Your marketing budget is an investment, not an expense…
To our marketing friends, I am writing this after a discussion with my wife. She is a marketing director and her company is looking at cutting the marketing budget. If possible, I would like a few moments with your CFO. It’s OK, I will wait while you go find him or her.
Stuck in a budget meeting? Well, maybe you could take a message:
We just want to say that something about staring at numbers all day must affect your vision, because we're hearing from our marketing brethren about shortsighted attempts to reduce company expenses by cutting the marketing budget.
Far be it from us to explain to those in offices that marketing spend is slightly different from the costs associated with the office coffee service, but let's just say your hell bent to put a dent in these "outrageous" costs for promoting your company's products and services.
We can only assume that to this belief means you'll lay off all those "money-grubbing" employees, shut down those retail outlets and then put all those savings into a nice bank CD where it can earn a staggering 5.4 percent.
Or maybe, just maybe, you don't want to do that. Maybe running a company can generate a return slightly higher than that stellar 5.4 percent and you see the value in keeping the doors open, the offices staffed.
Super, then why, do you refuse to see that what you spend on marketing is not an expense of doing business, but an investment in your business. Done properly, your marketing has an effective ROI yes, that's return on investment that generates additional revenue.
Of course, there's nothing wrong with altering your marketing mix to get the most efficient use of your dollars…that makes sense. Recent numbers show that every dollar spent on direct marketing generates $16 in revenue - three times higher than general advertising.
Cutting your marketing budget may save you $1, but it's costing you $16, on average, in revenue. So be sure to lower your revenue targets for the coming year.
Or better yet, regard this as the way you would any business investment - something you need to do for the good of your company. Oh, and while you're at it, give the members of your marketing team a bonus.