Guerrilla Marketing Cost Breakdown - Money Versus Effort

What is worth more: your money, or your time?

This is the trade-off involved in guerilla marketing. You don't need a lot of money, but if you don't invest your time, your efforts will not pay off. The principles behind guerilla marketing (listed in the beginning of this chapter) require planning, groundwork, and effort.

How can you tell whether it's worth the trade-off?

Here is a brief, hypothetical example.

One popular marketing method is to send out e-mail announcements in the form of a regular weekly or monthly newsletter. You could build a mailing list and create your own newsletter (the guerrilla method) or you could buy advertising space in another business's newsletter (the traditional method).

If you choose to advertise in another newsletter:

• You will spend somewhere between $100 and $1000 for premium space in a widely read newsletter ) with a big subscriber list. You may end up spending more for consecutive ads, since consumers typically need to see your message 3 to 7 times before they'll buy.
• You will spend a few to several hours researching e-zines, writing your advertisements or article, and contacting the e-zine owners in order to schedule your ad's appearances.
• You will typically see a conversion rate (number of people who read your advertisement compared to number of people who become your customers) of 2 to 5 percent - slightly higher than the conversion rate of a direct mail campaign. This rate typically goes up a few percentages with subsequent advertisements, depending on the effectiveness of your copy (the wording of your message).

If you create your own newsletter or e-zine:

• You will spend $0 to $100 (you may decide to invest in desktop publishing software, list management software or services, or an upgraded Internet service provider plan to handle additional web traffic).
• You will spend several hours to several months building your opt-in subscription base, through methods like sign-up boxes, refer-a-friend programs, e-zine directory listings, and word of mouth.
• You will realize the typical conversion rate at first (2 to 5 percent) - but you will never have to spend another penny for advertising, because you own the newsletter or e-zine. Your subscription base will continue to grow, and your sales resulting from your newsletter will increase exponentially, rather than in the measured bursts you can expect from the "traditional" method.

One thing to be wary of when you're building an e-zine subscription base is buying bulk lists and using "free traffic" programs to bulk up your subscribers. Though this will give you some impressive numbers, the majority of these will either delete your e-mails unread, or unsubscribe as soon as they've met the requirements of whatever benefit they signed up for. The best results will come from a carefully targeted subscriber list that you have built yourself.

Determining your money-versus-time factor
How can you figure out whether the time you'll invest in a given guerilla marketing campaign is worth the trade-off in advertising dollars -- assuming, of course, that you have a substantial advertising budget to begin with? (If you don't, no worries; you don't need one!)

You can get a rough estimate of your results by performing the following steps:

1. Determine a traditional advertising venue that most closely relates to your intended guerilla marketing effort.

2. Estimate the total monetary cost of each method.

3. Estimate the total time investment involved with each method.

4. Assign a reasonable dollar value to each hour of your time you would invest ($15 an hour is a good average).

5. Add monetary costs and per-hour time costs to each method, arriving at two separate totals.

6. Calculate a projected profit resulting from each of the methods (don't forget to factor in the "snowball" effect gained from guerilla marketing through repeat business and customer referrals - most traditional advertising venues are one-shot deals).

7. Subtract total cost from total profit.

This will give you a general idea. Usually, the guerilla marketing campaign will end up looking like a much better deal.