Summary : This page shares part of our ongoing analysis of marketing costs
per job for "lead generation" work, such as investment in targeted
marketing activities and "market reach" through various channels
to find relevant capital investment projects for US state and local economic
development agencies. The bottom line is that more than $50 million
per year may be spent on such lead generation work, but the average cost per
job created may still seem justifiable. Similar results might be
achieved at a fraction of this cost by eliminating the enormous duplication
of time and expenses invested to find rather than to win projects.
Well-qualified project referrals have been our
specialty for 15 years,
personally assisting over 1000 executives with their project plans, and
contacting thousands of others to discuss and address their interests.
The analysis here is not a critique of advertising or marketing choices by
individual areas, or of any publisher or event organizer. Our macro
analysis of this market focuses on the high total costs of state and local
marketing initiatives, and their value relative to their expected and actual
impact in terms of job creation, because our focus is to improve the return
on marketing investments.
7 year analysis of
investment project trends by state may be of interest in this
regard, as well as the multi-year trends in our level of
daily website visits and the
regional interests of our visitors.
Our April 2006 newsletter
(4 pages with graphs) summarizes this market research and analysis.
Contact us to discuss lead generation interests in this market, and how we can
Our response-oriented work
economically shares valuable market
knowledge and contacts. Our proactive marketing work reaches out
personally to top executives to find what they are seeking. In
general, our conclusion is that many areas actually invest thousands of
dollars per new job which could actually be attributed in some direct way to
their lead generation efforts.
Our focus is to drive down the high cost of economic
development "lead generation" work from an initial goal of $500
per job to $100 per job or less. Our plan to do this involves creating a more efficient channel
through a network of top professionals in major cities and industry sectors
who are independent and trusted advisors among top executives at large
We independently introduce executives to community
development leaders and
professional service providers who are relevant to their project plans,
whether through the use of our website content or by providing
well-qualified personal referrals.
We do trend analysis such as the following to benchmark our
own marketing performance and guide our goals and
for cost-effective ways to reach more investors every year.
Introduction : Scope and purpose of this analysis
In recent years, economic development agencies have routinely compared our
work to other types of marketing services, even if they are not really
comparable. Their budget costs and performance expectations and
results in old marketing channels are simply familiar as a value reference
The most common
comparison they make is to advertising in specialty magazines in this market, or to
the costs of consulting services related to marketing strategy, PR work,
telemarketing, etc. We have therefore shared our analysis of this
below. Another common comparison is to event marketing, such as trade
shows, networking events, familiarization tours, hospitality events,
sponsorships, etc. That is a more complex topic, and better discussed
The real cost of event marketing is
sometimes not considered carefully, as it involves a lot of valuable staff
time and resources rather than just the obvious direct cost, such as the fee
for a trade show booth, production of the exhibit and related promotional
materials, and the travel costs to be there. There is a lot of
pre-event and post-event work to make such events successful, so that needs
to be factored into any analysis of the total costs. Since the costs
of such event work vary widely, and their expected and actual target market
reach and results also vary widely, it is hard to generalize about the value
of such initiatives. Some are a waste of money, and others are
valuable. What works well for one area may also produce very little
value for others.
behind our analysis
of analysis, assume that there are roughly 2,000 major projects per year in
the United States which create over 50 jobs in a new location (rather than
just expansions at an existing site or a predetermined location without
serious consideration of other location alternatives). Refer to our 7
year analysis of project trends for more details, since the volume of
projects varies over an economic cycle and is also influenced by global
projects of this scale will mostly come from larger companies - because they
have the resources to afford and successfully manage such growth - with the
exception of some very fast-growing (and riskier?) small companies.
They often take more than a year to plan, so marketing results are not
achieved immediately. In short, not all companies have the resources
to plan projects which will create 50+ jobs, and long-term strategic
commitments are not taken lightly.
Unlike product marketing campaigns or point-of-sale
merchandising, in which the expected impact on sales can be readily measured
through indicators of short-term sales results, economic development
marketing campaigns are generally to develop a "location brand" and promote a
business community long-term rather than just promote one product such as an
available site or building.
That makes it necessary to measure marketing performance
over a longer interval of time, and in ways other than just direct response
enquiries, as in brand campaigns.
Development magazines and related
The following data, assembled in early 2005 from 2004 or 2005 advertising
statistics, shows that the leading magazines in this market have roughly
comparable total circulation, but some difference in the size of companies
they reach and their website visits statistics.
These are all free magazines, supported by advertisers. There are
major differences in the number of pages which Google has indexed on their
websites because of their website design choices.
FDI Magazine, published by the Financial
Times, is one of the few that relies on paid circulation (as well as higher
advertising rates), but it is relatively new by comparison to the magazines
below, which have been in circulation for many years. Circulation is
therefore much smaller, but may be more valuable, so it is not as relevant
for comparison to the advertiser-supported free magazines.
Distribution of website visitor interests and projects reported by state
given 50 states of varying levels of economic size and attraction for
business, the level of serious interest in any given state will just be a
small fraction of the national total.
As shown in our regional
distribution analysis of visits to our
Invest USA directory of economic development agencies, interest predictably
centers around 2% (100% / 50), with some states closer to 1%, some at
around 3%, and a few at 4% or even more. The global analysis on the
same page shows patterns of user interest in multi-state regions or other
countries. Our 7 year analysis of the
announced by states relative to their population
is another simple tool for developing a baseline assumption for the
benchmarking of long-term marketing performance.
For simplicity, some large states which have been very
proactively seeking investment may hit that 3 - 4% share of interest, but most still
remain close to 2% despite all their promotional activities.
- approximately - refer to their media kits for current data and 4
color page 1x rates
> 500 employees
visits per month, and pages indexed by Google (as of Nov 1 2005)
- website visits are not as reliably reported as circulation statistics,
and are often confusing - mixing references to "hits" and "page views" with
unique visits, or just referring to peaks in weekday or month visit activity
rather than ongoing patterns of usage. "Hits" are meaningless, as they
are distorted by page design (number of graphics for the server to download, etc.).
fDi - Foreign Direct
(FT Business - The
6 issues per year
roughly 80% of the readers are CEOs or CFOs
A further 15% are responsible for corporate development
Published by the
Financial Times group.
are higher than the many free magazines in the US market, but
there aren't lots of small ads competing for attention.
The website was
launched in February 2003 and
www.fDiAtlas.com launched in May 2007. The CPM for
fDi banner ads is $100.
Media kit indicates an estimated 3x pass-along readership (3
readers per subscriber)
Targets C-level or very senior executives at major firms - not corporate
real estate, facilities management, or administrative managers.
Strong global content and international market reach, rather
than a 99% US focus. 40% North America, 35% Europe, 25% Asia Pacific
and other regions.
7 issues per year
36 - 40,000 visits
125 pages + 2710
40 years. Roughly 3800 more copies go to
most US economic development agencies. Also operates
a FastFacility website to advertise available real estate, which at the time
of the statistics (2004) was being advertised on cable TV and Google to
boost visits and ad sales. Compare this to 34,900 pages on LoopNet in
2005 - or
only 42 pages indexed by Google on LocationOne.
visits/week at one point after a CNN TV ad campaign to launch FastFacility.
Much of the content available on the main website is apparently not indexed
by Google. Reliable data on visit levels has not been openly
available. It has multiple websites.
