The marketing budget: cost or revenue generator?

KPMG business advisory partner Mark Kippenberger

Mark Kippenberger, KPMG Business Advisory Partner discusses how small and medium sized businesses can make more from their marketing spend:

Firstly let me provide some context. Small companies, family or privately held business, often with employee teams less than 20 people.

Large enough to have allocated some scarce budget to marketing/ advertising spend, but not large enough to hire a marketing professional on the team.

Next let me say, while an accountant I'm a huge fan of marketing professionals, their skills, strategic thinking and ability to communicate a clear message. Most small NZ business are not 'strategic' enough to engage a marketer, but jump headlong into advertising spend, believing this to be the most effective route to revenue.

So how do business owners invest their allocated budget?

Well some allocate funds across a variety of advertising mediums. Often mediums linked to raising business awareness and selling product. This market space is jammed full of "noise" and often advertising is done without the context of a marketing strategy with an end goal (or company position) in mind.

The challenge is to do more with less. That is reduce your advertising budget so the lower spend has some end goal marketing strategy behind each $1 spent.

Creating a clear communication strategy with your clientele requires skill and fore thought. Given the frenetic role most owners assume in their business, this clarity around strategy can be hard to find.

Ironically small business owners once convinced of the need to spend in various advertising mediums, invest very little time in understanding what mediums created what returns. The time required to monitor a response mechanism seems too challenging to warrant the investment for many.

So where to from here for small business owners? Well cash flow underpins every activity. Without cash flow most owners are weeks from collapse. I contend that advertising spent within a sound marketing strategy increases revenue potency. The advertising investment warrants the time to monitor each 'medium spend' so owners are equipped to feed data back into the mix and tweak strategy.

Some tips

• Creating a clear marketing strategy needs professional expertise

• Advertising without marketing strategy does not maximise your revenue opportunity

• Allocating some investment to marketing strategy will make those advertising $ go further

• Include a response mechanism within each piece of advertising and monitor results

• Spend time reviewing advertising performance against marketing plan

• Ensure your marketing plan/advertising, end is consistent with your business plan activities and objectives.