Mike Downer: Hey, everybody. I’m your host, Mike Downer. And once again, I am joined on the Unlearning Lab by Kevin Wosmansky, the owner, founder, CEO, and chief entertainment officer of JAR Consulting Group here in Des Moines, Iowa. How are we doing today, Kevin?

Kevin Wosmansky: You know what? Chief Entertainment Officer, Mike. I’ve always called it the Chief Everything Officer, but I like that. That’s a good one there. I always love seeing what you’ve got for a new title for me. It’s kind of become fun.

Mike Downer: Wait until next week. All right, today we’re going to be talking money, Kevin. So how much should I spend on digital marketing? I know that’s a big question with a lot of business owners. Today we’re going to figure out the right marketing budget for a small to mid-sized business investing in digital marketing services.

Kevin Wosmansky: You know what, Mike? This is something we keep hearing from our customers. We were trying to figure out what people are searching online, and in almost any industry, people are searching, “How much does something cost?” So let’s address this one head-on.

Mike Downer: So for a small business making under five million, how much should they realistically be setting aside for marketing if they want to see actual growth?

Kevin Wosmansky: The U.S. Small Business Administration recommends seven to eight percent of your gross revenue for marketing for businesses under five million dollars in annual revenue. What we typically tell clients is that the rule of thumb is usually ten percent of your annual gross sales for marketing and advertising.

Now, that is going to change drastically based on the type of business you are. Obviously, when you get into mid- to large-cap businesses with annual sales from five million to a hundred million a year, economies of scale come into play and things change. But the rule of thumb is, if you’re a business doing anywhere up to five million a year in revenue, you should budget between seven and ten percent of your annual sales.

Mike Downer: Perfect. Now that we’ve established that, let’s talk about allocation of that budget. Once a business owner establishes their budget, how do you recommend they split it up between things like their website, SEO, and paid ads?

Kevin Wosmansky: Mike, this is where strategy—and who you work with—really matters, because it’s going to be different for every business, even businesses in the same industry. Every business is different, kind of like every family is different.

You obviously have to have a website. We have clients who invest heavily into their websites because they’re product-driven companies or spread out geographically across states or even nationwide. We also have clients with very minimal websites who invest heavily in social media marketing. Then we have others who go minimal on both websites and social media but put all their money into paid advertising.

I’m not going to say one approach is right or wrong. There are simply different strategies. This all ties back to a much bigger question: What is your marketing plan? How do you plan to attract new customers?

I was recently working with a client who has a very average web presence and does very little on social media, but they travel all over to conferences. They’re utilizing new technology to follow up with people they meet there, and it works very well for them. So their marketing budget is heavily allocated into travel expenses, conference registrations, and seminars.

So, long-winded answer to a quick question: How should a business split up their marketing budget? It all depends on the marketing plan and strategy.

Mike Downer: Perfect. For the frugal business owner out there, this is something we need to address: the true cost of cheap marketing. We’ve all seen the budget marketing options out there. Why does choosing the cheapest provider often end up being the most expensive mistake a business can make?

Kevin Wosmansky: Because when you choose the cheapest marketing option, what you’re getting is usually the lowest quality or the lowest value.

The hidden costs of bad marketing are things like wasted ad spend. Advertising requires a process of learning the right audience and the right message that gets people to convert. When someone says, “I’ll throw a thousand dollars at this for a month and see what happens,” I tell them not to waste their money or time because that’s the wrong mindset.

The hidden costs of bad marketing come down to wasted ad spend, lost time, and sometimes even a damaged reputation. People don’t think about those things because they’re only focused on, “If I spend X dollars, I should get a ten-times ROI.”

I always ask them, “Where did you get that expectation from?” Usually they say they heard it somewhere. If that’s your mindset, honestly, the best thing you can do is spend no money on marketing because it’s not going to work.

Mike Downer: That makes complete sense. Since we’re talking budgets, let’s talk price ranges. To give our listeners a reality check, what are the standard price ranges they should expect for things like a professional website or monthly SEO services?

Kevin Wosmansky: Let’s tackle this head-on. First, the product and service you’re getting is completely tied to experience and the amount of time and work someone is going to put into your project.