57,500 visits in
998 pages, plus their other websites
for over 50 years. Formerly tied
to CoreNet Global (as IDRC), Site Selection is now tied to the IAMC networking events
for industrial facilities managers and maintains a close
relationship with IEDC. It has multiple websites, so reported
visit totals sometimes reflect Site Selection and their other sites put together.
The data is generally just for one month, unlike the daily and monthly data
we share to distinguish peaks
or average visit levels. Their websites are heavily promoted to their subscribers
through e-mail broadcasts, events, and the magazine.
546 pages (for
their FacilityCity site)
38 years. Since their website also serves readers of a facilities
manager publication and event which may be less relevant to this market, we
don't know if their website visit data isolates the Business Facilities
visitors. The Google page count would include both. Additional
copies are circulated through trade show events and associations.
|20 years. Part of the
large Penton Publishing group. It also does a special issue for the
National Assn of Manufacturers, and organizes events for advertisers to meet
site consultants. In 2007 it was reorganized and tied into Penton's
real estate and finance media.
|Plants Sites &
was $7,940 in 2004
publication in Nov 2004 after more than 30 years as a leader in this market.
Had been acquired by Reed, a major publisher and event organizer. Had
an excellent website which was heavily promoted to subscribers through
e-mail broadcasts and the magazine. Reported 5000 pages of website
content, but Google only found 1700 at the time.
|We have not
found comparable circulation statistics or website visit statistics at this
time. Trade show distribution boosts circulation. No BPA data.
Same publisher as GCX.
|GCX - Global Corporate Xpansion
We have not found
comparable website visit statistics at this time. Five issues per
year. Trade show distribution boosts circulation. No BPA data.
|We have not
found comparable circulation statistics or website visit statistics at this
time. There are also two related websites for Southern Business
Development and biotech.
- We attracted an average of 50,000+ website visits per month in 2006
- 2007. We launched
this site in late 2003 - 2004, and exceeded 60,000 in 2007.
are mostly in the 45,000 or less range despite comparable free print
circulation and having been circulated for decades. Ad rates are very
||6,000 - 12,000
recipients at large (>500 employee) companies are on their mailing lists.
This may reflect multiple subscribers at fewer companies
|Mostly in the
30,000 - 40,000 visits range, but not as reliably reported.
daily visits and
magazines in this niche went out of business in 2004. One was Plants
Sites & Parks, and the other was Corporate Location (published by Euromoney
in the UK), which had formerly been a leader in Europe. The gap left by the latter was quickly filled by the
Financial Times with the rapid growth of their
Business Development Outlook magazine by WEDA still exists as an advertorial
publisher under different management. Expansion Solutions magazine had
no website and circulation or website data is not readily available, and
content is advertorial. Only the major magazines provide BPA audited circulation statistics. Data on website visits is
generally hard to find and vague or very limited, especially by comparison to the data we
Our website visits have grown from 200,000 in 2004 to
320,000 in 2005 to more than 500,000 per year in
2006 and well over 600,000 per year in 2007.
After promoting this website with very limited resources since 2004, our 2007
visits have grown to 60,000+
per month in mid-2007, which is higher than the visits reported by all the
above magazines. They have been in free circulation for 20 - 50 years
with the support of millions of dollars in advertising each year.
As more areas participate in our services, our reach should expand because there is no
comparable independent resource on the Internet for business location and site selection
Note that we refer above to visits - not "hits" or "page
views", which are in the millions but not meaningful as an indicator of
are from around the world, and are not driven by circulation of a magazine
and frequent e-mail broadcasts to the same population of 40,000+ monthly
The magazines repeatedly send e-mail
such as newsletters with website links to many of their subscribers.
This can drive up visit levels among existing subscribers - and ad
impressions. Some now organize special events, sponsored by
advertisers, as another way to make money and reinforce their print and
online ad sales.
We reach executives and their professional advisors (not just site selection
consultants) as they search for information, or as we talk to them
personally about their plans and offer referrals to help them.
Most of our visitors find us through Google because of relevance to their
search interests. Other search engines, as expected, provide many of
the other visitors because this was designed as a location research tool
rather than an archive of magazine articles and ads.
Advertising costs in the above
The published advertising rates for these magazines, such as for a 4 color
page or half page ad, can be found in their respective media kits on their
websites, or by contacting them.
As a simple
generalization, however, these range between around $2000 for a small B&W ad
to around $10,000 for a color page, with some of them more or less
than this. This makes it possible for them to produce an attractive,
glossy magazine and distribute it to 40,000+ free subscribers.
Advertisers also need to keep in mind all the costs to design,
produce, and conduct an effective ad campaign, including the staff time and
effort involved internally, rather than just the fees of an ad agency or
graphic designer or single placement costs in the chosen media.
Isolated or infrequent small ads may have little real marketing impact.
Doing it right takes considerable time and effort. A simple little ad
in isolation may not be expected to produce much, but few areas have the
resources to invest in large or repeated ads in multiple media, or can
easily justify such an investment by the expected and actual results.
For example, if an entire state is actually competing for a fairly limited
number of projects per year, and the executives that need to be reached are
not easily reached or influenced by advertising, then it may make little
sense for small areas to spend much money on it despite the obviously high
value of winning a major project. It is, in effect, more like buying a
lottery ticket and hoping to get lucky, rather than a marketing strategy.
projects are states really competing for each year?
the above analysis, if there are 2,000 projects per year and the states
which actively seek them through marketing initiatives generally attract a 2
- 3% share, or in a few cases 4%, then the typical expectation is to attract
around 40 of those 2000 projects per state, with some less (but likely at
least 1% = 20), and a few attracting 60 - 80 (3-4%).
Actual numbers may obviously vary, as will the total
projects per year during economic cycles, but as a simple generalization,
those provide some baseline assumptions.
For comparison, Site Selection magazine has reported 6000
major projects in each of the last three years, which roughly breaks out as
1000 new manufacturing, 2000 expansions, and 3000 "other" projects, as
explained in our 7 year trend analysis.
Not all of those projects would be "mobile", involving a new choice among
competing business locations - particularly in the case of many of the
expansions. Many projects are, by their nature, also limited to
interest in one region.
In short, areas are mainly competing for a greater share
of the "mobile" projects with interest in their own region of the country as
only a fraction of that 6000 project total. States may report hundreds
of projects, but that doesn't mean that these were all influenced or the
result of the marketing work, or that they were really competing for all of
the thousands of projects reported nationwide.
Magazines and lead generation work,
In terms of lead
generation to attract project enquiries, we share the view of many
publishers that this is not really what they do, even though magazines in
this niche have often promoted their advertising sales on the basis of their
ability to offer "leads" to their advertisers.
The volume and quality of such leads varies widely, as
almost any of the advertisers can attest.
Typically, reader responses are not handled by experts in
this field with valuable market knowledge and suggestions to share with the
readers according to their needs, but rather as a "bingo card" distribution
task to get the leads to as many advertisers as possible so that they will
be motivated to advertise again. Once again, they are publishers - not
direct response lead generation services.
It is reasonable to expect ad campaigns to have some
measurable impact and ROI, but lead generation shouldn't be the primary
metric in that regard, because that isn't what magazine ads do in specialty
B2B publications such as these.
The point, however, is that brand campaigns
to help raise the visibility of an area, as in the case of ads tied to
magazine editorial content relevant to their area or industry focus, may not
attract many direct responses among readers (or website visitors).
