Nonprofit Nation with Julia Campbell

How Much Should Nonprofits Spend On Advertising? with Samin Pogoff

March 02, 2022 Julia Campbell Season 1 Episode 27
Nonprofit Nation with Julia Campbell
How Much Should Nonprofits Spend On Advertising? with Samin Pogoff
Show Notes Transcript

The answer is... 42. (Listen to find out what that means, and thanks for all the fish.)

In all seriousness, the question is not should our nonprofit have a budget for advertising. In 2022, the more important question is - just how much should we spend, and how do we determine this?  Which channels are most effective for nonprofits? These questions are especially important as social platforms like Facebook/Instagram/LinkedIn continue to reduce organic reach across the board. 

Samin Pogoff is here to help. A creative storyteller at heart and a data analyst by training, Samin helps mission-oriented businesses and organizations increase their impact through data-driven strategy. Since starting at Whole Whale, she has helped clients like NYC Health and Hospitals, MediaJustice, Scratch Foundation, Mid-America Transplant, Compassion and Choices, Counseling in Schools, and Lung Cancer Foundation of America develop insight from their data and improve their digital strategy. Before joining the nonprofit digital marketing agency Whole Whale, Samin worked as a documentary film editor and producer with works screening at The Tribeca Film Festival and on HBO, VICE News Tonight, BBC World Services, and The History Channel. 

Here are some of the topics we discussed: 

  • Insights from the recent Nonprofit Advertising Benchmark Study
  • What nonprofits get wrong when thinking about and budgeting for advertising
  • How to create a budget for advertising that won't break the bank but will help you get results 

Connect with Samin:
https://www.linkedin.com/in/samin-pogoff/
https://www.wholewhale.com/
Nonprofit Advertising Benchmark Study 

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About Julia Campbell, the host of the Nonprofit Nation podcast:

Named as a top thought leader by Forbes and BizTech Magazine, Julia Campbell (she/hers) is an author, coach, and speaker on a mission to make the digital world a better place.

She wrote her book, Storytelling in the Digital Age: A Guide for Nonprofits, as a roadmap for social change agents who want to build movements using engaging digital storytelling techniques. Her second book, How to Build and Mobilize a Social Media Community for Your Nonprofit, was published in 2020 as a call-to-arms for mission-driven organizations to use the power of social media to build movements. 

Julia’s online courses, webinars, and talks have helped hundreds of nonprofits make the shift to digital thinking and raise more money online. 

Julia's happy clients include Mastercard, GoFundMe, Facebook, Meals on Wheels America, the Make-A-Wish Foundation, and the Boys & Girls Clubs of America. 

Julia Campbell:

Hello, and welcome to nonprofit Nation. I'm your host, Julia Campbell. And I'm going to sit down with nonprofit industry experts, fundraisers, marketers, and everyone in between to get real and discuss what it takes to build that movement that you've been dreaming of. I created the nonprofit nation podcast to share practical wisdom and strategies to help you confidently Find Your Voice. Definitively grow your audience and effectively build your movement. If you're a nonprofit newbie, or an experienced professional, who's looking to get more visibility, reach more people and create even more impact, then you're in the right place. Let's get started. Alright, hello, everyone. Welcome back to nonprofit nation. This is your host, Julia Campbell. And today I am here with some mean poke off of Holwell. Sameen is a creative storyteller at heart and a data analyst by training. She helps mission oriented businesses and organizations increase their impact through data driven strategy. And since starting at Holwell, she's helped clients like NYC Health and Hospitals, media justice, scratch Foundation, Mid America transplant Compassion and Choices, counseling in schools, and the Lung Cancer Foundation of America develop insight from their data and improve their digital strategy. And I think this is so interesting, because before joining Whole Whale, Simeon worked as a documentary film editor, and a producer, with works screening at the Tribeca Film Festival, and on HBO, Vice News Tonight, BBC World services and the history channel that is really, really cool. So you're definitely a storyteller at heart. Welcome to nonprofit nation.

Samin Pogoff:

Thank you. I'm very excited to be here. And thank you for having me. Yeah,

Julia Campbell:

so we'll definitely I want to talk about the documentaries. But I know you are a senior strategist at Holwell. So tell me a little bit about what you do, how you got started, and the work you do to help nonprofits?

