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Why Marketing is the Best Investment You Can Make For Your Business

Why is marketing a good business investment rather than a business expense? Words mean things: learn the difference to your bottom line.

What is the single most important activity for any business? Most of you will probably say something like “Growing my customer base” or “Increasing sales”, and you would be right.

Mostly.

The path to profits begins with building a strong brand identity, and that means crafting an effective, multi-pronged marketing strategy.

Unfortunately, too many business owners see marketing as an expense, and not a very important one at that. It’s one of the first things you’ll skimp on if your budget is tight, thinking that you can always just use social media to raise awareness.

I mean, social media platforms are something that you can use for free, and there’s certainly a lot of people using them. Just set up a page and start posting, and then wait for the customers to pour in. Wrong, but that’s another blog post.

What if I told you that equating marketing with business expenses is a wrong-headed approach? Expenses aren’t very sexy or exciting. They’re negative transactions that take away from your profits, and you want to cut them as much as possible without hurting your business.

– But investments are different. They’re associated with action and profit. In fact, the money you put into marketing may just be the best investment you’ll ever make.

The Difference Between an Expense and an Investment

On the surface, investments and expenses seem like the same thing. They both involve spending money on your business. In your budget, you’ll have daily expenses and overhead, such as rent, supplies, and payroll. These things all contribute to your business viability.

Investments are also funds that you put into your company. For example, you might invest in technology, new equipment, or expansion.

The difference is that expenses are mostly fixed amounts that are used to support business operations for a set period of time. They’re part of your yearly budget, but they rarely contribute directly to your profitability. They’re simply “the cost of doing business”.

Investments are more like flexible financial outlays that are used strategically to generate revenue. They directly correlate to profitability as long as you invest wisely. Some activities, like research and development (R&D), are mixed expenses because they involve investing funds, but don’t necessarily bring a return.

How to Calculate Your Marketing ROI

One investment that always produces a return is marketing. How much of a return depends upon how much effort and funding you invest. You need a strategy: an actionable, measurable plan. You can calculate it simply as (Sales Growth – Marketing Cost)/Marketing Cost = ROI. So a company raising $10,000 in revenue with a marketing investment of $1,000 per campaign is generating a return of 900 percent.

However, nothing is business is ever simple.

That calculation assumes that your month-to-month activity is the same, that you’ll be running a single campaign throughout the year, and that your customer base will grow at a predictable rate.

Marketing ROI is calculable by several methods. You can figure your ROI by campaign, as an average spend per customer, or by percentage of conversions per lead. Your ROI will also be different for each of these metrics. For example, you could figure the ROI of an email campaign by how many leads you generate. But, it’s more meaningful to figure how many of those leads actually generated sales.

Optimizing Your Marketing Investment

You don’t need a huge marketing budget to get a good ROI. You just need to know how to invest your marketing budget strategically.

Investing in a solid brand strategy contributes to:

Increased brand awareness.

This is the first and most important element of branding. You won’t get new customers if they aren’t aware of your existence. Current customers can’t buy your new product unless you tell them about it.

By investing to raise brand awareness, you improve brand recognition. This is an essential element in marketing and in stock analysis. It helps you increase your customer base and attracts investors to your company.

Frequency of exposure.

Did you know that the average consumer is exposed to a brand at least seven times before interest is generated? The more often a customer is sees your ads, the more likely they are to check you out.

Hit the sweet spot between frequency and spam. A call to action should appear on their radar 10 – 20 times within a month.

Broader reach.

Although reach and awareness are related, they are not the same thing. Awareness is how people come to know about your brand, but your reach could be limited by geographic location and other factors. For example, a customer might know about your store because they pass by it every day or see your ads on TV. By investing in other platforms, you’ll increase your reach and level of awareness.

Take a multi-pronged, omni-channel approach to branding by diversifying into new platforms and advertising methods. Make sure to test each for effectiveness after an appreciable time period. That could vary from two hours for a new PPC campaign to two weeks for email marketing. Depending on the split-testing, cut lose techniques that are ineffective and put more money into methods and platforms that generate results

Greater influence.

Big brands differentiate from non-players by their perceived influence and authority. By investing in your brand strategy, you’ll become the brand that customers trust to deliver. Gaining this kind of market prestige impacts your relationship with customers, industry peers, investors, and vendors. Who doesn’t want to be associated with an influential brand?

Prominence.

Tying all of these elements together allows you to gain prominence over the competition. You’ll become the name that’s associated with the lifestyle or solution your brand addresses. When a need or desire arises in the future, they’ll go to your brand before even considering your competitors.

Final Thoughts

How effective is your branding? Hiring a marketing team is one of the best investments you can make in your business. In addition to time and money savings, you’ll gain expertise and access to current digital marketing technology and best practices.

You don’t have to look far to find that level of experience and industry knowledge. Level 343 is a digital marketing company with a global reach. Contact us to consult with a marketing professional about your branding strategy today.

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