tool is because it totals up your revenue. And so you could do this again. You just total up your cost and total up your revenue based on your marketing channels and specifically on your cost. You're going to see what your marketing budget is set at. So in this example, we're at $63,000. And so what you can do is to say, okay, I spent $12,000 on Google and $12,000 out of 63,000 is 19% of my budget. 19% of my marketing budget was spent on Google. Then you can go through and say, okay, well on thumbtack, I spent $3,600 and I only made $2,300. So that's, that's a loser all the way around. So maybe I take some of these funds and I put them towards another channel that is producing well, and then you can build a marketing budget. Now, let's say you're just starting out. You have no idea how much money should I spend over here? What is the total amount that I should be spending on my advertising? Right, you're just starting bare bones. What we recommend is, and what we've seen with the businesses that we work with is they typically spend 3 to 10% of their revenue on their marketing budget. So if you see here in this example, the revenue generated was $1 million and they're spending $63,000 and that is a 6% of their revenue to marketing spend. Now we recommend your entire revenue, not just revenue generated by your marketing channels. Because there are other things like SEO and website. Maybe you have someone that's doing email marketing, text message marketing. It is hard to pull an SEO revenue number, right? Like this is obviously maybe inflated based off of did they come from SEO, did they not? So there's a couple different other things. But if you hire an agency, you can put their ad spend, whatever you're spending on your digital marketing agency in here and then you can build a true marketing cost of what you're spending on marketing. So hope this helps. If you have any questions, drop a comment below. If you need help getting this set up, I'll put a link down below. You can set up a call with us and we can help you get going with a marketing budget. And be sure to hit like and subscribe. We post content about growing local service businesses and we'll see you in the next video.
