To demonstrate this, stop and ask yourself what you do with an expense
in your business. The answer quite simply, is that you write it
off. Your phone and electricity bills, your rent and your taxes,
are all written off at the end of the financial year. So to view
your advertising as an expense, would be to write it off as soon
as you place it. So if you're simply going to write it off, why
pay for it in the first place?
Every business advertises in the hope that their efforts will bring
them new business. This brings us to another important point. You
get returns from investments, you do not get returns from expenses.
So understanding that you're investing your advertising dollar in
the hope that it will bring you a return, why is it that in the
average business, the owner has little if any idea what the return
on their investment is?
The reason for this is simply that the average business owner doesn't
take the time to measure the response that each marketing piece
generates. If you were to invest your money in shares, you'd most
likely keep a very keen eye on what returns you were getting from
that investment. But the average business owner, has little idea
whether they're getting any return at all, from the money they invest
in advertising.
So how do you find out what return you're getting from each marketing
piece? Simply ask. You simply ask each customer who calls, or comes
into your store how they found out about you. You then record their
response, and calculate how much business each advertising effort
generates. Once you've worked out the ones that are making you money,
or at least paying for themselves, and the ones that are costing
you money, you'll stop wasting money, and start to increase your
profits.
But back to what I was saying earlier about advertising bring you
unequaled returns. Ask most people where to get the best returns,
and they'll tell you that the stock market or banks are the most
effective. But I've seen advertising outperform these other avenues
time and time again. Like the business who spent $284 on an advertisement
which brought them an extra $4,500 profit in just 4 weeks. Or the
company who spent $4,900 on a marketing campaign which yielded an
extra $92,000 profit in only 9 weeks.
Try getting that sort of return from shares.