Samin Pogoff:

Absolutely. Well, Holwell is a B Corp digital agency that leverages data and tech to increase the impact of social impact organizations and for good companies. We provide analytics, content, marketing, advertising services, as well as fundraising email, and a whole bunch of other marketing services. And what I do here is, as you said, I'm a senior strategist, I work with our wonderful clients to help them really get familiar and comfortable with data, define their goals, define what are the metrics that really matter to them, that they should track. And that could include, you know, working on the reporting, and drawing strategies from their data. So that's what I do here. And I very much like it over here, because mostly, our clients are really doing amazing work in the world.

Julia Campbell:

I think it's fantastic. I'm just such a fan of Holwell, I still use the Google Analytics dashboard. Oh, that's created. So I do I still use it. And I recommend it to all my clients. I know there's a lot of resources, and we'll talk about them in a little bit. But today, I want to talk about the recently released nonprofit advertising benchmark study. Because I definitely think that spending money investing in advertising is something that maybe is a little foreign, to nonprofits, especially smaller organizations, they don't know how to go about it. So I'm interested to know more about sort of the reasoning behind conducting this study and how you went about it.

Samin Pogoff:

I mean, it's exactly what you mentioned that a lot of organizations, when they start thinking about advertising and their advertising budget, don't know where to start, they get overwhelmed. And our goal in the study is to give a better answer to some of their typical questions about their advertising budget, like whether they should spend at all or not, or how much they should spend. And the goal here is to really go beyond the cliche answer that it depends. go a bit deeper than that. So what we did is that we partnered with cause IQ that I'm sure a lot of your listeners are familiar with the leading nonprofit data platform. And we conducted this research on data from over 7000 us nonprofits 501 C, three organizations to be specific. And we looked at a group of nonprofits that fit the revenue criteria have between 1 million to 10 million. The data that we looked at was from their form 990s from 2018 2019. filed in 2020. Because, as we know, 2020 was anything by the typical here. And we wanted to create a large enough sample size to answer questions about advertising size for nonprofits that rely on common funding methods. So this study represents a full population of nonprofits that fit the criteria that I just mentioned, we did remove some organizations like chapter organizations, childcare, educational institutions, hospitals and organizations with no employees, because those often have different revenue generating and operate operating structures. That's fantastic.

Julia Campbell:

What I found interesting, while also what I loved about the answer to the question, should organizations invest in advertising was the answer 42? Because if you're a nerd, you know what that means. That Hitchhiker's Guide to the Galaxy, right?

Samin Pogoff:

Yes. And that is basically the answer to everything in the universe is number 42. Because exactly,

Julia Campbell:

I love that. I thought that was hilarious. And I have a question for you. Should organizations invest in advertising? What do you say to nonprofits that, that come to you and ask that question? And I get asked that question a lot.

Samin Pogoff:

Yeah. And we do as well. And that's basically why we did this study. So when organizations are trying to figure out the answer, whether they should spend money on advertising or not, they often want to know whether other organizations that are like them in terms of the size in terms of the mission spend online, right? So that's exactly what we looked at to see among the 7107 organization, what percentage of them do or do not spend? And the answer is that 60% have recorded advertising as an expense in the form 990s. And most of the organizations in that revenue rent do have an advertising expense, and this number is growing. So if you at the very least want to start from a place of being, you know, competing with other organizations, or matching the behavior of other organizations, similar to yours, that is a good place to start.

Julia Campbell:

Exactly. And when we talk about advertising, what specifically do we do we mean, what it was covered in the benchmark study, this advertising,

Samin Pogoff:

the budget line in form 990, doesn't specify what form of advertising but in our, you know, interactions with our clients, we can really say that this breaks over all advertising channels, from social media, obviously, to Google ads to email marketing, all of that could fall under this category. And organizations can And I will share more insight on where this money could potentially go. But organizations can really think about their strategies and like, think about the breakdown of this budget, based on their own data, which is my favorite thing to do.

Julia Campbell:

Mm hmm. I love that it's very based on data. And I know that a lot of my clients, they have this question as well, what to other organizations do what do other nonprofits in my same cause area do in my same budget area? How much are they spending? How much are they posting? How much are they investing? So I think the second question is, how much should nonprofits spend on advertising?