That doesn't mean it isn't worth doing, but simply that the expectation (and
performance metric) shouldn't just be short-term leads.
Executives will rarely see an ad and pick up the phone to
call, or fill in the bingo card or website form to request information, even if they noticed
and recall the ad whenever they may someday have an interest in the area.
They are more likely to seek information at the time when it is of active
interest, as few serious prospects will just gather a lot of information in
advance for future reference. They are not likely to diligently review
every page, see every ad, or respond often. An effective marketing
campaign, however, may influence their perceptions of an area over time.
That typically involves far more marketing work to arouse interest than
publishing a few ads, however.
Top executives are, to be blunt about it, too busy to
waste their time, so it is simply unrealistic to expect a lot of
valuable direct responses from magazine ads, and that is especially true of
small or isolated ads in a single magazine, rather than a marketing campaign
designed to really be noticed repeatedly over time and shape perceptions of
an area among the targeted executives.
jobs are at stake?
of the reported major projects (going back through the 1990's) suggests that the
average new project size has dropped from around 100 to 75 jobs, for
whatever reason. Good data is hard to find, and the reported job
totals may not reflect what is actually created later.
This means that the 40 projects (as
above) might be expected to yield perhaps 3,000 "new jobs", plus whatever a state
may get through expansion projects, which is typically much larger.
Some states might predictably do worse, such as 2,000 new jobs or less.
Large states or the few states which hit the 4% market share might attract
80+ projects and 6,000+ jobs in this simple model, with obvious variances, but that
gives a rough idea of an average state performance range. One is not,
in other words, generally competing for tens of thousands of jobs per state
each year, so any return on marketing investment analysis needs to be more
realistic about the expected impact, which is not really tied closely to the
much larger total new job creation reported within a state.
Some academics and consultants asserted back in the 1990's
that around 80% of the new jobs come from business retention and expansion
activities, rather than from new investors. If that widely accepted assumption is
then 3,000 new jobs from investment attraction (as 20%) would be part of a
larger total of 15,000 (by adding back that other 80%).
It should also be
noted that some of these projects would still happen if the states did
nothing to try to attract them, simply because there are compelling business
reasons to invest there anyway. The 80% total may also be inflated by
including lots of small local projects, rather than just the major ones.
In short, most businesses are small (millions of them), so they add up to
lots of job creation, but that isn't the usual focus of economic development
marketing campaigns or lead generation work. Adding them into the
marketing ROI analysis simply distorts the real cost per job created by
inflating the number of jobs so that the marketing costs seem more
justifiable. It is also worth noting that job losses are not
subtracted, but marketing work may not influence that anyway.
This analysis also does not relate to total state job creation
and unemployment statistics, which may not involve capital investment
projects at all, as in the case of routine growth within existing capacity, employee turnover rates, and activity by lots of very small companies -
many of which are started and fail each year (creating and losing jobs). Our focus is on major
investment projects which create jobs that may be more sustainable than a
similar total among new or small ventures.
Economic impact for a state from
investment promotion work
the assumptions and analysis in the right column indicates, the impact of a
marketing campaign for an average state in terms of new investment attraction
(cross-border investments from other states or countries) may really add up
to only around 1,000 - 4,000 new jobs per year. Larger or smaller
states may do better or worse than this just because of their economic size.
Winning those projects obviously involves far more work and expense than
just running an ad campaign.
There is also far more project activity in total than this, particularly by adding up
the many local expansion projects and small projects. Those certainly have
value, and may be influenced to some degree by a marketing campaign that
is really aimed at a different target group of executives.
If the campaign goal is to attract significant projects
(>50 new jobs) from elsewhere, then the basic point is that there are a
limited number of projects per year in any region for which to compete, and their
distribution around the country is not entirely flexible, since many
projects are regional in focus just because of the markets they will serve.
They may consider a few neighboring states, but each state won't be competing
for every project. A company which needs to better serve their customers in
California is not likely to be looking seriously at Virginia, and vice versa.
baseline assumptions for projects and job creation
If the baseline expectation as above is for an average state to win around
2,000 new jobs from new cross-border investments (excluding local
expansions) with little proactive marketing effort at all, and to perhaps
win 3,000 - 6,000 new jobs with a very proactive investment attraction
program that is sustained as a campaign over a period of years, then the
expected impact of that investment attraction program is 1,000 - 4,000 new
That is before the impact of any similarly better
performance at business investment and attraction above the baseline level
that would be expected if there were no such marketing program. For
example, a state the size of Texas should obviously attract far more than
Rhode Island, as reflected by our 7 year analysis
of project announcements relative to population over time.
success at new investment attraction may also influence business retention
and expansion decisions to some degree. A larger factor, however, is
more likely to be the basic location (right region of the country for the
intended purpose of the project) and practical actions taken to be very responsive to the
interests of those existing investors. The marketing of the region to
others may have little impact on their choices.
Example : cost per expected new job for
a small ad campaign
Consider the cost of a single small B&W ad in one magazine as
above, or one color page. Assume that the cost per ad insertion is
roughly $2000 - $10,000, depending on the choice of ads, and that one
represents a large area that is realistically
competing for 1,000 - 4,000 new jobs from elsewhere (plus any impact on
business retention and expansion, which shouldn't really require advertising
rather than better local contact work)
It follows that the ad cost per new job created for a
single insert is in the $0.50 per job range at best (4000 jobs if
miraculously achieved with a single $2000 ad that attracts over 50 projects
at an average size of 75 new jobs). It would still be pretty
miraculous at the $2.50 per job level (4000 jobs from
50+ projects at an 80 job average for one $10,000 ad insert).
If the single
$10,000 ad led to 1000 new jobs (13+ projects at a 75 job average), that $10
cost per job created would still be extraordinary. This is intuitively
ludicrous, but the use of inflated job totals (such as by comparing the cost
of an ad campaign to the total job creation reported by a large economic area in a year)
is basically the same logic.
More realistically, if a single ad led to one 50 job
project, that would still be surprising, and that would work out to $40 -
200 per job. One insert might, however, consistently lead to zero new jobs. One ad in isolation is
somewhat like buying a very expensive
|Who is one
trying to reach through ads? How do they search?
above, the economic development magazines reach around 40,000+ subscribers,
but only 6,000 - 12,000 of these are at companies with >500 employees, and
the level of the executives reached at those companies is not clear.
It may not be the same as the distribution of readers in the entire 40,000+
base since it is only 15 - 30% of the total subscribers.
For example, it may be relatively easy to reach top executives at small
companies and get them to accept a free subscription, but quite difficult to
get the attention of top executives at large companies. Even if they
accept a free subscription, they may rarely look at it.
After personally visiting more than 1000
executives over the years at their offices to discuss their active project
plans, the number of times when any of the major magazines was visible in
their offices (or reception areas) or mentioned by the executives was
perhaps 10 times. If they received the magazines, it wasn't obvious -
and these were very well-qualified prospects for active projects deemed
worth the time and expense of a special trip to meet the responsible
executives personally at their offices.
That doesn't mean the magazines aren't reaching useful or
influential readers. The point is that one needs to focus on reaching
and influencing the real investment decision-makers. If you were in
their position, is this a magazine you would read? Would you reply to
Example : multiple media, multiple ad inserts
Now, suppose that you wanted to try to achieve those results with a far
larger campaign, if the resources were available to do 6 inserts per year in
four top magazines as above, aside from any placements in other business
media, online advertising, PR work, etc.
