Pennies, Pounds and Fools
By Deliver Magazine

Forgive us, marketing friends, but we’d like a few moments with your CFO. It’s OK, we’ll wait while you go find him or her.

Stuck in a budget meeting? Hmmm, well, maybe you could take a message:

We just want to say something about staring at numbers all day—it must affect your vision, because we’re hearing from our marketing brethren about shortsighted attempts to reduce company expenses by cutting the marketing budget.

Far be it from us to explain to those in corner offices that marketing spend is slightly different from the costs associated with the office coffee service, but let’s just say your crew seems hell-bent on making a dent in these “outrageous” costs for promoting your company’s products and services.

We can only assume that clinging to this belief will mean you’ll eventually lay off all those “money-grubbing” employees, shut down those “dollar-sucking” retail outlets and then put all those savings into a nice bank CD where it can earn a staggering 5.4 percent ad infinitum.

Or maybe, just maybe, you don’t want to do that. Maybe running a company can generate a return slightly higher than that stellar 5.4 percent and you see the value in keeping the doors open, the offices staffed.

Splendid. Then why, oh why, do you refuse to see that what you spend on marketing is not an expense of doing business, but an investment in your business. Done properly, your marketing has an effective ROI — yes, that’s return on investment — that generates additional (as in more than usual) revenue.

Of course, there’s nothing wrong with altering your marketing mix to get the most efficient use of your dollars—that makes perfect sense. And, dear reader, we’d be remiss if we didn’t point out that when it comes to generating ROI, direct mail is one of the best investments you can make. Recent numbers show that every dollar spent on direct mail generates $16 in revenue — three times higher than the return for general advertising.

Think about that — cutting your marketing budget may save you $1, but it’s costing you $16, on average, in revenue. So be sure to lower your revenue targets for the coming year.

Or better yet, suck it up and regard this the way you would any business investment — something you need to do for the good of your company. Oh, and while you’re at it, give the members of your marketing team a bonus.

They deserve it.

---Source: USPS Deliver magazine July 2008 newsletter (













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