Competition within the legal industry continues to heat up. Firms are spending more on marketing than ever before--an estimated average 2.7 percent of total billings in the first quarter of 2008, up from 2 percent in 2007. Behind the increase in marketing spend is a domino effect of market realities and responses. Outside counsel convergence, to look at one such market factor, continues at an ever-increasing pace.
Competition to be on preferred lists has driven large firms to get larger and offer more. But in an effort to differentiate, large firms have unwittingly become more alike, serving clients with similar practices in similar geographies and with similar models.
Enter the legal marketer, charged with organizing the firm's resources for business development and creating methods for reaching the firm's audience. With a dizzying array of technology options and a new world of social media and networking providing newer options every day, the tried and true methods of differentiating your firm may no longer be enough. Today, a critical part of a successful marketer's skill set is the ability to determine which technology options make the most sense for each firm and choose the best allocation of those investments.
Yet with so many options, how does a firm decide where to invest and what it will call a success? One answer: consider a portfolio approach. A portfolio approach to personal finance says that the success of an investment strategy is not determined by the success of any individual investment, but rather by the success of the entire portfolio. This approach allows for risk and experimentation by allowing an investor to place a bet on high-risk, but potentially high-return, investments.
A portfolio approach to marketing technology is driven by the same principles and allows for experimentation with technologies that are new and unproven. These high-risk and high-potential technologies, such as Second Life, Facebook or a major move into online video, need to be balanced with more solid foundational investments. The key is to evaluate your portfolio on the return it provides as a whole, not just on the success or failure of a single element.
When assembling its marketing and business development technology portfolio, marketers and their law firms should consider six factors.
<1> Assess Your Strategy and Goals
Planning your technology investments should start with an analysis of your marketing strategies and goals. Begin with identifying your target markets and what you are trying to achieve through your interactions with them. For example, maybe your strategy is to target early-stage technology start-ups with the firm's intellectual property services, and the ultimate goal is to expand the number of services your firm provides to these start-ups as they grow and their needs become more complex. It is also important during this phase to formulate your definition of success.
<2> Assess Your Risk Tolerance
The next step is to accurately gauge your firm's risk tolerance. Unlike a traditional equity investment, in which the risk is the likelihood of losing some or all of the invested capital, the risk associated with a marketing technology investment may be defined by several additional factors. That's not to say that the possibility of spending the partner's money on a technology investment that under performs should not be factored in--it absolutely should be. However, you may also want to consider other potential risks such as the inability to gain buy-in for future projects if this project fails, negative market reactions or even the internal political risk posed by the project.