Spend Money to Save Money


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.

Short Term

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.

Long 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.

  • Website redesigns

  • Most traditional advertising – billboards, television, radio, print

  • Content marketing

  • 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.

Can You Measure Brand Marketing?

We have talked here before about the difference between brand advertising and direct response. One of the reasons why direct response has gotten so much more popular with advertisers is their ability to track and measure it. One of the major drawbacks of branding activities, if you ask most marketers, is that they are very difficult to measure.

The best ways we have of measuring brand advertising produce a wide variety of metrics that may signal a strategy is working relative to other strategies, but don’t get directly to the full impact on sales, which is what really matters at the end of the day.

But just because we might not be able to measure the kind of impact on sales with as much precision as we can with direct response, doesn’t mean we shouldn’t measure at all. Here’s a look at some of things companies can measure and how, as far as branding activities are concerned:

  1. Nielsen is the old guard when it comes to mass media measurement. They can help companies measure who is seeing your ads, what their general reactions are to them, and whether it impacts their actions – based on self-reported outcomes.
  2. Brand awareness is a popular metric for measuring how your efforts are impacting consumers. Most brand marketing is aimed at one thing, putting your brand in front of consumers more, so that it is top of mind when they go to make a purchasing decision. Brand awareness is a good way to measure whether or not its working, because it tells you how familiar certain audiences are with your brand. Consumer research surveys are a great way to track it.
  3. Website traffic and search data are another way of measuring the impact your branding efforts have on consumer behavior. In markets where you are spending money on brand advertising, you can use Google Analytics and Google Trends to see if there is an increase in visitors to your website or searches of your brand.
  4. Social media monitoring is a popular method of analyzing the response to branding activities. Social listening tools allow you to track use of specific brand terms or hashtags related to your products and marketing efforts. You can measure overall engagement and the frequency these terms show up to see if your efforts are getting the attention you hope for.

Brand Advertising vs. Direct Response

You won’t hear many people talking about the difference between brand advertising and direct response. That’s because the majority of people, even marketers, are not aware that these two distinct kinds of advertising exist.

Most marketers either do one or the other. And the general public, when discussing advertising, are almost always referring to brand advertising.

But for marketers, and the companies they represent, the distinction is critical.

Brand Advertising

Most television commercials. Banner ads on most websites. Billboards and most other forms of outdoor advertising. Most print ads in widely circulated newspapers and magazines.

Brand advertising is everywhere. It’s sexy. It’s the kind of advertising Don Draper was interested in, and the kind most people think of when they think of advertising in general.

Brand advertisers are interested in getting their brand in front of as many eyeballs as possible. Their aim is brand recognition. They want you, the consumer, to know who they are so that the next time you need something they sell, you think of them first. It’s all about the size of their market.

Almost all of the largest advertisers in the world are brand advertisers – Coca Cola, Bud Light, Apple.

Direct Response

Ads on search engines. Marketing emails. Many print ads in local newspapers or smaller, trade magazines. Facebook ads. Remarketing ads. Coupons. Local radio spots.

Direct response advertising is everywhere, but unless you are the one being targeted, you might not know it. That’s because direct response ads have a very specific purpose, and that is for you, the consumer, to buy something upon seeing the ad.

They are more targeted than brand advertising, because they are intended to be seen only by those likely to take action. They are meant to elicit a response (hence the name) and will usually feature a special offer or promotion.

Direct response advertisers track their advertising very closely to determine where they are getting the best ROI. They will optimize budgets to get more conversions at a lower per conversion cost.

So which is better?

Neither is better. It all depends on the market you’re in, who you are competing with, and how much money you have to spend on advertising. With direct response, you can start small and scale up over time. With brand advertising, you can make a more immediate splash and reach more people over a shorter period of time.