As we navigate times of economic uncertainty, many companies are grappling with the best ways to utilize their resources. When revenue and profits are down, it’s common to feel the need to make difficult decisions regarding budget cuts. Unfortunately, many businesses put their marketing budget on the chopping block in difficult times, when they should actually be doubling down on their marketing efforts.
This type of approach is common when marketing is viewed as a cost – a discretionary spend that isn’t integral to the growth of the business. But this mindset ignores marketing’s role in pipeline growth, brand equity and customer loyalty, all of which are critical to ongoing business growth. When companies view marketing as an investment in their growth, the impact on their bottom line is typically significant. According to research by McKinsey, businesses that prioritize marketing as part of their core growth strategy are twice as likely to achieve annual growth exceeding 5% than companies that de-emphasize marketing.
Business growth is harder than ever. Many companies are experiencing increasing customer acquisition cost (CAC) and tougher competition throughout their industry. In addition, AI disruption has changed the way businesses operate, forcing many companies to adapt on the fly. In this challenging business climate, CEOs can’t afford to underleverage one of their strongest growth levers.
Viewing marketing as a growth driver and an investment in the long-term success of your business can help you flip this script. If your company isn’t leveraging marketing to drive growth, it’s time to reframe your view of the role marketing plays in the success of your business.
Why Marketing Belongs at the Core of Growth
According to Harvard Business Review, high-growth companies invest approximately three times more on marketing. This statistic is very telling, and it underscores the importance of emphasizing marketing as a core part of your growth strategy. But at the same time, this statistic fails to tell the entire story. While investing in marketing is clearly essential if it’s going to drive growth, the investment alone isn’t sufficient to deliver your desired results. It’s also critical to empower CMOs by giving them a seat at the table with other executives tasked with achieving sustained business growth.
All too often, CMOs aren’t adequately supported by their CEOs, and this can negatively impact growth outcomes. Harvard Business review’s research also found that:
- 40% of Fortune 500 companies don’t have anyone in marketing and customer-related roles on their executive committees
- Companies that give the CMO a prominent role in strategic planning grow 1.3 times faster
There are several benefits you’ll experience when you prioritize marketing as a core part of your growth strategy and empower your CMO to play a prominent role in strategic growth plan development:
- Your CMO is uniquely positioned to educate the rest of your executive team on the specific marketing metrics that will drive financial growth.
Your CMO can provide unique expertise regarding the marketing metrics that truly matter to achieving sustained growth. When your CMO is able to contribute to the development of growth-oriented marketing metrics, it shifts the focus from KPIs that track reach to KPIs that evaluate relevance. Instead of being concerned with how many people saw your message, you become more focused on the reasons people are consuming your message and the effectiveness your messaging is achieving. When you understand these insights, it can be a much more powerful driver of growth than simply tracking the ways in which marketing is driving awareness of your brand.
- Your CMO can serve as a customer advocate, ensuring that your customer’s needs are always placed at the center of your growth strategy.
While it may seem obvious that the customer’s needs should drive your growth strategy, creating a customer-centric strategy can often be challenging. The fragmented nature of modern consumer buying behaviors requires a more nuanced understanding of your audience’s specific needs and pain points. When you include your CMO on the team responsible for strategic growth, you ensure there is a person involved in the process who understands the needs of your customers and can serve as their advocate. Having a customer advocate contribute to these strategic discussions helps the rest of your team make informed decisions regarding how your brand can better interact with your audience and meet their needs.
When your business invests in marketing and empowers your CMO to play a prominent role in your strategic growth planning, it can have a powerful effect. Not only will you have the resources necessary to achieve your goals, but you’ll also make sure these resources are used in a way that prioritizes the needs of your customers. This will significantly improve your ability to grow faster and more predictably.
A Real Life Example – E.l.f. Beauty
Last year, the Wall Street Journal published a case study of the impact E.l.f. Beauty’s decision to emphasize marketing as part of their core growth strategy. The company’s increased investment in marketing has been a gradual process that started in 2019 when they closed their brick-and-mortar stores and shifted their distribution exclusively to third-party retailers and online sales. At the time, they were spending 7% of their net sales on marketing each year, but the money saved on overhead when they closed their storefronts allowed them to boost this amount to 13% of their sales.
As part of this case study, their CMO indicated that they experienced exceptional results from this initial boost in marketing investment, and it gave them the confidence to invest 16% of net sales into marketing the following year. They saw even better results that year and invested 20% of their net sales the following year. E.l.f. Beauty now invests 25% of their net sales into marketing, and they experienced a 71% growth in net sales year over year from the end of their fiscal year in 2023 to the end of their fiscal year in 2024.
But E.l.f. Beauty did more than just increase their investment in marketing. They also empowered their CMO to play a prominent role in strategic growth planning. Their CMO acknowledged having a strong working relationship with the company’s CFO, allowing them to become closely aligned on strategic growth initiatives: “She [our CFO] knows exactly what we’re doing and why we’re doing it. She’ll be the first to actually want to pour more fuel on the fire if we both see the signals that this is working” said E.l.f. Beauty CMO Kory Marchisotto.
