Is Your Marketing An Investment or An Expense?

For now, let me just say that a strategic inflection point is a time in the life of the business when its fundamentals are about to change.

They are full-scale changes in the way business is conducted, so that simply adopting new technology or fighting the competition as you used to may be insufficient.

– Andy Grove, CEO Intel

How are YOU defining your marketing investments? Does the manner in which you define these investments effect your decision process? And if it does, is the effect positive or negative?

Two of the primary services my firm provides to clients are Digital Strategy & Innovation and showing companies how to develop Painless Prospecting Lead Generation Platforms. Neither is an inexpensive service, though when you consider that both service offerings provide value well beyond the time period in which the service is consumed, both are excellent investments. Yes, I realize I may be biased.

Marketing Investment vs Expense

We define a marketing expense as any expenditure of marketing dollars whose value is consumed at the point of expenditure. In other words, when you buy an advertisement, pay for a click on Google, or attend a trade show, the value of that expenditure is consumed by the action funded. While there is some residual value (brand awareness in the case of an ad or leads in the case of a trade show) the core value of the expense is consumed by the activity funded.

Thus it makes sense that companies make marketing expense decisions based on immediate return-on-investment calculations. This correctly correlates the expense to the impact on sales.

Marketing investments on the other hand are those expenditures that create tools that will continue to drive value and impact sales well after the cost to create the tool is spent. This includes items like websites, sales collateral, sales training and yes, marketing strategy. Unfortunately accounting rules don’t allow companies to amortize these expenses over the agreed to life cycle of the tool, as you can do with vehicles and buildings. Maybe if the IRS let companies amortize the expense marketers would think differently.

But even though the IRS doesn’t let you amortize the expense as an investment, you need to think about these expenses as investments. Too often companies miss opportunities because they  don’t have the money “in this year’s budget” or “can’t determine the ROI of the expense.”

Invest in Marketing

Whether you realize it or not, we’re living in one of those strategic inflection points. Self-educating buyers are hiding behind the anonymity of Google to research your company or  product and you only find out AFTER they’ve made their short list, that they are in the market for your product or service. Combine that cultural shift with anytime, anywhere broadband speed access to the Internet compliments of your mobile smartphone or tablet and you’ve got the perfect strategic inflection stormThe Invisible Sale.

And if you think you’re going to weather that storm by simply doing what you’ve been doing, you’re wrong.

To win tomorrow, you’ll need to invest today. Invest in ideas, innovation and the people and companies that can invent things you can’t even dream of yet.  You need to hire the people that can connect the dots in ways that create new solutions to old problems.

Don’t get bogged down in the ROI discussion. Focus on what could be vs what has been.

Embrace first mover advantage and fundamentally change the way you go to market, work with customers and retain clients. Give yourself permission to think in terms of years not months. By freeing yourself from the trappings of expense and embracing the opportunity of investing, you’ll give yourself and your company a chance to leapfrog the competition and win not just the day but the decade.

Stop Spending. Start Investing.

I started this post with a quote from Andy Grove about strategic inflection points.

Stop and ask yourself (honestly) this question:  Is your company facing change or a strategic inflection point?

If you’re just experiencing standard change to your marketplace, then you may be able to get by with ongoing marketing expenses.

But if you’re company or industry is facing a strategic inflection point, you’re going to need investments. Invest in technology, people and most of all…. ideas. Because the only way to beat fundamental change, is to create fundamentally different ideas.

Click Here to get started.

 

The Invisible Sale

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About Tom Martin

Tom is 20+ year veteran of the marketing and advertising industry with a penchant for stiff drinks, good debates and digital gadgets that helps digitally challenged companies create innovative and effective digital marketing strategies. He is the founder of Converse Digital , author of The Invisible Sale and a contributing writer for Advertising Age. Tom guides clients through the digital marketing maze and helps companies teach their sales force how to Painlessly Prospect their way to more sales. Connect with him on Google+ or follow him on Twitter or connect with him on LinkedIn.

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  1. […] surprises me how many business do not see marketing as an investment into their future. I am going to be 100% transparent here, marketing takes time to see results. Do […]

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