Why Big Budgets Aren't as Sexy as They Sound
By Stephan Aarstol, inc.com
The bigger the budget you have, the lazier you get.
Big budgets can be captivating--especially big marketing budgets. If
you look at someone's résumé and see that he or she managed several
million dollars, you think, "Wow, this person must be pretty savvy to
throw around that kind of money."
The problem is that the bigger the budget you have,
the lazier you get. And when you get lazy with your marketing, your money doesn't go as far.
Just think about Super Bowl ads. This year, a 30-second spot costs $4.5 million, but research suggests that only one in five Super Bowl ads leads to a sale. It makes you wonder how effective those deep pockets really are.
When I started my stand-up paddleboard company, I had no budget. I couldn't do what everyone else was doing to compete, so I had to get creative. There's still a running joke at my company that my marketing team will ask what the budget is, and I'll reply, "As close to zero as possible."
Not only is it possible to succeed on a small or nonexistent budget, I'd argue that it's actually preferable.
How Big Budgets Set You Up for Failure
I'm not delusional. Of course you can fabricate growth with advertising. However, sustained, profitable growth over the long term requires a self-fueling marketing engine.
If you have more money to throw at advertising, there's little motivation to innovate. It's easier to stick to the status quo and use whatever tactics everybody else is using, which is why the auto industry has been so slow to innovate.
Suddenly, a company like Tesla Motors comes along with a high-performance electric vehicle, and it presells its cars years in advance with no TV advertising. When you have a small budget, you're forced to find cheap, creative ways to market your products.
A big-budget mentality can also lead to trouble. Before the dot-com crash, companies like Webvan landed millions in funding and used it to buy expensive advertising before they'd even proven their business model. One by one, they fell.
A few years later, college kids started Facebook and expanded it into what it is today by relying primarily on word of mouth. Clearly, today's market demands a shift in thinking.
How to Shake the Big-Budget Mentality
To achieve marketing success, here are some tips for ditching the big-budget mentality:
1. Use free and semi-free resources. Social media, organic SEO, and other online marketing tactics will help you reach your audience with little monetary investment. If you create compelling content that emphasizes the value of your products, you'll get a lot of visibility. It just takes time, persistence, and consistency.
2. Focus on making great products. You're much better off spending $1 million to develop a great product and promoting it through your network than spending $1 million advertising a mediocre product. When people find something great, they're going to share their positive experiences, which will stimulate sales.
3. Hire the best talent cheaply, and let them run wild. There are tons of smart, talented people just starting their careers. You can hire them for cheap and give them free rein to come up with innovative ways to market your products with little to no budget. Not all of their ideas will be winners, but chances are there will be at least a few good ones you can implement.
4. Have a small team operate with no budget. Slice off your most promising team and challenge them to compete directly with your marketing department. Give them virtually no budget, then have your main marketing team apply the hacks they come up with.>>>
the lazier you get. And when you get lazy with your marketing, your money doesn't go as far.
Just think about Super Bowl ads. This year, a 30-second spot costs $4.5 million, but research suggests that only one in five Super Bowl ads leads to a sale. It makes you wonder how effective those deep pockets really are.
When I started my stand-up paddleboard company, I had no budget. I couldn't do what everyone else was doing to compete, so I had to get creative. There's still a running joke at my company that my marketing team will ask what the budget is, and I'll reply, "As close to zero as possible."
Not only is it possible to succeed on a small or nonexistent budget, I'd argue that it's actually preferable.
How Big Budgets Set You Up for Failure
I'm not delusional. Of course you can fabricate growth with advertising. However, sustained, profitable growth over the long term requires a self-fueling marketing engine.
If you have more money to throw at advertising, there's little motivation to innovate. It's easier to stick to the status quo and use whatever tactics everybody else is using, which is why the auto industry has been so slow to innovate.
Suddenly, a company like Tesla Motors comes along with a high-performance electric vehicle, and it presells its cars years in advance with no TV advertising. When you have a small budget, you're forced to find cheap, creative ways to market your products.
A big-budget mentality can also lead to trouble. Before the dot-com crash, companies like Webvan landed millions in funding and used it to buy expensive advertising before they'd even proven their business model. One by one, they fell.
A few years later, college kids started Facebook and expanded it into what it is today by relying primarily on word of mouth. Clearly, today's market demands a shift in thinking.
How to Shake the Big-Budget Mentality
To achieve marketing success, here are some tips for ditching the big-budget mentality:
1. Use free and semi-free resources. Social media, organic SEO, and other online marketing tactics will help you reach your audience with little monetary investment. If you create compelling content that emphasizes the value of your products, you'll get a lot of visibility. It just takes time, persistence, and consistency.
2. Focus on making great products. You're much better off spending $1 million to develop a great product and promoting it through your network than spending $1 million advertising a mediocre product. When people find something great, they're going to share their positive experiences, which will stimulate sales.
3. Hire the best talent cheaply, and let them run wild. There are tons of smart, talented people just starting their careers. You can hire them for cheap and give them free rein to come up with innovative ways to market your products with little to no budget. Not all of their ideas will be winners, but chances are there will be at least a few good ones you can implement.
4. Have a small team operate with no budget. Slice off your most promising team and challenge them to compete directly with your marketing department. Give them virtually no budget, then have your main marketing team apply the hacks they come up with.>>>
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