Marketing Investment vs Advertising Investment

Over the past 10+ years I’ve worked with a lot of companies – CEO’s, CFO’s, Marketing Director’s, etc doing a variety of tasks related to marketing and online lead generation. I was reading an article recently about how CEO’s continue to rely on costing cutting – even when very specific growth is projected. Aligned with this are a lot of small business owners we work with who range from the very cautious to an ‘I’m all in’ mentality – where every cent is being put back into the company via staff, marketing and technology. As I think of my roots in advertising and more traditional marketing practices, I have recently been contemplating –

When should we focus on marketing investment and when do we focus on advertising investment, and where does the balance belong as it relates to dollars.

A quick review of the definitions for each, I’m going with the Merriam-Webster source:

1. Advertising: the action of calling something to the attention of the public especially by paid announcements
2. Marketing: the process or technique of promoting, selling, and distributing a product or service

A few interesting distinctions, advertising involves paying for your promotion. I recently attended an AIMA luncheon where one of the presenters from a creative/video shop in Atlanta said that any viral video truly required paid advertising. Basically you have to ‘pay to play’. That made sense to me as he was saying it, even though I still had (wanted?) this optimism that viral could be truly grassroots and driven purely by the masses – now I’m not so sure.

On contrast, marketing is defined as a process. That’s huge and largely undefined for most. This process entails website optimization, web structure and functionality, conversion process, expectations and goals, the brand and message definition, as well as advertising to support it.

But when budgets are tight, how do you allocate your dollars? Let’s just say now that if you are putting zero dollars into these groups – you are in big trouble.

I like to equate this to PPC vs SEO. PPC is like a light switch, when you are funding it, there is traffic being driven, but when you stop, traffic reduces. With SEO, much like marketing, it’s a long-term investment which grows over time.

That still doesn’t answer the question though, where to put your dollars? And is it possible to exclusively advertise and not invest in ‘marketing’? To answer this I think you need to ask yourself – do you have long-term goals identified? If not, advertising may be the best bet while you formulate your plan.

Generally speaking, you need to do a quick rundown of revenue and expenses. For marketing, it’s a percentage of sales decision. Most people say to take your reliable monthly revenue, subtract expenses and then allocate the dollars into buckets. Forbes spells it out in a recent article. Broad buckets, in my opinion, are things such as marketing, growth expenses, hiring new staff, etc and depending on your future goals that will affect your decisions. You also need to balance commitment and expectations.

Marketing is a beautiful thing nowadays; no longer do you need to commit to a 1-year plan set in stone. Commit the dollars and do quarterly plans. Give yourself time to see what’s working and adjust throughout the year. But don’t back out of the annual budget just because quarter 1 didn’t produce the results you wanted. You will have wasted that very valuable knowledge gained!

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