Multiply the above costs by 24, creating a $48,000 - $240,000
campaign range. This would, in effect, repeatedly "reach" all of their
subscribers to promote the location for a full year with either a small or
large ad, or some mix between these two budget levels. Note that one
can spend far more than this if advertising in less specialized business
media with high circulation to a less targeted audience for the purposes of
this niche market.
One is still competing, however, to try to attract around
1000 - 4000 more new jobs per year than the expected baseline performance
level of around 2000 jobs from elsewhere (plus all the local expansions) if doing
very little proactive marketing at all, such as just providing a responsive service to
help those executives and advisors who express interest in the area.
As in the above analysis, that works out to a "best case" range of
$12 per job ($48,000 to miraculously attract 4000 jobs through 50
projects of an 80 job size through only 24 small ad inserts divided into 4
magazines), or $240 per job ($240,000 to achieve 1000
more jobs than usual through 10 more projects at 100 jobs on average from
only 24 large ads).
That assumes, however, that the ads are a decisive factor
in attracting those extra jobs, and that such results are actually achieved.
For example, if the $240,000 campaign only helps a state to win 4 more
projects (one per magazine) for 400 new jobs (4 x 100) - regardless of how many "leads" may
have come in
from all their reader responses or website visitors that year, then that works out to $600 per job.
At the local level, the costs are typically much higher, because the odds of
any single location attracting a project are much less than the odds of it
going somewhere much larger, such as anywhere within a state. Even small local marketing campaigns
can therefore cost far more per new job actually created.
Keep in mind that the total cost of new job creation is also far more than
the cost of a few such ads, because of all the other staff work and
resources which go into investment attraction. The point is simply
that the cost of lead generation by advertising can easily be hundreds of
dollars per job created, even if one is not too picky about which projects
were really influenced by the ads.
or type of company is being targeted?
If aiming to
attract projects which create >50 new jobs, such as to aim for a >75 job
average, then it is obvious that this is 10 - 15% growth for a 500 employee
For smaller companies, it becomes much harder to justify
or finance projects which create >75 new jobs. For example, if it is a
150 employee company, that would be 50% growth, so although that might
sometimes happen, it won't happen very often.
Although small company projects may add up to lots of
jobs, so that they are certainly worth helping, they are not the usual focus
of a marketing campaign because there are so many small companies and few of
them would be planning a major project in a new location. Small
companies are more likely to be planning local expansion or new projects in
the 10 - 25 job range, rather than create >50 new jobs somewhere else.
It may be useful to attract small projects with solid growth potential, but
the cost of finding such a small project can be disproportionately high.
By contrast, larger companies have the resources to invest
in larger projects, although some may choose to do so by investing in
existing operations through M&A deals rather than by growing their own
operations in a new location. The marketing campaign may have little
influence on such M&A choices, and any resulting growth at the acquired
company would then show up as an expansion project supported by local
business retention work rather than as new investment attraction.
Once again, most new jobs come from the growth of local employers of all
sizes, and a marketing campaign has relatively little impact on that.
Proactive marketing work to attract small firms may be prohibitively
expensive unless the local representatives are convinced that such projects
deliver sufficiently high value over time to be worth the investment up
front to find and attract them.
This is really a
development strategy choice and funding priority choice which each area has
to make for itself. One can target and pursue almost any size or type
of project which the area would be realistically able to serve well, but
given limited resources, marketing choices must be made.
The value of advertising is not the same
for all areas
are definitely not opposed to magazine advertising in economic development, nor do we
compete with magazine advertising. It is a very different channel as
part of the marketing mix to reach potential investors and develop a
"location brand". It is very
appropriate and useful for the marketing strategies of some areas to raise
awareness of their areas, boost their image as an attractive business
location, shape perceptions, etc. The
point is that "reach" in terms of subscriber statistics does not have the
same value to all locations. Will relevant executives actually notice,
recall, respond to, or be influenced by such ads? Will a few ads in
isolation have any meaningful impact, or is it just a gamble?
Magazine advertising is generally not an efficient lead generation channel
in this niche B2B market because that simply is not really the function of such
advertising. It is not designed to be a direct-response or research channel that
is actively used by top project decision-makers to find what they are
seeking. Executives don't generally plan multi-million dollar
strategic investment commitments by filling out magazine bingo cards or
website forms. The ad recall and direct response rates are predictably low
among top executives regardless of ad design or relevance to their project
interests, so it is unfortunate that many ad placements are sold as though
lead generation was the best way to measure their value.
magazine readers matter to any specific area?
A magazine may
reach 40,000 readers, but if only 2 - 4% of them are likely to be very
interested in a given state, that works out to 800 - 1600 subscribers who
to the advertiser, plus
perhaps a similar number for those with interests in neighboring
states who might also be attracted.
It's like the old joke by a consumer products executive
about knowing that 50% of his advertising was a waste of money, but never
knowing which half. In this niche market, with only a few thousand
"mobile" projects per year in the entire United States market, but very high
value for each such project, the challenge for advertisers is even greater.
Out of 40,000+ readers, there may only be
2500 - 5000 which potentially matter for any 3 state region. At a 1-2%
direct response rate, that's 25 - 100 useful "lead generation" responses
per year (even if one receives more "leads"). Not all of those will turn out to be good prospects which might
be won. After all, if an executive requests information about only 5
"short list" locations of high interest, then that still means 4 of them (80%)
are going to be disappointed in the end. The real "hit rate" is very
low for such "leads". In any case, as explained
above, leads generated per ad is not a very good metric for such campaigns.
Advertising : The analogy of investment in many lottery
In terms of direct short-term lead
generation, each ad is somewhat like buying another lottery ticket which may
or may not win as expected today, regardless of how carefully it is chosen.
Buying many more tickets over time may improve the odds of winning something
someday, but the outcome could predictably remain a total loss for a long
time if one is measuring ad results in terms of short-term lead generation.
Activity such as simply getting a lead - even if it is
poorly qualified or irrelevant to the area - is an even worse metric than
good, well-qualified leads. That's like celebrating getting three out
of five numbers right on a lottery ticket that only pays off for all five.
No matter how you rationalize that you came closer to winning this time, you
predictably lost, and will lose most of the time. Hope springs
eternal, however, that it just takes one winning ticket to make it all
justifiable. If direct lead generation is your focus, then advertising
may not be the most appropriate way to spend your marketing budget.
Top executives simply don't rely on bingo response cards to plan large
capital investments. That doesn't mean advertising isn't valuable, or
influential. It just means that direct reader response isn't a good
metric, because it tends to measure activity among readers who aren't really
the top targets.
are only perhaps 2500 - 5000 relevant readers receiving an issue, then a
$10,000 ad is like paying $2.00 - $4.00 per ticket for one chance to try to
attract at least one project among them. Compare that to the total cost
of a very targeted direct mail campaign, or spending $200 per person to host
50 executives for a special event (including all the costs to arrange it),
or perhaps $1000 per executive to personally visit 10 at their offices, or
perhaps $10,000 to meet 100 or more people who show up at a trade show
booth. (Once again, how many top executives walk around trade show
booths to plan their projects?)
