January 2017 | Tony Gavin, Esq.

Archive Monthly Archives: January 2017

The Hidden Cost of Marketing – Non-Working Spend

I came across an extraordinary report last week. Produced by global marketing platform provider Percolate, the report focuses on the hidden cost of marketing – non-working spend. You can download a copy of the report here.

The average marketing budget allots only 48% to advertising

Percolate mostly deals with large global brands. I know for sure that most small businesses don’t spend anything like 52% of their marketing budget on non-working spend – but maybe they should. Let’s dig a bit deeper on what non-working spend actually is.

Non-working advertising spend

In a nutshell, non-working spend is the money spent on creative – not putting it in front of an audience (i.e. what you spend directly on advertising). Think of the cost of creating and maintaining your website, graphic design and printing of brochures, creating content for blogs posts, agency costs, performance monitoring and measurement expenses and the myriad other items that eat into your marketing budget that are not direct advertising spend.

Working advertising spend

Working advertising spend is what you invest directly on distributing the content you create – be it postage, paid ads on Google and Facebook, print-based ads, radio and TV commercials or the million other advertising options which exist. Working advertising spend is an expenditure that directly delivers your message to your audience.

Why SME’s need to invest more on non-working advertising spend

Put bluntly, the typical small business generally lacks the internal skills (and time) to develop marketing strategies that predictably deliver new customers and a sustainable return on investment from advertising. Even those businesses that have a capacity to develop strong marketing strategies rarely have the internal resources to successfully execute tactics (most notably in the digital realm), monitor, measure and manage their marketing plans to success.

The Percolate report is very focused on reducing non-working advertising costs. For large corporations with internal marketing departments and vast amounts of capital invested in branding and the like, that makes a lot of sense. It makes almost no sense at all for a business where the owner writes boring copy for the company website and the receptionist designs (ugly and ineffective) marketing collateral, using Microsoft Publisher. These businesses need to spend more on their non-working advertising spend – generally a whole lot more.

Non-working advertising spend is a long-term investment

Think of it like this – what’s more likely to elicit a positive response from prospects; a poorly designed website built by your next door neighbours 12-year-old – or a professionally designed website built by people who know how to sell ice to Eskimos?

If you’re going to spend money on bringing people to your website, you might as well make the investment in fully optimised pages and a well-crafted message.

The same principle applies to researching your market, development of your primary value proposition, creation of an ROI-focused marketing strategy, selection of worthwhile marketing tactics, management and monitoring of your marketing and advertising campaigns – and most of all – investing in the people who bring all of that to life.

A final word

Modern marketing is complex. That’s especially the case in the world of digital marketing. One standalone tactic like AdWords, or SEO, or running Facebook ads is unlikely to work for your business anymore. You need a strongly focused and cohesive strategy that drives your decisions on what tactics to implement. You’ll also need a good team around you to advise upon, execute and manage your plan.

For smaller businesses, your non-working advertising spend may prove to be the decisive factor in whether your marketing plan succeeds or fails. Hire skilled people internally, or outsource your marketing to a company that has the expertise and people to make your plan work. Either way, you need to budget for the hidden cost of marketing – your non-working marketing spend.