Posted by: Christine Adams | October 19, 2009

Marketing: Investment or Expense?

There is a constant struggle between Marketing and Operations departments in the mindset of whether marketing is an investment or an expense. It is true that marketing endeavors can be costly but if they produce a positive return on investment then it is worth the outlay of capital. Let’s explore what does and does not constitute a proper marketing investment.

Marketing should be viewed as an expense when a significant amount of money is spent with little return. This can occur when promotions draw a large crowd but the crowd does not purchase any products. Campaigns geared to entertain but do not educate the potential client can be costly ventures with little to no return. Branding efforts that are reevaluated and then tossed by the wayside can cause significant loss of funds.

On the other hand, marketing can be seen as an investment when it gathers new clients, upgrades current clients to a higher price point or starts a positive word of mouth campaign that gains momentum. The goal of marketing is to embed your product or service into the minds of consumers, so that when they choose to make a purchase they opt to spend their money with your company. Marketing dollars placed targeting the proper demographic, in an appropriate medium that has high visibility with a proper message, rarely produces negative results.

The challenge is that positive marketing campaigns may or may not produce instant gratification. This is where the line gets fuzzy. Companies spend money to gain clients and if the results are not instantaneous, they believe that the marketing dollars spent were wasted. This is not always the case. Repetition of your name in front of the consumer will remind them to think of you. It may not be today, tomorrow or even this year that they will be in need of your product. The more times that the potential customer hears or sees your name the more likely they are to call you when they choose to react.

It is important for entrepreneurs to view marketing as an investment or they will never grow as a business. To view marketing efforts as an expense is a narrow-minded, short term thought process in the race to a larger bottom line. If you can step back and remove yourself from the present, set long-term goals and understand that marketing is a process, you will see that the money you invest will sustain you in the future. So what are your thoughts, investment or expense?

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