Marketing Expense vs Marketing Investment

Are you a brand ambassador, franchise owner, or a small/mid-sized business owner? Do you often wonder if your marketing efforts constitute as a business investment or an expense? To appropriately answer this question you have to make sure you have a full understanding of what marketing is and the role that it plays with respect to business.

Businessman drawing ROI (return on investment)

By definition, marketing “is the action or business of promoting and selling products or services”. In the arena of business, an investment is looked upon as “the act of committing money/capital to an endeavor with the expectation of obtaining an additional income or profit”; whereas an expense is considered a “deductible that is always netted against the business’s income”.

In establishing a marketing plan or campaign you want to be sure that you are insuring that your business is consistently meeting the needs of your customer base and receiving value in return. Meaning you should have short-term and long-term goals in place that will boost direct sales, garnish new clientele while increasing subscriptions, building brand awareness and customer relations (repeat customers).

Not having this understanding of marketing or short-term and long-term goals becomes the downfall of a lot of start-up small/mid-size businesses. To ensure that marketing efforts result as an investment for your business, it is crucial that you seek out the right publications and promotions that will help you tell your business’s “story”. You should be upfront as to your purpose in the industry and why consumers should invest in you, why are you the premier choice for the products and services that you offer.

Approaching your marketing campaign in this form ensures that the expenses incurred from establishing a marketing budget is deemed as a necessity to the survival of the business rather than a superficial cause. Remember marketing cultivates revenue; therefore it needs to be considered an asset for your business. Marketing should never be omitted from your planning and/or budget.

Cashing In Marketing Investment

The assurance of funding for marketing translates to the assurance of an avenue to increase brand visibility. If you are not seen and/or heard how else will your customers be exposed to your product or service if they can’t find or know what you offer? Customers want to find you online, on TV, on the radio, in their mailboxes, on billboards, and in their neighborhoods, etc.

Return on investment (ROI) is a measure of the profit earned from each investment. Like the “return” you earn on your portfolio or bank account, it’s calculated as a percentage. In simple terms, marketing ROI is implementing a system of measurement to help determine or confirm that you are getting at least $1.01 back in sales for every $1.00 you spend on marketing the product or service. Marketing ROI can be applied to either an individual marketing tool like email marketing or to a campaign itself.

The first step is to evaluate how current dollars are being spent. Begin by looking at the last six months’ spending. Once you have gone through each item, compare your expenses to investments. Note that some items are not easy to identify. The second step in this process is to create a written marketing plan that is focused on investments. Finally, devote dollars to marketing investments. Some level of marketing investment must be maintained regardless of the financial state of the company. If your budget is limited, pick two or three marketing investments that will be low in cost but high in impact and commit to making these activities successful.

Founder & CEO of WJ Enterprises

2 thoughts on “Is Marketing An Investment or An Expense For Your Business?

  • Incredibly helpful! Thank you so much for sharing this info! It’s very helpful and progressive! As a young artist and entrepreneur, I find this information incredibly helpful!

Leave a Comment