There is also no assurance that any of the advertisers on
a bingo card will win their projects. The choice of locations is not
limited to those who advertise in a particular magazine, so ads may not
really improve the odds of winning unless they are very effective and
influential ads. The larger the project, the less likely that the
search will be limited to advertisers. When many millions of dollars
and the future success of the company are at stake, the ad may do no more
than perhaps help to get in the door for review, but not raise the odds of
success at all. That is useful, but the handling of the lead is far
more critical, as is the fundamental business case for the logic of that
business location for the project. If that business case is strong,
the area may get on the "long list" with or without any ads.
In the case of corporate investment projects, there is
only one winner, no matter how many areas chase after the project through ad
campaigns, events, PR work, direct contact, etc.
There is a point of diminishing returns for ad campaigns
in this market. It may certainly be useful to be visible and get the
"location brand" out there to the intended audience as best one can through
ads, PR work, events, direct mail, or personal contact work, but those
marketing costs can grow dramatically without necessarily producing comparably better
results. Spreading a few ads across several magazines may not be
Once again, magazine ad campaigns are not necessarily an
efficient way to try to attract investment projects directly. They may seem
relatively cheap by comparison to the expected value of winning even one or
two more good projects per year, but in general the role of advertising is
to communicate and build up the location "brand" image and buyer perceptions of that
product in a relatively small target audience for any given area.
The best ads in a large campaign may still generate very
few direct-response leads of value. That doesn't mean the campaign
isn't worth doing - it just means that the cost per job of the ads is
largely overhead spent to be more visible in the target market, rather than an
investment in direct lead generation work. Sometimes one may get lucky, but
ad response rates in this niche are predictably low for good reason because
of the way that executives actually make their decisions, and good prospects are rare among the "leads".
and event reach relative to project and job goals
above, a 2 - 4% market share of 2000 projects per year may mean that an area
is competing for an extra 1000 - 4000 new jobs (above a 2000 base) through
the full range of marketing activities - not just magazine advertising as
one part of the marketing mix.
At an average of 75
jobs per project, that works out to seeking 13+ to 50+ extra projects.
If an effective ad campaign may only generate 20 - 120
useful reader responses per year, or perhaps 100 - 300 at a higher direct
reader response rate such as 5% rather than 1-2%, then it's still going to
be difficult to find and win those 13-50 projects among the ad responses.
Even if one receives more ad responses, the number which
are actually solid prospects for projects which the area can win may be just
a small fraction of the total responses. One may receive 100 leads,
but if only 20 are really relevant as prospects, that is what matters.
Of those, only a few may reach the "short list" stage, and even if the short
list involves only 5 locations, 80% of the time (4 out of 5 locations) will
be a disappointment. Some areas will do better than others at winning
once they are on the short list, which is really important as a higher
priority and measure of success than all the volume of "lead generation"
The market reach of the various magazines may also
overlap. Four magazines with a 40,000+ reach may actually be reaching
many of the same people - or different people at the same companies - more
than once. One isn't reaching 160,000+ companies or executives and,
even if one were, there may still only be around 2000 projects per year, and
just a fraction of those are going to be relevant to a given region, so that
"reach" is irrelevant. It is also the case that those 40,000
readers aren't all at 40,000 different companies, and there aren't 40,000
major projects per year. There are only a few thousand in the USA each
Even if they reach more than one person at a company,
there may really be just one key person who one needs to reach to win a
project at that company, and there is really no assurance that the
subscriber is that key person, or in a position to influence that person, even
if it was necessary to declare that to "qualify" for a free subscription.
In other words, the quality of the magazine "reach" is
very important. Is this a magazine that the top decision-maker will
actually (A) receive, (B) read, or at least browse through quickly, and (C)
regard as a useful resource when actively planning future projects? Is
the magazine website easy to use for quick research into the current
interests of the executive? Does it take more than 60 seconds, or a
lot of pages, to find what they are seeking? Similarly, is the
magazine designed to make it easy to find what really interests them, and
additional sources of information? If not, do the circulation
statistics really matter? Is one actually reaching the key executive,
attracting attention, and arousing interest?
Magazine reach is potentially useful, but just as one part
of a larger marketing strategy. Similarly, large trade shows and
association events may attract thousands of attendees, but even a prominent
exhibitor is unlikely to personally meet more than a few hundred over a few
days, and only a small fraction of those may be good "leads" or serious
It may still be worth doing, but the
point is that the cost per job created tends to be fairly high through such
channels, even if it seems justifiable by the value of the projects. One
generally has to do the same thing repeatedly for years before getting
noticed by many of the targeted attendees, because they are typically at
such events for other purposes - and it is therefore difficult to attract
their attention and arouse interest or be memorable.
As with advertising
campaigns, the nature of such event work therefore tends to be more of a
"brand" campaign to "show the flag" and let people in a target industry or
group know that the area is interested in their business, or already has a
relevant cluster of businesses in that market. The results in terms of
short-term lead generation activity, after one further qualifies the "leads"
from an event, may be small. In short, some events are like buying a
different type of lottery ticket for a different price. Being an
exhibitor is not a marketing strategy, just as buying an isolated ad or two
is not a marketing strategy. It is just one type of marketing activity
which can be effective - or not - as part of a marketing strategy.
Relating marketing costs to lead generation expectations and
summary, different parts of the marketing mix have different costs per real
The cost of magazine ads per job created can be very
misleading if one divides the campaign cost by all of the new jobs created
in a state - including the 80% which might happen from local business
retention and expansion projects without any ads at all. There is some
baseline level of inward investment in any area which might be attracted
with no advertising campaign at all. If advertising is relevant to the
marketing strategy of an area, then it is worth doing consistently and well,
rather than infrequently with false hopes.
The investment in advertising and other marketing work is
generally supposed to help attract major, multi-million dollar investment
commitments that would not
otherwise happen, so it needs to be measured against that expected change in
baseline performance rather than against everything that happens in a state.
In short, what would happen with no advertising or promotional events at
all? What will influence an executive? Is there an identifiable change in performance over time which
can be confidently attributed to such marketing investments?
Short-term reader responses are not a good metric for ad effectiveness.
Once again, good ad campaigns can be quite justifiable and
valuable, and may even turn up some good short-term prospects, but direct lead
generation is not their primary function. Magazine publishers are not
location advisors or site consultants despite various claims to the contrary.
They publish interesting articles and ads, and if they do it well, their
subscribers may actually look at such content and renew. They don't work as professional
advisors supporting the project plans of individual executives.
Top executives don't pick their locations for
multi-million dollar strategic investment commitments by filling in reader
response bingo cards or website forms, especially if confidentiality is
important. They turn to trusted, independent professional business
advisors - not articles by journalists or junior freelance writers without
much real project experience in this field who are just trying to fill space
in a magazine with something that may actually be of far more interest to
their advertisers than to their free subscribers. No matter how good
or interesting and genuinely helpful the articles may be, that still isn't
how executives make their choices for strategic investments. Over
time, favorable PR and advertising can be influential, but it's not a direct
lead generation process that is actively used by investors to make choices
at the time of their investment decision.
Good leads are found through personal contact with the
responsible executives. They are qualified for project potential by
listening and talking to them about their own needs and strategies. Ad responses may be an
easy way for a few readers to gather information and explore their interests, but when
top executives start
planning multi-million dollar investment commitments of strategic importance
to the success of their company (and their own careers),
magazine articles and ads are not what they rely upon to plan their projects.