Samin Pogoff:

So in terms of how much they should spend one way to approach the answer is, of course, to start with a sample budget that matches the current mean spend of other organizations that somewhat match yours. And what we found in this study is that there is actually a simple ratio of ad spend to revenue that can determine the size of the spend. When you look at the ad spend of organizations that did record money being spent on advertising, you see that the median, or the midpoint of advertising spent is actually around $12,000, or $1,000 per month, and the ratio of average ad spend to average revenue is at about 1.4%. The ratio of median ad spend to median revenue is point 5%. Now, before we get lost in all these numbers that I'm throwing at you, I think as a rule of thumb, it is better to look at the simple ratio of median ad spend to median revenue, because if we have time, I will explain the distribution of the spent is not normal is kind of follows more than 8020 rule, which means there are a few large players in each field that spend much more significantly more than other organizations. So median is a better representative of that. So that is a good benchmark to start with just looking at that median spend, and compared to the median revenue and see

Julia Campbell:

where you fall. Okay. And for a nonprofit that might be looking at the study They're convinced maybe they want to invest a little bit. Could you talk about which channels nonprofits are investing in? And maybe, maybe with your clients? Or maybe in terms of the benchmark study? Which channels and platforms and methods tend to be the most effective?

Samin Pogoff:

Yeah, that's a very good question and really comes down to each organization. But the trend that we're seeing is that organic reach on social media is declining. And that is intentional, because social media platforms are primarily positioning themselves as advertising platforms. Right, exactly.

Julia Campbell:

It's very frustrating. But yes, it is what it is.

Samin Pogoff:

Yeah. So paid social advertising is something that we are seeing that has kind of an upward trend. The other thing that we love over here is the Google Ad grant that I'm sure a lot of your listeners are familiar with. But that is basically $10,000 of grant money Google gives to nonprofits that are eligible, that can get nonprofits at least started with expanding their reach. And then of course, there's email marketing, that is a permission, marketing, it's much more valuable when it comes to sustaining your long term relationships with your donor base, for example. And we see much higher conversion rates there as well.

Julia Campbell:

So just basically, because I'm more interested, I'm very interested in social media. That's what I do. That's what I teach. Our nonprofits trending away from Facebook and Instagram ads and into maybe LinkedIn or YouTube or Google or are they mostly staying focused on kind of the big major players,

Samin Pogoff:

nonprofits, like any other organizations on social media, mostly social media that is owned by Facebook, are moving away from organic, because like I said, the reach is quite limited. And then really, depending on what it is that they're trying to achieve a yes, often we see some move towards LinkedIn, because LinkedIn might give you, you know, capabilities to reach really specific targeted, if your services, for example, are in b2b. So it gives you a little bit of more freedom there. And email, email is getting big, especially with some of the privacy changes. Email is definitely one of the more reliable channels, they you certainly can reach a higher potential audience and clientele.

Julia Campbell:

Do you see the changes in the recent iOS updates and privacy protections and data privacy trends? Do you see that affecting the efficacy of advertising in the future?

Samin Pogoff:

Yeah, absolutely. And agencies like us have to, you know, kind of be very agile reacting to those changes constantly. And that is why always having some backup strategies like email, or Google ads and stuff like that, and breaking your budget into multiple channels and not putting all your eggs in one basket, or some of the strategies that you can kind of find a workaround there.

Julia Campbell:

Absolutely. I always teach that do not put all your eggs in any basket, especially like you just said, the organic reach basket, because you can't control what the algorithm does. You can't control what social media sites are going to do on and you also can't really control what Gmail does, and Outlook does and email clients do. But you have a little bit more control over that kind of thing than you do the social media platforms. So something I found interesting, one of the findings I really found interesting was that the benchmark report found that arts organizations lead the pack in advertising. And the lowest spenders, not necessarily surprisingly, are grantmakers, and giving services. So could you maybe talk about that talk about some of the more interesting findings in this report?

Samin Pogoff:

Yeah, that is definitely very, very interesting. So we looked at these two codes, that one is like in a ICS code, the other one and Te codes. But without getting too technical. Basically, they put organizations in larger categories based on their cause vertical, right. And what we found out is that when you look at these buckets, you see that performing art companies that include theater, dance musical groups have a median spend of over $53,000. And a second group in terms of the median spend is the promoters of performing arts and sports and seminar events with a median spend of over $49,000. This is quite interesting. When you look at the likelihood of these organizations spending money in advertising, you see that over 90% of them, allocate dollars to advertising. And what this could mean for your listeners is that if you rely on audience or promote organizations that rely on an audience of back in pre COVID times live audience and now live an audience, you may need to allocate for a higher than average advertising spend. And this becomes more pronounced when you look at the lower spend category, which, as you mentioned, is the ground Making and Giving services category. And the median ad spend is actually zero. And they percentage of organizations in this category that allocated money to advertising is much smaller. 75% of these organizations did allocate money to advertising much, much smaller than some other categories, like we just saw. And these organizations are more education and advocacy focused. And then most of the nonprofits in other cause categories that we looked at, and they have a higher median event fundraising spends their median event fundraising spend is about 127%, higher than the overall median, which we could explain by saying Bratton, grant making organizations typically appeal to a, you know, higher range of donors, well, advertising might be useful for educating and advocating to the public, it's not always a useful strategy for your major donors. And then, if you are, you know, reaching into your major donors, you might want to think about one to one fundraising appeals or event fundraising, like I mentioned, in general, to get you further with your money.

Julia Campbell:

So are most organizations using advertising for lead generation and donor acquisition?

Samin Pogoff:

That is not something I can tell you based on the data that we looked at. But it is true, based on what we've seen anecdotally, with our clients. That is true.

Julia Campbell:

Yeah, that's what I see as well. So I think that's interesting about arts organizations. What trends have you seen in terms of political advocacy organizations? I know that has been a huge challenge. For some of my clients, some of my core students getting flagged for political or cause related content on Facebook and Instagram. Do you feel like that number has gone up or gone down? And and what are some of the trends around political advocacy?

Samin Pogoff:

To be perfectly honest with you? I do not have the answer to that. But I have seen examples of our clients, dealing with challenges around things that could very easily get tagged as political, even when it comes to let's say, COVID vaccinations of like that, which when you think about it is really crazy. But yes, it is something that we have seen examples of it, I actually don't have the data on it.

Julia Campbell:

I think it's just interesting that it does seem to be something that a lot of organizations are struggling with, because I even had a Historical Preservation Society be flagged as a political organization. So it seems like almost everything is getting flagged these days. So how do you recommend that? Nonprofits just maybe just starting out or reading this report? How can they use these benchmarks to start creating their own advertising strategy? I

Samin Pogoff:

would say start somewhere, don't be afraid, start somewhere start by, again, looking at that medium span. And there are multiple ways of looking at this data. For example, we looked at size of the organizations, we looked at the age of organizations. And you might be surprised that actually one of the biggest factors in determining whether organizations end up spending money on advertising or not, is the year that they were established.

Julia Campbell:

I thought that was so interesting,

Samin Pogoff:

isn't it. And one reason could be that, even though they have reported having less revenue, on average, these newer organization might be more tech savvy and generally more comfortable with leveraging advertising. So we could draw the conclusion that this is the trend this is that is that is going to continue to grow. And, again, to go back to your original question about how organizations should approach it. Well, the study itself is available on our website, that I really invite your listeners to go check it out. It's on wholesale.com/advertising. And then there's an a dashboard attached to it, where you can really go and customize the data that you're looking at and draw conclusions from there, based on the criteria that matters to you the most, whether it's the cause vertical that you're looking at, it might be different for, you know, a health organization versus an educational organization, a social advocacy organization, and then you can segment the data by the size Unlike number of employees the size of its revenue, and really, you know, dig deeper into this data to really find comparable organizations and see where they are and benchmark your budget there. And then keep tracking, because a lot of times, I feel like organizations, you know, kind of earmark some budget, and they're like, Well, we're good, we have this money, we have money in advertising, but they don't really track how these campaigns are working for them, right. So really staying on top of your data, really making sure that you're tracking everything and then continuing continuously optimizing, it will get you much further with the same amount of money. So just start somewhere, don't be afraid.

Julia Campbell:

What are some of the metrics that nonprofits should be looking for when they're tracking their data?

Samin Pogoff:

That is a fantastic question. So when you're looking at metrics in the for profit section is much easier, right? You want to basically increase revenue, increase profit. But when you're looking at nonprofits, it becomes much trickier. Because it's really hard to translate the metric that matters to one organization to another one, some organizations might be in the educational and advocacy space, those organizations might want to keep an eye on their reach, and how their users, for example, are engaging with their resources, and stuff like that. Whereas some other organizations that might have donation goals, might want to look into their revenue, because at the end of the day, that might be what you want to report back to your board. So really, customizing those metrics is important for nonprofits, particularly because there are industry standards are not as standard as it might be in the in the for profit section.