What Goes Wrong When Marketing Is Treated as a Cost
The primary obstacle to making marketing a growth driver is treating these resources as a cost rather than an investment in your ongoing growth and success. This is a common mindset among businesses that have never invested significant resources into their marketing efforts, or even worse have been burned by bad results when they have invested in marketing. In these situations, it’s understandable that company leaders may view marketing as a gamble that may not be worth the cost.
When you view marketing as a cost, it often results in smaller budgets and a focus on short-term gains rather than an investment in strategies that may deliver long-term benefits which won’t be experienced right away. This approach can:
- Hinder creativity
- Increase the likelihood of choosing budget services that fail to help your brand connect with your audience
- Limit the resources available to make marketing a true driver of growth
One of the reasons so many businesses underestimate the potential of marketing to drive company growth is that many CEOs lack a marketing background. McKinsey estimates that only 10% of Fortune 250 CEOs have marketing experience and only 4% have previously worked in a CMO-like role. Conversely, over 70% of Fortune 100 CEOs come from a finance or operations background. This creates a disconnect where many company leaders fail to understand the ways in which investing in marketing can drive long-term growth.
This disconnect also impacts the ability of many CEOs to connect the dots between traditional marketing metrics and their impact on business growth. The same McKinsey report indicates that CEOs feel marketing metrics correlate with business impact less than 60% of the time. When they’re unable to see the way these metrics impact growth, it’s extremely hard to understand how these marketing resources represent an investment in your company’s long-term success.
What Happens When You Treat Marketing as an Investment Instead of a Cost
Viewing marketing as a cost and consequently seeking out more cost-effective (read: cheaper) options will actually cost your business more in the long run. You’ll end up wasting your time and money on marketing efforts that don’t build your brand, generate leads or improve customer loyalty. This will delay growth, costing you much more money in opportunity loss compared with the cost of a larger investment in quality marketing solutions.
Once you start treating marketing as an investment, it creates a mindset shift that recognizes the growth potential generated by every dollar spent. This investment mindset will deliver several important benefits:
- Creates long-term value
- Delivers measurable returns
- Improves customer engagement and retention
- Builds brand equity
- Creates competitive differentiation
Creates Long-Term Value
When you make an investment, you’re not necessarily looking for a quick payout. Instead, you’re thinking big picture and playing a long game. When you develop and implement marketing initiatives intended as an investment in the growth of your business, you have the ability to create long-term value that will pay dividends for years to come.
A well-executed marketing strategy that is aligned with your company’s growth goals can help you enhance the power of your brand and cultivate greater customer loyalty that increases their lifetime value. Over time, this will drive sustained revenue growth and profitability.
Two great examples of the long-term value that can be achieved through effective marketing are Nike and Apple. For decades, both businesses have heavily invested in marketing efforts that build their brand and drive customer loyalty. In 2024, Apple led the US smartphone market share at 61.26%, with Samsung a distant second at 22.63%. While Nike’s numbers aren’t as impressive, they still dominate the market share for sneakers and apparel with 16.4%, while their next closest competitor, Adidas, only holds a 9% market share. No other company even holds 4% market share.
Delivers Measurable Returns
Today’s digital marketing strategies provide a wealth of data that allow you to track the performance of your efforts in real time. This allows you to make strategic adjustments to your campaigns that will help you improve your ROI over time.
The important caveat to the statement above is that you must track the right data. The most effective marketing strategies occur when there is alignment between the CEO, CFO and CMO regarding the important metrics to track and how to measure success. This is when your marketing data can become a powerful driver of business growth.
In general, the most effective marketing metrics to track are the ones which help link your marketing strategies to their financial outcomes. KPIs such as customer acquisition cost (CAC), customer lifetime value (LTV), conversion rate and lead-to-customer rate all provide powerful insights that can help you grow your business.
Improves Customer Engagement and Retention
Loyal customers are one of the most powerful assets your business possesses. They make repeat purchases, spend more money with your business, refer other potential customers and provide valuable feedback regarding your products and services. They also tend to be less price-sensitive than new customers.
Effective marketing strategies don’t just target new business. They also help you improve engagement with existing customers to establish long-term relationships which drive continued revenue over time. Marketing resources that are used to improve customer engagement and retention are a significant investment in the long-term growth of your business, allowing you to reap the financial benefits associated with repeat business and customer referrals.
Builds Brand Equity
Brand equity refers to the value your brand holds in the minds of your customers. It encompasses customer perceptions, awareness, loyalty and experiences. When you have strong brand equity, it allows you to command higher prices and generate stronger profit margins than competitors with poor brand equity.
Building your brand equity doesn’t happen overnight. It’s a long-term strategy requiring consistent marketing initiatives that create positive associations with your brand that influence your audience to value your products and services over your competitors’ offerings. When you view marketing as an investment, it allows you to take a patient and measured approach to building brand equity that can generate new sales, improve customer retention and boost the lifetime value of each customer. This creates a cascading effect that significantly boosts your long-term financial growth.
Creates Competitive Differentiation
In the modern business landscape, many industries have become oversaturated. Your ability to stand out from your competitors will play a critical role in the long-term growth and success of your business. Investing in marketing provides a powerful tool to drive the competitive differentiation your company needs.