Free magazines may "reach" them, but not as professional business
advisors, and it is sheer arrogance by some publishers in this niche to not
recognize that difference. Their publications may be influential over
time at shaping perceptions among readers, but they are not site selection
consultants or business advisors. They are publishers. Good
publishers focus on what they do well - to repeatedly reach and maintain the
interest of a specific target audience which PR content and advertising may
influence over time. Direct lead generation marketing work and site
selection consulting is not really their specialty.
Executives may browse niche magazines for general
background information, but they are unlikely to search through all the ads
and choose who to call, or ask the publisher about what they should do to
plan their own project. They may visit some of the websites which
already seem relevant to their interests, but at the end of the day the
whole process comes down to personal contact and whether an area or service
meets their current needs or not. Since their needs change over time,
a few small ads aren't likely to have much impact to get their attention and
arouse interest in an area which wasn't already of interest anyway.
If they were already interested in an area, they could easily find relevant
information within seconds with a Google or other search with no magazine
ads at all. Now, more than ever, the main function of good advertising
in this niche is developing a strong "location brand" so that, when the time
comes to do a location search, the area will be favorably perceived.
: A macro perspective on lead generation costs per job
A country like the UK with roughly 60 million people may report 60,000+ new
jobs per year, but perhaps only 6,000 of that really comes from inward
investment, with the rest coming from business retention and expansion,
including lots of small projects rather than major ones which are the main
focus of investment attraction marketing efforts.
Of that hypothetical 6,000, perhaps 2 - 3,000 might happen with no marketing
program at all at the national level, by just having a very responsive
network of regional and local agencies to help companies with their plans in
the UK, or because it is a fundamentally attractive place to do business
even if nobody is actively promoting it as such.
The hypothesis that a national marketing program is more effective than a
regional one is not clearly proven by UK results, so there is duplication of
effort from the local to regional and national levels. At the end of
the day, all investments are local. The competition between countries
for projects boils down to competition between specific local areas.
National investment promotion agencies can be helpful, but one should think
of this business as an inverted pyramid rather than a top-down hierarchy
from national to regional to local levels.
In other words, national and regional work supports the results achieved by
local leaders, as opposed to all the local levels supporting a pyramid of
regional and national organizations, because the business deals are done
locally with whatever regional or national help is applicable. As the
United States demonstrates, by having no national investment promotion
agency at all, it is wrong-headed to think that the national level is the
most important, even though national policies and actions matter because
they support the local business environment. National bureaucracies
tend to misperceive who is supporting whom, and whose performance is most
critical to the competition of one area against another, while also facing
the political problem of not wanting to be perceived as favoring one area
over others within the country. The same issue arises in states and
regions. The competition for investment is local, so it needs to be
driven by local leaders with higher-level support. Political leaders
can be influential in working out a winning deal (governors, etc.), but only
if the local situation clearly fits the needs of the business well.
That comes first.
The millions that the UK spends on field offices in the USA
and elsewhere in the world, along with a wide range of marketing investments
(ads, events, PR campaigns, networking, etc.), probably adds up easily to an
investment of thousands of
dollars per new job attracted through such efforts. It is not clear,
however, how much would happen without them. Once again, the United
States has no such investment promotion program at all, so the question is
how much investment into the UK is actually influenced by such promotional
That is in addition to the value of all the staff time,
travel, and support overheads at the UK national, regional, and local levels
(plus any direct incentives to the investors) to win the project after a
good lead is found. A lot of time and resources are wasted chasing
projects which predictably are not won, but which show that the various marketing staff
and other bureaucrats
are staying very busy. Many projects are actually found through
contacts at the regional or local level, rather than through national
marketing representatives, even though at some point the project plans may
involve the national officials for their support role in a deal.
In this context, the real total cost per job created (not
just lead generation marketing costs) can be
staggering relative to the annual salary of the new jobs created. It
may still be a good investment over time, because that is an investment up
front to win jobs and other social benefits - including tax flows - which
may endure for many years and grow to create even more value over time if the new companies
are successful. New jobs may also stimulate the creation of other jobs,
directly or indirectly, and
bring other social benefits.
From a net present value perspective, the benefits of
winning a project accrue over more than one year, so the total costs per job
created may be more justifiable than they appear at first glance. The
point, however, is that the total cost of investment attraction work can
easily add up to thousands of dollars per job as a social commitment at all
levels - national, regional and local - to
attract new business to an area. Few economic development
organizations measure and report lead generation costs and performance in a
reliable, consistent, and comparable way. There's a lot of fuzzy math
rather than hard data.
The cost of our services
Our response-oriented services to highlight the
benefits of an area range from $500 per year to $1000 per month.
This provides many ways for small communities to benefit from our work in
the same manner as the largest, while keeping the cost down by design.
We now attract website visits at a pace of more than 500,000 per year,
typically in response to their Google searches.
We can also do short term projects, such as to arrange and
report on site selection consultant familiarization visits to an area, or to
help with promotional work and the scheduling of introductory meetings at
events. This includes other services to help organize B2B networking
Our proactive targeted marketing services range from
$1000 to $10,000 per month, or more for custom projects according to the
time and resources required.
We can also do some
types of marketing work on a base plus success fee basis to reward
performance such as well-qualified introductory referrals, "inward visits",
and actual jobs created by projects. This ties our fees directly to
results. (Try getting an ad agency or PR firm to do that, or an
advertising channel such as a magazine, or even a good telemarketing firm or
event organizer to take the risk of working on that basis.) In
short, if we are not confident of our ability to deliver the results you
expect, we won't enter into such deals. We aren't in business to waste
Contact us directly
to discuss your marketing plans, and what we can do for you.
Our business plan and structure as we grow to scale
business plan is to develop independent working relationships with
networks of executives, professional advisors, and communities through
for project referrals.
The gist of the plan is to develop a team of professionals
who can provide well-qualified project referrals as an ongoing service for
our clients. The role of the team is basically to be readily available
and well-known to business leaders and professionals throughout their region
through personal contact, local networking activities, and targeted
marketing work within each region and industry of interest to those who
support our work.
For example, many areas and service providers are "targeting"
the same groups of companies, whether for the same or different services in
this niche market. Instead of pushing such areas or services directly
on an exclusive basis at high cost, our shared marketing role is more like a
concierge - finding out what the executives want, and then introducing the
relevant contacts. We can do exclusive market research and personal
contact work to arrange valuable introductions, but this generally takes
more time and resources to reliably achieve the desired results.
This business was developed by Bruce Donnelly (biographic
profile) after a decade of experience at regional investment promotion and the sale
of site selection consulting projects across North America for PricewaterhouseCoopers.
This is a unique marketplace for business location research
There is typically only one "insertion" in our direct-response work
to promote an area
through this website for a year, unlike monthly magazine
ads or multiple events each lasting a few days. Useful information
about an area is shared, and then simply updated as appropriate to keep it
timely. Unlike a piece of paper, it is easy to find at any time.
That typically involves work to highlight an area in many ways, on various
relevant pages, but we charge for the work involved to share content that
will help to attract attention and arouse interest, rather than according
to our market reach or the number of times that an ad image is displayed
on paper to
somebody or attracts a click-through on a website. This is not advertising.
Our work is more analogous to point-of-sale merchandising and personal
assistance to help buyers find what they are seeking in a convenient
Our focus is to share useful local market knowledge and contacts in a
globally consistent way so that it is easy for executives and advisors to
find what they are seeking, and quickly recognize whether an unfamiliar
business location or service may be relevant to their project plans.
