Are You Putting Your Marketing Dollars In The Right Places?

When I think about all of the avenues of advertising a business has to choose from, two quotes come to mind.

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” – John Wanamaker

“A man who stops advertising to save money, is like a man who stops a clock to save time…” – Henry Ford


It can be a hard decision when you’re running on a tight budget to decide how to get the word out about your tax business. One the one hand, you don’t want to invest in channels you are unsure of, and on the other, you need to invest in some form of advertising.

With so many choices out there between mass media options, mailers, social media, and digital advertising, where do you invest your money?

Here are some stats to consider 

Roughly 50% of all taxpayers use a tax professional and, theoretically, 50% prepare their own returns.  In reality, a significant number of self-preparers get free help from friends or relatives who buy TurboTax-type software that permits them to prepare 5-6 returns if desired.  

Self-preparers must have a compelling reason to pay a tax professional a large fee, and only a very small percentage will do so.

Customers of paid preparers also must have a compelling reason to switch to a different paid preparer, such as receiving a letter from IRS and not being able to get help from their preparer. In that case, consider the fact that the IRS may only audit as little as 1% of all taxpayers.  Other reasons may be that the fee for tax preparation was too high, the experience was not professional or friendly, an error may have been made, or the taxpayer may have moved and left their preparer behind. The challenge is to identify these unsatisfied taxpayers. 

My educated guess (based on my years of experience) is that only about 10% of all taxpayers will consider hiring a new or different tax preparer each year.  Therefore, paying for ads directed to the general population using some form of mass media, 90% of the people seeing or hearing that ad have no interest in the services being advertised.  

So the advertiser is paying a very big premium to reach the 10% who may possibly be interested. 

Consider a more targeted option

A much better tactic would be targeted advertising such as paid search where you only pay for the people who may be interested.  Even though the cost per impression for targeted ads is much higher than mass media, it may actually be much less expensive to reach those who are interested because you can laser target specific audiences more so than with mass media options. 

The same is true for social media. Facebook, Twitter, LinkedIn, and Instagram ads are all channels that allow you to target down to a user’s interests, demographics, and more. These channels are great for tackling specific segments.

We say, step into the 21st century and give these options a try. Not only do they give you the ability to create super targeted ads, the metrics behind impressions and clicks won’t leave you guessing on the number of people you reached or how affective your ad was.

Will you be using targeted advertising this tax season? Leave a comment.