Marketing is an Investment Not a Cost

Sept. 11, 2014 - PRLog -- If you attend a trade show and obtain leads you cannot attribute the marketing costs of the trip to only one quarter of revenue.  The leads from that show won’t mature for 2 to 4 quarters into the future, although your taxes must be done this way, your business planning should not.  “This suggests that the marketing investment should be amortized over a longer period of time, incurring the P&L expense as the benefits are accrued,” says Jon Miller in his article “A Better Way to set up Your Marketing Budget for 2014” in INC. magazine.  “This is the model that is used for many budget line items, including capital investments, so why should marketing be any different,” says Miller.   Calculating marketing is one of the most difficult things to do especially with the launch of a new product.  Many business owners and much of Silicon Valley depend upon word of mouth marketing as if it were the best policy; however Facebook and Twitter know firsthand that lots of users do not necessarily translate into lots of revenue.

“With the advent of online marketing, the landscape of advertising, sales and marketing just got more complicated and more challenging to small business,” says Terrence A. Lovett, CEO of the Christian Library on Demand, LLC (CLD).  “How you calculate what to spend on marketing can make the difference between success and failure,” says Lovett.  The general marketing budget calculation considers your sales markup and your rent, allocating 10 to 12% of your gross sales revenue considering that most merchants have a storefront and the sign is one of their chief marketing tactics.  However for e-commerce merchants, a website is not like a store sign that people can see from the road.  So another standard for assessing a marketing budget is popular.  It is the 5% to 7% of gross revenue rule which does not consider conventional signage.  Considering the industry that you are in and whether you are an established business or a startup varies this rule and may increase the ratio 12% to 15% for startups.  Both of these techniques consider marketing a cost and only a cost without truly understanding what the return on investment is on their marketing spend.

“You must understand how much you receive in return for any branding, advertising and marketing tactic that you employ.  Marketing should be considered in light of the process by which you earn a customer and how long you can keep that customer or the customer life.  Your revenue cycle is the key to understanding the value of your marketing efforts,” says Darcey Hutchinson, CFO of the CLD.  “You must consider how much did you spend to get a lead on a sale?  How much did you spend to make the sale?  How much did you spend to keep the customer based upon how often the customer returns and purchases again.  Finally, which tactic helps you actually make the sale?” says Lovett.  Knowing the various stages of how you reach, sell and keep your customers is the key to understanding what you should allocate to marketing.

“The Christian Library on Demand cuts through the clutter and terminology of online marketing and makes it clear as to how we actually drive traffic to your points of sale and we have ratios on what to expect with any given campaign.  With these ratios you can directly estimate how much to spend on marketing, have a decent expectation of the return on that spend and more importantly you can prevent overspending on a particular marketing tactic,” says Hutchinson.  This makes marketing an investment of which you can expect a decent return, not a cost which you have to spend, but don’t really know what to expect in return.  Each branding, advertising, sales and marketing tactic can be assigned a value and that value should translate into sales.   “This is how you know what to pay for and what not to pay.  In the digital world, you must consider that any tactic that is not a mouse click away from the sale may be a waste of your time,” says Gerald Wiggins, Christian Library on Demand Senior Vice President of Distribution and International Development.  “Our digital distribution forces us to meld the principles of distribution and the flows of the online environment.  We must ensure that any tactic we adopt is very close to the sale of our products or the numbers start to indicate that it is just not worth what you will receive in return on the marketing investment.”  “Marketing cannot be thought of as that stuff you HAVE to spend on, but do not really want to, it has to be considered as an investment of which you should receive a decent return, just like any use of funds,” says Lovett.

Once you are aware of your revenue cycle, how you get customers and what drives them to you, then you know the numbers you need to produce the return on revenue needed to sustain your business.  This number gives you the proper spend investment for marketing.  Then you start to identify new tactics which will improve your return on revenue over the long term, because branding, advertising, sales and marketing are an investment which you can amortize over time.   Once you invest, they continue to work to drive new customers to your point of sales.  This is a long term perspective on marketing which helps you to consider the value of each tactic you employ.  “The Christian Library on Demand employs TV shows and movies, the most reliable and effective marketing drivers ever employed.  We provide organizations with what used to be reserved for mega-corporations; national and international TV advertising to a demographic which is your target audience if you are a business which targets the family,” says Lovett, “then we offer retail extension to ensure that your point of sales is only a click away, making the sale for you, within our EnLive Smart TV App.”   This is the distinction and the value of the Christian Library on Demand.

About the Christian Library on Demand

We are the Christian Library on Demand (CLD) a Christian entertainment company.  We have Christian entertainment available on streaming video apps!  Just search “Christian Library on Demand” in your Apple or Android App store.  It is a FREE download!   If you have a smart TV with access to the Google Play Store, VIZIO App Store or the Samsung Smart Hub you can download “EnLive” Smart TV App for FREE!  Just go to www.ChristianLibraryonDemand.com for more info the CLD mobile app!  And Go to www.EnLiveTV.com for more info on the EnLive Smart TV App!

Contact Terrence A. Lovett or Darcey Hutchinson for details

Terrence_Lovett@Christianlibraryondemand.com

Darcey_Hutchinson@Christianlibraryondemand.com

720-275-5387