“How much are the ads?” is the wrong question. The right question is “how much can I profit after I pay the cost of the ads?“
Because if you spend $30,000 per month on ads but take in $150,000 in fees, that $30k ad budget looks like a pretty good deal.
The cost of ads is relative. It doesn’t matter how much you invest, what matters is how much your investment earns. Your net profit after the cost of the ads and your overhead.
Is it really that simple? Yes, and no.
Yes, because it’s just math. No, it’s not that simple because you have to consider the risks.
The risk that you won’t take in enough revenue to cover the cost of the ads (and overhead). The risk that the ads that work today won’t continue to work tomorrow. The risk that you’ll get complacent and mess up something, or you’ll let your guard down and some charlatan will take you to the cleaners.
I’ve lost a lot of money on advertising. I’ve run ads that bombed, been cheated, and spent more than it tuned out I need to spend. But I’ve also made a lot. More than enough to cover my costs and turn a handsome profit.
But if you’re considering advertising, there’s something else you need to know. You can still make a profit on ads that break even or even show a loss.
How can you lose money and still make money?
On the backend.
Your front end is the business (and revenue) you get directly from your ads. The backend is the business and revenue you get from repeat business and referrals.
If your ads bring in a client who has a lot of legal work, you might break even on the first case they hire you to handle, but get a steady stream of repeat business (and referrals) for years to come.
And all that backend profit is net profit, since you already paid the advertising costs to bring in the client.
Many attorneys lose money on every one of their ads, but make a fortune on the backend.
So, that’s the big picture. Advertising could be the best thing you ever do for your practice, but if you’re not careful, it could leave a big red stain on your books.
Fortunately, you can minimize your risks and simultaneously maximize your profits.
You minimize risk by learning all you can about advertising and not blindly turning everything over to someone else.
You minimize risk by starting small and testing. See what works on a small scale before rolling out on a bigger scale. You don’t invest $5000 on an ad until you see that the $750 version is doing okay.
I started out with classified ads. Then 1/4 page. Then 1/3 page. Then 1/2 page. And eventually, full page.
Start small and if you see a profit, continue running the ads and, eventually, expand into more ads, bigger ads, more publications or sites, and more keywords.
If profits decline, you fix things, or scale back.
You minimize risk and increase profits by continually testing other ad copy, headlines, keywords, and offers.
You can also minimize risk by targeting smaller markets and niches where there is less competition and the cost to advertise is lower. These can be as profitable as bigger markets, and are often more profitable.
Another way to minimize risk is through multi-step marketing. Instead of expecting to make the sale on your frontend ads, you capture leads and stay in touch with prospects, some of whom will “buy” weeks, months, or years down the road.
And you minimize risk by avoiding the same kinds of ads other attorneys run and making yours different or better.
Risk is part of advertising. But so is opening an office, hiring help, going to court, and everything else you do to build a law practice. That’s business.
But in business, success doesn’t require the elimination of all risk (even if that was possible). It requires intelligently managing your risks.
Same as everything in life.
How to get more repeat business and referrals