It takes only a few days of work together to share better information
about an area, and we don't have the high costs to produce and distribute
a glossy magazine. We can focus our work on getting to know your
area better, and then openly share that knowledge all year, and update it
as appropriate. We don't just
print an ad once, and then charge to include it again and again.
If you just want to share your display ads for a year through our website,
there are very inexpensive options to do that, because it is easy to do
within hours. We don't charge thousands of dollars for that, and one
benefit of our Ad Recall feature is that your ads can then be found by their text content through
search engines at any time, and by thumbnail images in our relevant
We share useful content to help executives and advisors
discover why an area or service may be relevant to their interests.
They can easily visit your website for details or contact you directly.
We just need to periodically update or improve that content as
appropriate, including our analysis of what seems to be working or not to
attract the attention of visitors, arouse interest, and develop
well-qualified referrals or direct-response contact.
The result is that, as shown above, our
response-oriented lead generation work usually costs less per year than a
single magazine ad insert in one publication. For anything larger
than that, our focus shifts to proactive, personal contact work among top
executives to identify and develop relevant working relationships for
major capital investment projects.
have been designed to drive down the cost per new job created in this
market. Our analysis suggests that, even if they don't measure and
report it this way, the cost of lead generation for many areas is actually
several thousand dollars per new job created, and even some of the most
successful area would work out to more than $500. Our goal is for
our proactive marketing work (direct personal contact with relevant
executives) to deliver results at less than $500 per job created, and for
our response-oriented website work to drive those costs down to well below
$100 per new job created.
is on project referral work, not producing a magazine
magazines, our focus is on direct contact with executives about their
future project plans and support needs, and on the capabilities of
professional service providers and local communities to meet those needs.
This is a professional service to help executives find what they are
seeking. We are not a publisher distributing a magazine full of
articles to a base of free subscribers.
Similarly, events such as trade shows, professional
associations, and other networking or promotional events have value as
part of the total marketing mix. We can do things to be supportive of
event marketing work even though we do not compete with such services.
Our response-oriented work is inexpensive because it
doesn't require a lot of time and resources. We already built up the
websites through a major research and development investment up front to support
global referral work, and continuously improve them. Our
proactive work is more expensive because of the time it takes to
personally identify and reach top executives about their project
interests, which may turn out to not involve any serious interest in a
particular business location or service no matter how well researched and
"targeted" that personal contact work may be.
As indicated above, an area can easily spend $10,000 -
$50,000 on a relatively small ad campaign or event work such as trade
shows and association meetings with little assurance that anything of
value will come out of it. Once again, the real total cost of ads
and events adds up quickly, and the full value of internal staff time is
Large ad campaigns or PR initiatives in this niche market
can easily exceed $100,000 or $250,000, and some are vastly higher even
though the target market is relatively small - such as the example of 2000
major projects per year in the US market, for which any given area will
just be competing for a small share of them, such as less than 100 which
are "mobile" and very relevant to their region.
In other words, if one spends $250,000 or more on a mix of
advertising, events, PR work, direct mail, promotional publications,
website improvements, and other marketing initiatives, that is all still
targeting the same relevant share of those 2000 or so projects, such as
perhaps 100 or less, and one won't win far more of the viable prospects by
simply spending much more on an ad campaign. At some point, more ads
deliver little added value.
As a niche market with a limited number of projects per
year, one hits a point of diminishing returns at some level. A
critical factor is to consistently win more of what one finds, especially
because such success may then get noticed and help to attract more
interest among more investors.
Companies are not going to do more capital investment
projects because development agencies do more advertising. It is not
a consumer market in which one can stimulate additional demand. This
is a market in which states and local areas are competing for a larger
than usual share of whatever volume of projects the national economy makes
justifiable for growing companies each year.
The macro perspective on
lead generation costs per job
If it costs $250,000 per year to win 500 more new jobs than
are reliably achieved otherwise, then that is a cost of $500 per new job
created, which is easily justifiable by the high value of such jobs to the
community over time. On the other hand, if that $250,000 produces
only 100 extra jobs, then the $2500 / job cost of lead generation
marketing activities (aside from all the other costs to win such projects)
is much higher, but perhaps still quite justifiable given the long-term
After all, how much are 100 good new jobs worth to a
community over time? It is, in effect, an investment up front to
achieve that desired outcome over time, so a net present value analysis of
the local value of projects over a period such as 10 years can provide a
useful perspective. Even the cost of doing nothing (such as having
100 people needlessly unemployed) may be a factor.
That is really a choice for each state and community to
make, but the obvious point is that states are actually investing millions
of dollars per year when you add up the state, regional, city, county, and
local organizations. Their combined spending on advertising and
events in this market easily exceeds $20 million per year, plus the value
of the time, travel, and resources of literally thousands of economic
development professionals who invest part of their time on lead generation
work as a very difficult and frustrating "needle in a haystack" marketing
challenge for any single location.
There is also the value of internal work. If 1000
economic development professionals spend only 50 of their work days per
year (roughly 20% of their time) on lead generation work, with the rest of
their time devoted to other priorities, that adds up to 50,000 days of
work, or roughly 200 man-years.
In reality, there are probably far more professionals
spending even more time than this on lead generation activities, so that
should be an extremely conservative estimate. To illustrate, if 500
representatives spend 3 days at an event such as CoreNet Global summits
twice per year, plus 3 days on preparatory and follow-up work, that's
already 6000 man-days or 24 man-years. Add to that all the time
spent attending or exhibiting at trade shows or organizing and attending
events. It is not difficult to conclude that, in total, well over
200 man years are spent on lead generation work.
If the total cost per person for the people who are doing
such work is only $150,000 on average (salary plus all office overheads,
travel, taxes, benefits, promotional materials to support lead generation,
administrative staff support, etc.), those 200+ man-years add up to $30+
million more - beyond the $20+ million spent on advertising and events
each year. In reality, hundreds of man years of work are probably
invested in such lead generation activities.
From a simple macro perspective, that means the states
which actively pursue major projects are probably spending well over $1
million per year on average just for their marketing lead generation costs
- before considering the higher cost of everything else which they must do
to win what they are finding, plus business retention and expansion work
or other local services they provide. Note that this lead generation
cost also excludes all the time and money that areas spend to develop
their targeted marketing strategies and things such as websites and
promotional materials. This analysis just focuses on the direct
costs of work to develop well-qualified project leads for an area.
If they are all competing for a pool of perhaps 2000 major
"mobile" projects per year which create an average of 75+ jobs, then that
works out to $50+ million being spent to develop leads for 150,000 jobs,
or roughly $330+ per job created just for lead generation activities.
In reality, each state may only be competing actively for 100 or so of
those projects, so the value of a lead for a good prospect which they
wouldn't otherwise find at an early stage of planning can be much higher.
If there are more projects and jobs, then the average cost
per job may be even lower. If the $50 million can be driven down by
millions of dollars and achieve largely the same outcome, however, then
the lead generation cost per job created should go down significantly.
professional service provider side of this market
The analysis here focuses on marketing investments in lead
generation work among economic development organizations.
