HOW MUCH SHOULD YOUR LAW FIRM SPEND ON BRAND AWARENESS?

HOW MUCH SHOULD YOUR LAW FIRM SPEND ON BRAND AWARENESS?

Posted on March 21, 2024 by Law Leaders

In the highly competitive landscape of the legal industry, effective marketing is essential for law firms to stand out, attract clients, and maintain a strong presence in the market. Among the myriad of marketing strategies available, allocating resources for brand awareness stands as a critical component. However, determining the optimal percentage of a law firm’s marketing budget to allocate towards brand awareness requires careful consideration of various factors, including industry benchmarks, practice areas, firm size, target market, and marketing objectives.

UNDERSTANDING THE IMPORTANCE OF LAW FIRM BRAND AWARENESS

Brand awareness encompasses the extent to which potential clients recognize and recall a law firm’s brand and is commonly measured and managed based on three levels of brand awareness. The challenge for most attorneys is that they commonly confuse advertising for marketing and as a result, according to a survey by the American Bar Association, 59% of attorneys cite differentiation as one of their top marketing challenges while studies by LexusNexis also show that only 26% of lawyers felt confident about their branding efforts.

Establishing a strong brand presence fosters trust, credibility, and recognition among clients and prospects. It serves as a foundation for generating leads, nurturing client relationships, and fostering long-term loyalty. Why is this important? Just consider the following:

  1. According to Nielsen, 59% of consumers prefer to buy products from brands they are familiar with.
  2. A study by Lucidpress found that consistent brand presentation across all platforms increases revenue by up to 23%.
  3. Research by Gallup indicates that engaged customers represent a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth over the average customer.

INDUSTRY INSIGHTS: BENCHMARKING BRAND AWARENESS SPENDING

Legal Industry benchmarks provide valuable insights into how law firms allocate their marketing budgets. According to data compiled from various industry sources, including the Legal Marketing Association and legal marketing agencies, law firms typically allocate anywhere from 5% to 25% of their total marketing budget towards brand awareness initiatives. Clearly this number is VERY low – especially since nearly all small to medium sized law firms never even reach the first of three levels of brand awareness in their markets.

For larger law firms with established brands and expansive marketing campaigns, allocating towards the lower end of that scale is not uncommon – the higher the existing brand awareness, the lower the budget needed to grow it. Conversely, smaller firms or those in highly competitive markets typically find it necessary to allocate a larger portion of their budget towards brand building efforts to gain visibility and differentiate themselves effectively.

TAILORING BUDGET ALLOCATION TO FIRM SIZE AND OBJECTIVES

According to the CMO Survey conducted by Duke University’s Fuqua School of Business, on average, companies across industries allocate approximately 10.5% of their total revenue to marketing. Of this, around 45% is typically allocated to brand-building activities, including brand awareness.

The size and growth stage of a law firm play a significant role in determining the appropriate allocation of marketing resources. Smaller firms or those in the early stages of growth may need to prioritize brand awareness initiatives to better establish themselves in the market and attract clients.

For these firms, allocating a higher percentage of the marketing budget, around 35% to 45%, towards brand-building activities such as content marketing, video marketing, image displays, outdoor advertising, social media engagement, and/or public relations can be beneficial. These strategies help increase visibility, enhance reputation, increase conversions, and position the firm as a trusted authority in its practice areas.

Conversely, larger firms with established brands may focus more on maintaining visibility and reinforcing their reputation through targeted brand awareness campaigns. While these firms may allocate a smaller percentage of their budget, around 5% to 10%, towards brand awareness, they often invest heavily in high-impact strategies such as sponsored events, thought leadership initiatives, and targeted advertising to reinforce their market position.

TARGET MARKET AND GEOGRAPHIC CONSIDERATIONS

The composition of a law firm’s target market and geographic location can also influence the allocation of marketing resources towards brand awareness. Firms targeting niche markets or operating in highly competitive regions may need to allocate a larger portion of their budget towards brand-building efforts to differentiate themselves effectively.

For firms serving local or regional markets, investing in community engagement, local sponsorships, and targeted advertising can help enhance brand visibility and attract clients. In contrast, firms with a national or international presence may focus on broader marketing initiatives, such as thought leadership content, industry conferences, and strategic partnerships, to increase brand recognition on a larger scale.

MEASURING ROI AND EFFECTIVENESS

Regardless of the percentage allocated towards brand awareness, measuring the return on investment (ROI) and effectiveness of marketing efforts is crucial for optimizing resource allocation. Key Performance Indicators (KPIs) such as website traffic, new versus returning visitors, referrals received, social media engagement, brand mentions, asking how clients heard of your firms, and client inquiries can provide valuable insights into the impact of brand awareness initiatives.

Tracking these metrics allows law firms to assess the effectiveness of their marketing strategies, identify areas for improvement, and reallocate resources accordingly. Additionally, leveraging marketing analytics tools and conducting regular performance evaluations enable firms to adapt to changing market dynamics and stay ahead of the competition.

HOW TO CALCULATE WHAT YOU NEED TO SUCCEED

Allocating the right percentage of a law firm’s marketing budget towards brand awareness is not a one-size-fits-all approach. It requires a careful assessment of firm size, target market, competitive landscape, and marketing objectives. While industry benchmarks provide a useful starting point, firms must tailor their budget allocation to align with their unique circumstances and strategic priorities.

As previously published, most law firms should spend at least 10% of their annual EXPECTED revenues on marketing annually. Of that money, the vast majority of small to medium sized law firms should allocate up to 45% of that budget for brand building exercises. Why? Because strong branding builds higher levels of recognition, trust, and client conversions. So, let’s look at an example of how this would be calculated for a firm that expects to produce $500K in billings for the coming year:

ANNUAL (EXPECTED) BILLINGS/REVENUES:   $500K

ANNUAL MARKETING BUDGET (10% OF REVENUES): $50K

AMOUNT SPENT ON BRAND AWARENESS (45% of $50K):  $22,500

Now, take a look at your own current marketing budget and allocations and see if they match this formula? Don’t feel bad if they don’t – nearly all of the thousands of law firms I have worked with over the years never had this initially right – for nearly all of their marketing budget was spent on direct advertising. Sound familiar?

ALTERNATIVES TO LEVERAGE BRANDING IN YOUR MARKETING

Despite the need for most firms to increase their brand awareness budgets, most simply lack the overall budgets, time, knowledge, and resources to effectively leverage brand building in their markets and even get close to achieve the first of the three levels of brand awareness. But the good news is for top rated attorneys, there is now another and better alternative…

To help support top-rated lawyers in overcoming their legal branding challenges, we created Law Leaders – utilizing unique, distinguishing, and premium attorney branding that enables consumers to more easily identify and connect with the best attorneys in their markets.

We then combine our unique law firm branding services with AI-powered industry leading ads in 19 practice areas locally and nation-wide and then intake, vet, and live-transfer live potential client calls to members of our unique service.

Are you a top attorney that wants to stand out from your competition and generate better prospective clients and cases in your market? Then CLICK HERE to learn more and sign up today to make effective branding your competitive advantage with Law leaders.

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