Paid vs. Free: How Investing in Advertising Can Transform Your Architecture Business
A marketing channel is a place where you can reach your prospective clients. You’ll come across two different types on the internet, paid and unpaid. Usually, a social network works like freemium software — you get a bit of exposure for free, but if you want the full amount, it will cost you.
You’re probably using a few different unpaid channels right now. Instagram, Facebook and Organic Google Search. If you’re like most architecture firms we come across, you probably aren’t paying for any of the channels you’re marketing your firm on (except Houzz).
In fact, taking pride in not paying a dime to get your projects seen has become such a powerful meme in our industry, that Bowerbird made their slogan “Architects don’t advertise, they get published”. It resonates.
Some have even asked if it’s unethical for Architects to advertise.
I have a more optimistic view of this issue because I believe the bright future of architecture is paved with entrepreneurial badasses who hustle as hard as any other industry does, or harder — because the work we do is bloody awesome and it’s up to us as individual firms to get it out there.
Moreover, we’re not talking about the type of advertising that’s used to sell vacuum cleaners and Nutribullets — we’re talking about the internet. More specifically, advertising in 2018 is just boosted social media. There’s never been a more down to earth advertising medium.
But here’s the bigger question, why would you start paying for what you’re already getting for free? Unpaid channels cost your time, and paid ones don’t, they just cost money. In other words, paid channels scale, because they don’t suck up your time the way unpaid channels do.
Badass archi-preneurs know that time is the most valuable resource in your practice.
Imagine this scenario: Things are slowing down in the studio, so you’re feeling motivated and you decide to get serious about pushing your organic channels. You’re sharing video, links and photos on Facebook. You’re taking photos and posting them on Instagram. You’re adding content to your website to get more organic traffic. You’re sending emails to journalists in the hope that you get published. You’re writing awards submissions. Great! But, you’re maxed out, you’re giving up as much of your schedule to this activity as you can and you’re hitting the wall of diminishing returns.
So what do you do when you aren’t growing as fast as you should be? Or your marketing efforts aren’t moving the needle? Double down and spend twice as much time on your marketing? How does that work, how does that scale? What has to go to make way for that?
That’s a leverage problem. There’s two forms of leverage in business. Labour and capital. If your labour (you) is at full capacity, it’s time to deploy some capital.
Spend $100 on paid channels, get back to doing the real work, while they generate $200 of new business. Next thing you know, you’ve found a channel that works, things are going well, it’s time to expand your marketing effort. Just up the budget to $200, and bring in $400 of new business. Your marketing is scaling.
Getting a bit busy? Turn the dial down.
That’s exactly what I do at Vanity Projects. We don’t have any more time to give to writing, Instagram, or whatever — so if I want to see an increase in inbound leads to keep a healthy number of deals in the pipeline, I’ll nudge up my Facebook, Instagram and Adwords budgets.
That’s the perfect growth framework for a small-practice architect or interior designer, but where do we start? This article will explore a few different paid channels we see working very well for our clients every day. I’ll explain how you should assess the different options out there, and offer a recommendation for your studio.
Assessing paid channels
It isn’t common for architects to experiment with paid channels, so naturally, we worry about a few big questions.
* “I’m looking for ___ clients, are they really on Pinterest, or Facebook, or Snapchat?”
* “My service is very unique or complex, so does it’s value really come across on X channel?”
* “Is the channel affordable relative to my profit margins?”
Assessing which channel is right for your studio is called Channel Fit. Don’t get me wrong, most paid channels are a terrible fit for our business models, value propositions and target audience. I’m certainly not a shill for just any old paid strategy. Let’s find out how to pick the winners.
Four factors will determine your channel fit:
1. Channel cost
The small architecture firm’s business model is high revenue per customer.
We don’t need many clients to keep us afloat, since each new client will contribute tens of thousands of dollars in Lifetime Value to our firm.
We’re a low volume, high margin business. Not necessarily high-margin in percentage terms, because our market is so price sensitive, but in nominal terms we make a lot more from one new customer than McDonald’s does, for example.
Because of this huge ‘revenue per customer’, we are actually placed pretty comfortably to experiment with paid channels as a component of our marketing mix, because it makes sense for us to pony up a decent amount of cash to land one.
This is great because some channels, such and LinkedIn and Adwords, are really expensive. How expensive? Take your monthly website traffic, and multiply it by $4, to find out how much it would cost to double your inbound leads each month using Adwords.
On the other hand, well-targeted clicks from Facebook image ads will cost as low as $0.2 per click, and even less for short videos.
This is great for us, because we have options. While some businesses make $50 from each customer over their entire lifetime, we make thousands. That gives us a lot to play with.
Let’s examine the simple math going on here.
The expensive extreme: Let’s say your studio designs educational buildings, and you decide to target specific people by specific job titles and/or seniority on LinkedIn.
You’ll need to earn quite a bit of money from each of those clients, because just one or two out of every hundred clicks will talk to you, and even less will become paying clients.
Paying $7 per click with your LinkedIn ads, and assuming a website conversion rate of 1%, it will cost you $700 for a lead. Maybe one in ten of those decision makers who give you their information progress to a project. That takes your cost per acquisition up to $7000.
How do you work out if you can afford that? A general rule of thumb is that you should spend up to 1/3 of your expected lifetime value per client, acquiring a client.