For example, a professional website design on the low end might cost three to four thousand dollars. On the high end, it could go up to one hundred thousand dollars. Typically, we tell people professional websites range between three and twenty-five thousand dollars.

A lot goes into that: branding, content strategy, website features, backend CMS systems, and more.

For monthly SEO, there are different levels. It can include optimizing website architecture, backlinks, ongoing content creation, and many other strategies. On the low end, monthly SEO might cost around seven hundred fifty dollars a month, and on the high end, up to five thousand dollars a month. We typically see one thousand to fifteen hundred dollars a month as a solid range.

Pay-per-click management is another big one. The industry standard is that fifteen to twenty percent of ad spend goes toward PPC management. That includes campaign setup, research, management, creative design, and reporting. Sometimes agencies bundle those services into retainers.

Then there’s social media. It’s important to understand the difference between social media posting and social media engagement.

Creating and posting content typically costs between five hundred and fifteen hundred dollars a month. If you’re also doing engagement—responding to comments, interacting with businesses and customers—that usually ranges from fifteen hundred to three thousand dollars a month because the time commitment increases.

All of these are ranges, and it all comes back to how much work the business needs and what the expectations are.

Mike Downer: That makes perfect sense. You mentioned red flags earlier, and there’s definitely a lot of snake oil in digital marketing. What are some immediate red flags listeners should look out for when talking to a digital marketing agency?

Kevin Wosmansky: Mike, we could do an entire episode on this question because I could go on for an hour. But let me give you a few examples.

First, firms charging a flat rate of two hundred ninety-nine dollars a month for SEO. Let me be clear: businesses are getting very little to nothing for that. They may get a little upfront work, but in most cases, it’s money thrown away.

Another big red flag is guaranteed page-one rankings. There is absolutely no way to guarantee that. Zero. I’ve seen agencies make these promises and then lock customers into two- and three-year contracts with a lot of penalties attached. If someone guarantees rankings, run like the wind.

The last big red flag is long-term contracts with no transparency or reporting. If someone wants you in a twenty-four-month agreement and there’s nothing about reporting, metrics, or transparency—just vague language—that’s a huge warning sign.

Mike Downer: Makes sense. Let’s wrap this up with the JAR Consulting approach. How is JAR Consulting Group structured differently to ensure clients are getting transparency and ROI instead of just another bill?

Kevin Wosmansky: At JAR Consulting Group here in Des Moines, Iowa, we believe in full transparency on all marketing costs. After twenty-three years in this industry, I’ve seen too many businesses waste money on agencies hiding behind jargon and vague reports.

When you work with us, we’re going to show you the metrics and numbers—good, bad, pretty, or ugly. We have to know where we’re going in order to help the customer succeed.

That’s the biggest thing: full transparency on all marketing costs.

Mike Downer: And I love that about your company—transparent results and accountability. That shows you care about the customer.

Kevin Wosmansky: To wrap this up, another important piece is setting the right expectations. Some businesses just want to land a new client quickly, but if we look at a situation and determine it’s going to take six months to a year to move the needle, that’s what we’re going to say. Sometimes it could take even longer, depending on the industry and competition.

If your competitors have been doing this for years, it’s going to take time to catch up. But if someone tells you they can guarantee results in two months, run like the wind.

Mike Downer: Run like the wind. All right, Kevin. Thanks a lot. That clears up a lot about costs, which is always an anxiety point for business owners. But it sounds more like an investment than a cost based on the way you described it.

You’ve done a great job today, as always. Next week, we’re going to talk more about those red flags. I think that’ll be a fun episode. In the meantime, I’m a little bored, so as chief entertainment officer, I think you need to start planning some company activities that I’ll enjoy.

Kevin Wosmansky: Just in time for summer, Mike. Just in time for summer.

Mike Downer: I know. My timing isn’t bad. All right, next episode, let’s have some fun talking about marketing companies, advertising agencies, red flags, and what to avoid. That’ll be a great episode to dig into.

Kevin Wosmansky: I’m looking forward to that one.

Mike Downer: Perfect. Thank you, everybody, for joining us on the Unlearning Lab with JAR Consulting Group and the guru of digital marketing, Kevin Wosmansky. Have a good one.

Kevin Wosmansky: Have a good one, Mike. Take care, buddy.