For any new start-up, micro or small businesses, it is a real fight to keep day to day operations and business running within the scarce resources they have. When the entrepreneurs trying to do this real fight every day it is very common that the last thing they think about is Marketing on top of all this and allocating a budget for it is just an expense. They just think they cannot afford to do it. On the contrary, they save on to buy some assets for Business, hire staff, invest on inventory, buy land and forget to make investments into Marketing, an engine which drives sales for their business and accelerate growth. Marketing on the other hand is warped in the eyes of these entrepreneurs as an expense where you spend money in return of something which is never lasting or is very fugacious. I think this all miss-conception has been a result of accounting this expenditure as expense in accounting terminology. However, if we examine carefully how financial investments are made for a return on the investment, it relates to Marketing too in the same way to marketing as investment as results of leads, brand awareness, interested customers, etc. which are classified as return on Investment into Marketing.
Build Permanent Assets and receive compounded results
When I meant investment into Marketing is to build assets like your website, the Search Engine Optimization done, publishing an article offsite. These stay indefinitely and source the traffic to your website. The link building will continue to pass referral traffic to your website. These assets of content, information, links, etc. are all assets and they gain you compounded results when you leverage the use of them.
The paid advertising on the social channels, advertising channels are all on the other side based on expense-marketing. The amount you spend is proportionate to the results you achieve on these channels. The moment you stop spending on these channels, you see no results.
Choose the right strategy
All it takes to choose the right strategy of investing into building your assets or leveraging paid channels to see quick results. Instead of choosing between the two methods, your goal should be to find a balance, and invest in the strategies you feel will be better for your business’ unique situation.
For example, you can consider yourself planting some vegetable garden, but buying that vegetable from the store is a short-term measure to cook your lunch. First one is a temporary exchange for a momentary result, while the second one offers you compounding returns in some future date. You may need first one, the second, or both to truly succeed.
Once you see marketing strategies as investments, than just expenses, you start planning your budgets better and start optimizing your strategy for the best possible return. Though the best possible return is not always the one with the greatest or a long-term financial value. Short-term benefits have their own advantages. Understanding those differences and the benefits each can provide will help you plan better for what your business needs are.
ROI: Track your results on those channels and assets to gain on the investment
To justify your investment in Marketing you need a way to track those results your Marketing provides. All the Marketing investments can be measured and their ROI can be tracked. For example, google, all social media, paid advertising channels provide analytics to track the results of your marketing efforts to help you calculate your ROI. Marketing automation tools these days are intelligent enough to keep track of your visitors, visitors’ behaviour, statistics, patterns and other details to help you optimize your efforts.
Tracking ROI can get difficult with complex marketing campaigns, but with a commitment and good reporting processes. The challenge is that you can’t always use financial methods as you would do for other investments. You have to compare results against tangible marketing goals. For instance, if your goal is to increase business’ brand awareness by 30 percent in one year, you can use awareness surveys and studies to measure the results before and after a marketing campaign. With sales growth as goals, you can actually track increases in sales resulting before and after promotional periods.
Use your ROI calculations to continually improve your campaigns. Keep testing new ways to raise your ROI and spend your budgets on the campaigns that produce the greatest return for your business. For example, if one campaign generates a 10% ROI and the other 40%, where will you invest your marketing budget next time?
So do you agree Marketing is an Investment not an expense?