Some experts in the marketing space seem to think that you have to spend money to save money. Sounds like a bit of double speak that is used to get companies to say yes to proposals and campaigns that cost more than they might otherwise spend. Sounds like “experts” conning you out of your fought-for marketing budget.
But on closer inspection, some of this actually makes a little sense.
To identify the good spending from the bad spending, we have to approach our marketing budget from both a short term and a long term perspective.
In the short term, the money you spend today should have immediate impact on results. Companies that rely on direct response advertising measure the return on every dollar they spend. Did that campaign bring in new sales? How many? And what does that mean for our revenue?
From that perspective, a company should only increase their budget if we can guarantee the same results. Because spending money now that won’t generate new sales is a waste. It hurts the bottom line in the short term.
But if we take a longer-term mindset, the advantages of certain kinds of new advertising spend make more sense. Companies that spend money on branding are not concerned as much about the immediate return on that investment. Instead, they know that by spending money in the right ways now, they’ll be able to more effectively generate sales growth later, over time.
There are a lot of different marketing initiatives that fall into this second bucket.
Most traditional advertising – billboards, television, radio, print
Digital branding – banners, videos, etc.
Companies don’t necessarily expect that money spent in these areas will lead immediately to an increase in sales. Rather, over time, they expect that these activities will expose new potential customers to their brand. In this way, they can increase their brand awareness.
When more consumers know who you are, more often they will come to you, instead of the other way around. Brand mentions go up. Brand searches go up. Word of mouth improves.
And over the long term, you experience significant sales growth.
You spend money now so that you don’t have to spend so much money chasing sales later.