The companies that achieve the most effective competitive differentiation typically invest significant resources in the planning phases of marketing strategy development. This includes conducting market research and detailed competitor analyses which help you determine your unique market positioning. Once you understand your market positioning, you can develop brand messaging that effectively communicates your unique selling proposition (what makes your business special and unique) to your audience. By showcasing the ways in which you’re different from your competitors, you can attract customers who resonate with your USP and brand messaging. When your audience can clearly see what sets you apart, it will help improve your market share and drive revenue growth.
Creating the Mindset Shift from Marketing as a Cost to a Growth Investment
Shifting your mindset from viewing marketing as a cost to a growth investment requires a significant buy-in from your leadership team. Your executives must be able to think beyond the next quarter or even the next year and instead take a long-term approach that sees the role marketing plays in sustained revenue growth. When long-range growth objectives are prioritized over short-term gains, you can start to develop a marketing strategy that represents a true investment in your company’s success.
The following steps can help you make this mindset shift so that you can unlock the revenue growth that is possible when marketing becomes an investment in your company’s long-term success:
- Educate and align your leadership team
- Use data metrics for accountability
- Integrate marketing with business strategy
- Shift focus from short-term to long-term value
- Foster cross-departmental collaboration
Educate and Align Your Leadership Team
Creating a mental shift requires educating your leadership team so that they understand the role marketing plays in driving revenue growth. This education should focus on the following concepts:
- Delineating the difference between one-time expenses and long-term investments
- Showing how marketing creates ongoing value beyond immediate sales
- Explaining the ways advanced marketing goes beyond promoting products and increasing awareness:
- Drives competitive advantage
- Assists in strategic decision making
- Influences the full customer journey
Use Data Metrics for Accountability
The specific data metrics you track will play an important role in your ability to help your team understand the ways marketing is an investment in your company’s long-term growth. If the primary KPIs you track are related to awareness metrics, then your leadership team will largely view marketing as a tool to raise awareness. This can reinforce the “marketing as a cost” mindset since it is often challenging to see the ways in which awareness helps grow your business.
To change this mindset, you need to track metrics that tie your marketing efforts to revenue growth. The following KPIs will help you measure and communicate the tangible impact of your marketing efforts on revenue growth:
- Marketing ROI
- Customer acquisition cost (CAC)
- Customer lifetime value (LTV)
- Return on Ad Spend (ROAS)
- Conversion rate
- Lead-to-customer rate
At your executive meetings, your CMO should regularly report outcomes tying marketing spend to key business results such as increased leads, conversions, recurring revenue and retention rates. When your executive team sees the tangible results of your marketing efforts, it will be easier to view marketing as an investment in long-term success rather than a cost to be managed.
Integrate Marketing with Business Strategy
It’s important to make sure your marketing strategy is aligned with your business growth objectives. Have your CMO explain to your executive team how each marketing campaign supports your top priority growth goals. This could be related to helping you enter new markets, increase your market share, or any other long-term growth objective you may have.
Whenever possible, have your CMO highlight case studies where your marketing efforts have driven company growth or protected your business from customer attrition and financial losses during economic downturns.
Shift Your Focus from Short-Term to Long-Term Value
While immediate wins are important, focusing exclusively on these short-term benefits can contribute to viewing marketing as a cost. It’s important to remember that anytime you’re making an investment, it should be viewed from a long-term lens, so it’s important to shift your focus to the long-term value being provided by your marketing efforts.
Help your leadership team reframe expectations so that they appreciate both the immediate wins and the growing, future impact of sustained marketing investment. As part of this adjusted perspective, make sure your strategy balances rapid response, performance-based marketing tactics with brand-building activities that deliver compounding returns over time.
Foster Cross-Department Collaboration
One of the reasons marketing is often viewed as a cost is because it operates in a silo. It’s important to involve other members of your executive team in marketing planning so that it is viewed as an integrated engine for growth, not an isolated or expendable cost. When you include your CFO as well as sales, product and operations managers in marketing planning, your entire leadership team will understand the ways in which these initiatives provide tangible benefits to their areas of focus.
Webolutions Can Help You Maximize the ROI of Your Marketing Investment
While viewing marketing as an investment rather than a cost is the first important step to driving sustained revenue growth, you also need a digital marketing partner that can help you get the results you need. At Webolutions, we can help you maximize the ROI of your marketing investment.
We’ve been Denver’s leading digital marketing agency since 1994 and over the past three decades, we’ve helped businesses in a wide range of industries achieve the growth necessary for long-term success. Our team includes seasoned marketing professionals who understand how to design a digital marketing strategy that will drive meaningful revenue growth, and we leverage the latest best practices to ensure you experience the best possible ROI on each campaign.
In addition, our real-time performance intelligence dashboards provide your team with actionable insights in a visual format that is easy to digest. These performance intelligence insights will help your leadership team see the ways in which your marketing efforts are driving revenue growth, allowing you to understand the tangible results you’re getting from your marketing investment.
Contact us today to schedule a free consultation. Webolutions serves clients nationwide from our offices in Denver, Colorado.
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