Expense Vs Investment
Marketing is an investment to your future business success at the expense of current cash flows. What does this mean? As a marketing consultant, who sells advertising media, when I consult a business, they think in terms of marketing as an expense. However, they are not wrong.
How Business Owners View Their Business
When a business owner sits down and views their business financial every week or 1x a month, they run test that conduct their income statement, cash flow statement, and balance sheet. Advertising is viewed, and inputted into the expense column, so naturally marketing/advertising can be seen as an expense.
However, we need to view the power of what an investment is in the dictionary. It is the action or process of investing time or money for profit or material result. We invest the money in hopes of return on our cash expensed out, with incremental change in value of the original cash output.
When we market, we put your business, your service/product into the world of the consumers. Whether through targeted methods, or mass reach methods, we make sure your brand is top of the mind. In order to increase sales, people have to know what you offer, so they can make a decision to buy.
Short Term Vs Long Term
One of the challenges faced as a marketing consultant is understanding the basic psychology of how we work, how we function, and how we feel pain in regards to reward. Marketing can derive quick immediate results, but we market to position our company for long term growth.
Coca-Cola is brand ever knows, and is sometime used to refer to a soft drink that may be of another's competitor's brand. Coco-cola spends about $6 billion a year globally on their marketing, (Source) while generating minimum $31 billion in revenue. That is an advertising investment of 20% YOY.
Coca-Cola has been around since 1886, and they are surviving/striving. They understand the concept of delayed gratification vs instant gratification.
What Does This All Mean - Conclusion
When putting together a marketing strategy, best practices are to think long term. Identify the key issues that can gain market share, improve sales, and reach your customers. The reason we are in business is because we have a product we are trying to provide to our customer.
If 0 people know who you are, 0 people will buy your product. Blatant example, but you get the point. Each time we reach we a person, we have potential for them to share or talk about your company within their private circle of influences, and they then begin to plant the seed.
This helps your business grow. While consumers are spreading your business name, your advertising is reaching targeted consumers. Now you have 2 systems working to help you create the communication channel between your brand and the consumer market.
Think long term. Let's invest in marketing, and grow your business.