Investors would be overjoyed to see a 20% return on their stock portfolio. Heck, 7.5% gains would be pretty respectable. When you’re making money it’s not an expense, it’s an investment.
We need to take a similar mindset to marketing.
Treating marketing as an expense is crazy. It’s like saying, “I only want to grow to this point.” But if you knew every dollar you invested in Google Adwords generated a $1.20 in revenue, you’d never want to constrain yourself with a marketing budget. You’d keep investing dollars, because you’re generating a solid 20% return. That’s smart marketing.
Always have an unlimited budget for marketing that works.
I see too many small- and mid-sized companies hamper their growth with “marketing budgets.” By setting a constrained marketing budget the team is implying one of two things:
- Marketing is a waste of money, because it’s having little to no effect on sales.
- Marketing feels like gambling, because you don’t measure the results and have no idea if its working.
If your marketing is a waste of money, stop what you’re doing. You wouldn’t tolerate an employee that never shows up for work, and you shouldn’t accept marketing that doesn’t work.
If on the other hand your marketing feels like gambling then use your budget to avoid any runaway expenses, but get smarter. Quantify the results of your marketing campaigns and processes, and get rigorous about data and accountability.
The best way to use your marketing budget is to test ideas and campaigns, and put in place the metrics to track results. Once you know a program is working, release the shackles and let it run freely. Good marketing is always an investment that pays dividends.
What I am arguing is relatively easy to grasp. This isn’t a complicated idea, but like so many other aspects of life it’s easier said than done. There is a great deal of rigor and practice required to convert marketing into an investment that delivers predictable returns.
To move marketing from an expense to an investment requires two key behaviors:
- Master your data. I am obsessed with developing lead and lag measures that drive towards a defined goal. By mastering the measures that lead to results you can develop marketing programs that work.
- Experiment Often. There is no shortage of brilliant ideas to market your business. The challenge is adapting and testing them to fit your business. That requires iterating and experimenting with ideas in small, contained projects. But when you find a marketing tactic that works, double down on it and make it an investment.
Like investing, marketing is hard. Only the most dedicated companies turn their marketing dollars into predictable returns. But that commitment is worth striving towards. Your business will grow in leaps and bounds when your marketing is treated like an investment versus an expense.