In the above example, you’d need to make at least $21,000 in gross profit over the life of that client to make that channel profitable for your firm. You would break even at $7000 LTV, but that would be a gross margin of $0 — bad deal!
Every channel has a cost that can make or break it’s suitability for your firm. Typically, the more targeted, the more expensive.
On the other end of the scale, let’s look quickly at a small residential practice and their math.
They run ads to a wide audience of people who “look like their previous website visitors”, live in their city, with an interest in architecture. The clicks come for $0.3 each with a click-through rate of 5%. The site converts at 1%. Again, 1 in 10 leads become clients.
Cost per lead: $30
Cost per qualified lead: $300
In this example, Facebook is a great fit because the cost per acquisition is inline with the revenue per customer.
Even a fairly poorly converting website can perform well enough to get an ROI from an ad spend.
2. Channel audience targeting
The second, and probably the most common question I get is:
Is my target audience even on X channel?
Your Education department leader may not scroll though Instagram on her lunch break, and your extension client may not be cruising LinkedIn on the bus home.
Obviously ordinary people use multiple platforms, but generally speaking, you need to think about the most suitable platform to reach your audience in the most direct way.
Thought-leaders and business people are on LinkedIn (but they’re also on Facebook and Instagram), the general public are all on Facebook, and trend-followers are on Instagram. Decorative types are on Pinterest, young socially outgoing people are on Snapchat.
Generally speaking, you can find every prospect on Facebook — but while other niche platforms are more expensive, they might convert higher, so don’t exclude them all together.
3. Channel audience volume
Another thing we have to think about is volume. I mentioned earlier that residential architects can target a wider group of people on Facebook, because enough of their prospects are on there.
A channel with a small audience, or too-small of an audience target, will get saturated really quickly, so you need to throw the net a little wider and make sure you’re using a channel with a lot of volume to handle it.
Here’s a quick break-down of the volume of each platform in Australia, measured in Monthly Active Users:
- Facebook — 17,000,000
- YouTube — 15,200,000
- Instagram — 5,000,000
- Snapchat — 4,000,000
- LinkedIn — 4,000,000
- Twitter — 3,000,000
- Pinterest — 280,000
My clients sometimes have a hard time understanding why our Facebook ads are sometimes targeting 80,000 people in their city.
“I’m an architect, I only need 5 people to know about me to flourish!”
We target larger-than-expected audiences to overcome the problem of saturation. Show your ads to too small of an audience and you’ll be showing a lot of people the same ads over and over and over again. They’ll get bored, they won’t click, and you’ll be wasting money.
Impressions are cheap. You can reach 1000 people on Facebook who fit your targeting criteria for about the cost of a sandwich.
Targeting too small to save on impression costs may cost you a lot if you end up excluding a few prospects.
4. Channel ad units
Finally, let’s talk about ad units. Ad units are basically what the creative looks like on the platform. In social media world, ads are “native” which means that they look like regular posts.
On Instagram they’re large, typically square photos, that you’ll be inserting among beautiful and inspiring photos that users actually want to see.
On Facebook, they’re coming up between status updates from friends and articles brought in from other sites.
On Houzz, they’re turning up on search result pages in response to a specific query.
Keep in mind that your content may not fit the vibe of a certain channel. On the other hand, study that channel and figure out how your ad copy and visuals should look and sound.
Your project has striking imagery? Instagram may be a great channel to promote it, as people tune in to be taken away by beautiful imagery.
Your project has a big idea, an unexpected twist, or a bigger message? Facebook is the place to tell that story, because people are looking for new ideas and trends — and they want to get into heated debates.
You market your value on existing in a postcode? Houzz! No hard feelings, Houzz.
Customising your studio’s value proposition and visual assets to the specific channel you’re targeting is our job, but it’s an important thing to think about when you’re looking to make a start on your own.
The best paid social channel (the one we recommend)
For nearly every architecture practice that approaches Vanity Projects, the right paid channel is almost always Facebook Ads.
The targeting is way more precise than any other channel, the volume is there (nearly every Australian has a Facebook account), and the clicks are 10x cheaper than any other alternative.
They’re also incredibly flexible and powerful. Seriously, if you haven’t already picked up on how creepy Facebook’s audience research and data mining is, you must have been living under a rock.
Some studios are looking to reach a new audience, and Facebook can do that. Others are looking to retain top-of-mind status with everyone who has come across their work over an extended period of time. Like a newsletter, Facebook can do that. And finally, Facebook can help you to take something vague like an Instagram follower, and target them with a specific call to action both on Instagram and Facebook.
Finally we recommend a passive ad budget for Google Adwords. It just makes sense to run a very low-budget ($5–10 per day) campaign targeting important location keywords.
It is also worth protecting a small number of obscure ‘long-tail’ keywords such as “(Project name) architect” and your own name — just in case your SEO isn’t working the way it should.
Google search traffic is highly motivated, and even though architecture related searches are very low-volume, a small ongoing Adwords campaign can help to capture a few extra leads each month.
The main drawback of Google Adwords, and why we recommend Facebook (if you were stuck on an island and could only bring one) — is that its damn expensive and the benefits of marketing to people based on their interests with Facebook, and capturing their attention during the research phase, really increase the possibilities from a sales perspective.
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