Do you see marketing as an investment or an expense? Your answer may have a direct impact on the success of your brand.
It’s been shown that brands that invest in marketing get higher returns. After analyzing data from more than 140 leading companies, researchers at McKinsey found that revenue growth from companies with advanced marketing capabilities was approximately 30% greater than that of the average company in their sector. Thriving brands view marketing as an investment and understand that growing their businesses requires continual investment in developing new leads, winning new customers and retaining existing customers.
Yet, some companies don’t prioritize marketing, instead considering it to be simply an expense. Compared to tangible purchases like equipment, technology and personnel, marketing can seem less important or urgent. When businesses are doing well, they may neglect to spend money on marketing, believing they already have all the business they need — and not realizing that marketing plays a role in maintaining current customers. When sales are low, companies may cut marketing budgets to save money. Of course, this is the time when they should be focused on marketing the most, to help return sales to a healthy level.
By shifting from an expense mindset to an investment mindset, companies can improve their marketing strategy, and experience higher returns on their marketing investment.
Just like a financial investment, a marketing investment creates value that grows over time. Marketing investments have many characteristics in common with financial investments:
The best financial investments preserve the value of the funds initially invested. While the funds you spend on marketing may not show an immediate return, the growth your business experiences from increased awareness, sales and new customers should generate enough revenue to replace those funds, while generating additional income. A great marketing campaign will also preserve the value of your brand. Marketing builds brand recognition, strengthens your brand’s reputation and creates stronger relationships with your customer base.
Compounding interest is a good metaphor for the exponential growth effective marketing can spark. As your brand begins to advertise, new customers are introduced to your company and sales increase. As a result, your market starts to grow, reaching more customers with each campaign. The wider your audience expands, the greater the impact of each marketing cycle.
No investment provides a guaranteed return — and marketing is no exception. Changes in the market, economy, customer behaviors, new technologies and many other variables can impact the success of a marketing campaign. Factors like creativity, strategy and the skill level of the marketing firm you hire can also make a difference in how effective your marketing may be. Businesses that tried marketing and were advised poorly, or that didn’t execute on the appropriate strategy to begin with, may feel they were “burned” and be afraid to invest in marketing again. However, with the right partner and strategy, marketing can be very effective.
Even the best-planned marketing campaigns may not create immediate results. It takes time and resources to build a strong brand and grow its value.
To generate an even stronger return, try these five strategies:
Now more than ever, consumers are inundated with communications promoting products and services. How will customers make the decision to buy from you if they don’t know you exist, much less understand what sets you apart from the competition? Remember, when you’re not marketing, your competitors are — so it’s important to keep your brand at the forefront of customers’ minds. Take time to research your competition and determine your points of difference.
Successful investors understand the businesses in which they invest and evaluate changes in the market around them. Similarly, a successful marketing campaign begins with a deep understanding of your target audience and a carefully designed strategy to reach them.
The world of marketing is always changing, and with new technologies, it’s changing faster than ever. Traditionally, newspapers, magazines, direct mail, TV and billboards dominated the advertising marketplace. Today, digital marketing channels like email marketing, social media and streaming services are getting more attention from consumers and creating strong results for advertisers. Statista recently found that “for every dollar invested in digital search advertising, U.S. advertisers gained about $11, making it the medium with the highest returns.” Of course, that could change at any time. Successful brands stay on top of current marketing trends and are always willing to adapt.
Just as investing in your 401k consistently over time increases your chances of creating a large nest egg, investing in marketing on an ongoing basis will create consistent brand growth. Ongoing communications help to build brand awareness, educate consumers about your brand, help your business acquire new customers and retain existing customers.
It is impossible to grow your market share without marketing, but it can be daunting to do it alone. To get the most value from your marketing investment, choose a marketing partner with a strong portfolio and a track record of results. (Full disclosure: My company specializes in branding, but you have many different options when it comes to finding a marketing partner.)
Effective marketing takes time, talent and commitment — but it’s an investment well worth the effort.