Move over, Halloween and Thanksgiving: It’s law firm budget season.
Although budgeting is never a particularly fun exercise, creating the 2022 law firm marketing budget brings with it enduring baggage from the COVID-19 pandemic and new challenges of an increasingly digital world. It is critical that law firm leaders understand this specific context and allocate their resources accordingly.
Industry data shows two themes that law firm leaders should be mindful of this budget season:
Marketing spend is way down in 2021, but that’s not forever. According to Gartner’s State of Marketing Budgets 2021, across the board, marketing budgets fell from 11 percent of revenue in 2020 to 6.4 percent of revenue in 2021. That’s the lowest level of marketing allocation in the history of the survey.
Spend is down, but these unprecedented times won’t last forever, and already there are signs of a rebound: In an August 2021 survey, CMOs stated marketing spend had gone up 5.2 percent in the past 12 months. By year’s end, they expected a 13.4 percent increase over 2020 levels.
While there is no legal-specific data on that front, Thomson Reuters reports that law firm demand is up 7.3 percent. And while across the board, overhead expenses in the second quarter were down 4.1 percent from the year prior, that’s a substantial jump from the first quarter, when they were down more than 8 percent.
Key takeaway: It is dangerous to make your lean pandemic budget your new baseline. Your competitors are starting to reinvest in marketing communications and business development tactics.
As the Gartner survey summarized: “Marketing budgets have always been the first of the enterprise budgets to be cut and the last to be restored … the illusion of savings today presents a significant risk to tomorrow, as brands lose customer relevance, share of voice and the ability to reach customers with targeted and timely messages.”
This budget season, resist comparisons to 2020 and 2021. If you must have a temporal tie, look at 2019 for a pre-pandemic perspective on marketing investment. But be ready for a markedly different landscape, as we’ll discuss next.
Marketing spend goes virtual. Law firm marketing budgets are poised for a major shift, according to a report by Calibrate Strategies:
- 84 percent of law firms plan to spend more on digital technology and programs in the wake of COVID-19;
- 82 percent plan to reduce their spend on sponsorships; and
- 93 percent plan to cut in-person events, with more than one-third slashing events by 50 percent or more.
To understand the significance, it’s helpful to see how firms allocated resources to these categories before the pandemic. While every firm (and every marketing budget) is a little different, ALM Legal Intelligence benchmarks provide some pre-COVID guideposts:
For both firm sizes, sponsorships and events comprised more than half of their marketing budgets – and soon could be overtaken by the category in single digits.
Key takeaway: If you are among the many law firms about to invest more in digital marketing, make sure you are doing so purposefully.
One primary concern: the law firm website. Your social media, paid search, organic search and digital advertising will drive traffic to your website. It is the foundation of it all. Is your current site designed to close business? Does it provide the evidence prospective clients need to know you are a safe choice? Given that more than half of your visitors will look at lawyer bios, are their profiles smart and memorable?
Second: your digital strategy (or lack thereof). It is easy to waste a considerable amount of time and money online (as many of our Netflix and Amazon accounts will attest). It is hard to rank for keywords that people actually use. It is hard to build a loyal and engaged following on social media. It is hard to capture a prospect’s attention with a digital ad, and to lead them through a sales cycle. Do not believe consultants who say otherwise.
Instead, approach your digital marketing like you would your old-school business development:
- Make the right first impression. Your website is now your reception area.
- Show up to network where your prospects are. Be present on relevant social media. Consider Google your new referral source, and ensure your SEO answers that age-old question “Does anyone know anyone who does this?”
- Build your credibility. Without live events to serve as your platform, share online articles and speak at webinars.
COVID-19 brought a massive shakeup to law firm operations. Smart firms will take this opportunity to reevaluate their marketing strategies with creativity, purpose and empathy for the clients. Pitfalls abound for the firms that try to keep pandemic budgets forever or rush into digital without a clear plan.