Julia Campbell:

Exactly. I find that too. So choosing metrics based on your goals based on what you're trying to achieve. And I always recommend when my clients are starting out with advertising, I like to I just really like them to track it to a specific goal. So not to just sort of boost a post for $50 and then say, Oh, 5000 people saw this. Okay, well, what does that get you did that actually help you move the needle on some kind of goals, something that you're trying to achieve some kind of organizational objective for the year? So really thinking more strategically about where you're putting your advertising dollars? So that gets me to my next question, what do nonprofits often get wrong when they're starting out with advertising,

Samin Pogoff:

I think they get it wrong by not getting started. Because as we're looking at this data, we see that, again, 60% of organizations are spending and this trend is going up, I can actually kind of tell you the stats about you know, the increase is projected to go up by 100%. And between 2019 and 2024. So in this five year period, digital ad spend in the EU in the states only will grow from 132 point $46 billion dollars to 278 point $53 billion. So just looking at those numbers, you see that it is a space where more and more people are spending money in and you just simply cannot afford to be part of this game. Those days that nonprofits didn't have to worry about advertising, unfortunately, or unfortunately, the way you look at it, are behind us. So it is really important to really get in there. And no benchmark is as significant as informative for you, then your own organizational benchmark, when you start somewhere, and when you track you see where you are, and then just set a benchmark set a goal for yourself for the next year to improve from there. It's really as simple as that.

Julia Campbell:

Does the nonprofit really have to have like a full time person to do this? Do you think that is

Samin Pogoff:

actually a very good question and something that we looked into? It depends on the size of the organization. So organizations that have more than five employees spend significantly more on advertising, like the jump from five to like the next category? You know, it's quite significant. And that could suggest that, yes, you do need some, you know, in house, talent in house, human resource to run advertising for you. But it's not exclusive. It's not really all or nothing and you know, you can get it done or you can seek out, you know, agencies that might be able to do that for you.

Julia Campbell:

Exactly. I think that nonprofits like you said, they are just scared to even get started like what is the first step that you would take? If you have not done any advertising before? or maybe you've done some and you haven't been as strategic.

Samin Pogoff:

The first step I would recommend is to really set the goals like you were saying, because how you spend your advertising money, which platform you put it on, the end goal that you're after is really different than some other organizations that might, on some level look very similar to you know, so you really have to be strategic about, is it the reach that I'm trying to expand? If it's conversion, what it is that I'm trying to get people to do? Do I want people to, you know, sign up for my newsletter, is it that I want, you know, people to go sign such and such petition. So really finding your, what we call KPI, key performance indicators, and then tie those to basically like a funnel that, okay, if I want my users if I want my audience to, you know, become more and more engaged and finally contribute to the cause that my organization is after tying those metrics to different parts of your funnel is essential. And once those are clear, the rest becomes much more easy to figure out.

Julia Campbell:

Wonderful. So tell me where people can find the benchmark report where they can find the dashboard?

Samin Pogoff:

Sure, yeah. So they can go to our website www.holwell.com/advertising. And both the study and the dashboard are available there. My email address is sammy@hotmail.com. If they want to reach out to me directly, with any further questions they might have.

Julia Campbell:

Great. So and we will list all of this in the show notes. And we will put simians LinkedIn address on there if you would like to connect with her on LinkedIn. Any last thoughts before we sign off?

Samin Pogoff:

No, thank you so much for having me. This was really wonderful conversation. And I'm really excited for your audience to hear about this. This is just a place to start. And I'm sure we can build on what we have already here. So they're very excited. Thanks again.

Julia Campbell:

We'll check out the free report, check out the dashboard. Check out Whole Whale. They are fantastic, fabulous people. And I really appreciate you spending the time with me today. Sameen. Thank you.

Samin Pogoff:

Thank you so much, and have a wonderful day.

Julia Campbell:

Well, hey there, I wanted to say thank you for tuning into my show, and for listening all the way to the end. If you really enjoyed today's conversation, make sure to subscribe to the show in your favorite podcast app. And you'll get new episodes downloaded as soon as they come out. I would love if you left me a rating or a review because this tells other people that my podcast is worth listening to. And then me and my guests can reach even more earbuds and create even more impact. So that's pretty much it. I'll be back soon with a brand new episode. But until then, you can find me on Instagram at Julia Campbell seven, seven. Keep changing the world your nonprofit unicorn