It is worth noting that site selection consultants
rarely invest in advertising, trade shows, or other types of event
marketing work other than perhaps to attend for networking purposes or to
appear as speakers, preferably with their expenses paid. It's
interesting that so many areas "target" the site consultants as a source
of referrals when few consultants can afford to do much marketing work, or
serve more than a few client projects per year. They work on some
very good projects, but they probably get more leads from their contacts
among development agencies than vice versa.
Some of the other service providers, such as CRE brokers
and engineering / construction firms, do invest in advertising and events.
They are generally far larger in scale, and can therefore afford to make
such marketing investments, often including support of local development
agencies as a potential source of valuable leads.
Most site selection consulting practices are small, have
very limited resources (even if they are a part of much larger firms), and
handle few projects per year at a relatively low fee level. They
can't really afford to spend much on lead generation work other than the
value of their own time as they network among past clients and anyone they
know who might have useful contacts. That is usually sufficient to
find enough work to sustain but not significantly grow their staff.
In a recession, there is typically high turnover as staff cuts are made
quickly for lack of projects. In a recovery, there is a lag to hire
and develop enough trained professionals, so there may be significantly
more potential demand than they can reach. They soon become too busy
to look for many new clients.
In any case, the point is that development agencies are
not the only organizations which are motivated to reach executives at an
early stage of capital investment project plans. Brokers,
architects, engineers, construction firms, law firms, banks, tax advisors,
HR service providers, and other professionals are all motivated to some
degree to seek new clients as companies grow. Unlike site selection
consultants, they may derive higher value through larger services and
ongoing working relationships. That's why they invest more in
marketing than site selection consultants, and serve far more projects per
year through larger networks of existing business relationships.
If one analyzes how much these organizations spend on
lead generation marketing activities related to this niche market, the
simple point is that together they probably spend far more than all the
development agencies put together, in part because of the very high value
of the time of the top professionals who lead their marketing work.
Even if they spend little on advertising or events, as in the case of the
site selection consultants, their cost to develop well-qualified prospects
for new client relationships is very high, but the potential value of such
relationships is also very high.
In effect, that high cost of sales gets passed on to
their clients through the fee levels they charge for their services.
Site selection consultants are at a disadvantage in that regard, because
their work is mainly for one project at a time and only lasts for a few
months, as opposed to services which involve an ongoing working
relationship with a new client of high value for many years. The
present value of finding a new site selection consulting client is
typically very limited.
As a simple example, one need only compare the fee value
to a CRE brokerage firm of closing a deal on the sale of a 100,000 sq ft
building, or the value to an engineering and construction firm to design
and build such a facility, to the fees earned by a site selection
consultant. If there is any doubt about this, think about how many
site selection consultants there are in North America, and compare that to
the number of CRE brokers. Site selection consulting work just
reaches a very small (but valuable) share of the total market as companies
expand or relocate their operations. Brokers, for example, may earn
a lot from local lease renewals involving no space changes at all.
This business was designed to support the lead
generation interests of both economic development organizations and
professional service providers by creating an independent process to find
the executives who would welcome help with their project plans, and
provide well-qualified referrals. That can drive down the high cost
of lead generation work for both groups and be more responsive to the
needs of executives as a more efficient distribution channel for such
This cost-benefit analysis
guides our business plan and client work
In short, it should not take 200+ man years of work by
1000+ economic development professionals at an estimated cost of $30+
million, plus $20+ million in advertising and event work, to find 2000
projects per year and refer them to the relevant contacts.
Our estimate is that 20 - 40 top professionals in key
cities and industry sectors should be able to consistently find and refer
a very high percentage of all the "mobile" projects per year at an early
stage of planning. The gist of our business plan is to build up such
a professional team with very strong networks of contacts and personal
relationships as trusted advisors to many executives, and drive down the
lead generation marketing costs for participating areas over time.
That's why our goal to drive the cost per well qualified
lead down to less than $100 per job, starting with a goal of $500 that
should already be far below the total costs for most areas, and why many
of our services to small areas are designed to cost only $1000 - $5000 per
year in recognition of their greater challenge at finding well-qualified
We will, in short, focus on doing larger work for those
areas where the expected results readily justify it. Small areas may
attract new projects infrequently, so they should spend less on proactive
lead generation work but still be just as fast and easy to find - whenever
they are relevant to the needs of an investor - as the largest areas which
spend a lot on advertising, events, and other marketing activities every
year. The larger areas may spend more to achieve more, but areas of
all sizes should benefit. The lead generation cost per job created
should be justifiable for their own situation, as it is obviously much
harder to find good prospects for some areas than others.
Our analysis suggests that many areas spend very little at
all on lead generation work other than the hidden (and high) cost of the
staff time they spend on it. They expect dismal results from the
high costs of advertising or event work. Even if they are just
sending out some direct mail or e-mail newsletters to targeted databases,
or attending networking events and meetings with consultants, or making
phone calls to try to arrange introductory meetings with targeted
executives, that work all takes time and money. It is a common
mistake to not measure the value of their own time and all the related
overheads and expenses which may be buried in separate line items in the
We identified more than 1000 US development agencies which
have invested in advertising and events in the last few years, and we
estimated the value of all such spending (total ad pages, exhibits,
sponsorships, etc.). We are also the recipient each month of a huge
number of promotional mailings and e-mails.
Our analysis therefore reflects far more research work over
recent years than is shared here.
Bottom line : How do your own marketing cost per job
The point is that those areas which proactively seek
projects are, as best we can estimate through both macro analysis as well
as reported budget and performance analysis for a variety of areas,
spending far more than $500 per job created today. Some areas are
investing thousands per job. It is even higher if one looks at how
many projects were actually identified through lead generation activities
(as would be the case to be comparable to our work seeking what isn't
Reliable data rather than anecdotal evidence is very hard
to find. A cynic might infer that such performance data is not
shared because it would be easy to criticize, or deemed unjustifiable.
Our perception is that non-profits rarely measure marketing performance as
reliably as profit-motivated businesses. The value of lead
generation work is hard to measure, easily misperceived, and not a popular
metric to discuss openly, particularly because this is a long-term market
involving major investment cycles so that lead generation performance is
hard to manage for consistent results.
In some areas the total lead generation cost easily adds up
to thousands of dollars per job, which may still be quite justifiable if
the local need is great and the resources are available. In summary,
the averages reflect many places spending little beyond internal work,
while a small number of places spend a lot of money even if they may not
achieve proportionately above average results.
In some areas the cost appears at first glance to be lower,
because the number of jobs is inflated by adding expansion projects rather
than those which needed to be found through lead generation marketing
work, and by neglecting to include many of the internal costs related to
lead generation work. The analysis can also be distorted because
multiple organizations are involved, so that the real cost per job created
needs to reflect their total rather than separate lead generation costs.
In conclusion, this research was an initial attempt to
quantify the value of lead generation work per job created through
proactive economic development marketing initiatives, and we welcome
comments and suggestions according to the experiences of specific states
and local areas.
Our best estimate is that US development agencies are
spending well over $50 million per year on lead generation marketing
activities which could be outperformed for $10 million or less by working
together, with a large part of the cost covered by the value of this to
professional service providers. That is the basic premise of our
work - to drive down lead generation costs, such as from an average level
estimated at well over $500 per job (and many times more than that in some
areas) to $100 per job or less. What is really critical for areas is
to compete for relevant projects once they are identified, preferably at
an early stage of planning, rather than to duplicate lead generation
marketing efforts and expenditures. Our work can free valuable time
to focus on that priority.