Spending on PI advertising spirals as competition hots up
Claimant lawyers spent a record £208,000 a day advertising personal injury and clinical negligence services last year, according to a White Paper published today (7 September) by First4Lawyers, the largest independent marketing collective in the UK.
The analysis of spending of around 500 law firms and claims management companies (described in the report as ‘collectives’) between 2010 and 2014 found that the sector has invested £267m in marketing over that time.
It has been on a sharp upward curve, going from £27m in 2010 to £76m in 2014, an increase of 182%. This equated last year to £208,000 per day or £2.41 per second.
The White Paper – Spreading the word: the changing face of personal injury marketing – says the largest driver of this increase was a rush of solicitors looking to get a foothold in the market and raise their profile as traditional referral networks closed in the wake of the referral fee ban in 2013.
While spend has gone up rapidly, the number of firms and collectives doing it only increased 14%, meaning that the average spend per business rose from £128,117 in 2010 to £315,810 in 2014, a 147% increase.
Unsurprisingly, a small number of organisations dominate the market in terms of amount of money spent. In each year, the top 10 spending firms accounted for 85% of the total, with First4Lawyers one of only four to have been in the top 10 each year. Law firms represent 30% of the overall pot; collectives – though their number is much diminished since 2010 – have more muscle than ever before, spending an average of £2.5m each per year.
The research finds that to compete and ensure your marketing stands out requires more of a significant investment now than it has ever had. First4Lawyers forecasts that businesses wanting to become a top 10 advertiser will need to spend in excess of £1m during 2015. In reality, to compete at all requires a minimum of £350,000 investment in air time and media space, before adding production and delivery costs.
The White Paper also looks at the changing face of PI marketing. It says that whilst the world is becoming increasingly digital, “it would be foolish to predict that any one single area of the marketing mix will break away to become the only marketing channel, despite the many digital suppliers insisting that they are the future of marketing and similarly compelling arguments from more traditional marketing suppliers”.
It continues: “Our experience is that TV is currently providing some of its best ever efficiencies and return on investment. Digital marketing, by contrast, offers instant response and the flexibility to change campaigns with more agility depending on market conditions. We cannot use one without the other because they have grown to complement each other but modern marketing techniques mean that ‘mass marketing’ is now off the agenda.”
As for the future, First4Lawyers predicts that the three big investments will be in people, big data and content, with a focus on the customer experience above all else. It goes on to suggest that within the next five years the world’s largest law firm won’t actually have any lawyers.
Here’s why: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba/Amazon, the most valuable/largest retailers, have no shops. And Airbnb, the world’s largest accommodation provider, owns no real estate.
“Something interesting is happening. So is it within the realms of possibility that there will be no lawyers in the world’s largest law firm? Of course, this firm will not be providing the legal services itself, but it could have a huge grip on the market.”
Qamar Anwar, managing director of First4Lawyers, says: “We recognise that by no means everyone has the time or resource to devote to marketing that we have. The purpose of our White Paper is to paint a picture of how marketing in this sector has grown and changed in the last five years, and help firms working out how to spend their budgets understand the nature of the task before them.
“This is a fascinating but challenging world to be in. The rules can change rapidly as new technologies are adopted, and the scale can sometimes be daunting – there are more than 150,000 key word searches where we want First4Lawyers to be appearing top of the results. We are now using our knowledge to expand our services for law firms into non-injury areas of everyday legal practice.”
Associate News is provided by Legal Futures Associates.
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