“A PERSON WHO STOPS ADVERTISING TO SAVE MONEY IS LIKE A PERSON WHO STOPS A CLOCK TO SAVE TIME!” - Henry Ford

Pay for stuff

As a bootstrapping entrepreneur, my instinct has always been to work before spend. If there was a way to spread the word virally instead of buying ads, I would. If there was a way to change the project so I could do it myself, I would. If I could trade or whittle my way into getting an asset on the come, I would. That's the mantra of the bootstrapper.

It turns out that paying for stuff works too.

Ads that pay for themselves are worth buying. Employees and freelancers that produce more than they cost are worth hiring. Office rents that generate productivity, foot traffic or revenue are probably worth paying.

In the free media world in which we're living now, it's so easy to get stuck on not investing, on avoiding outlays at all cost. Frugal is an admirable trait, but being a miser is dumb.


On Behalf Of Seth Godin


Good read!! Wanted to share!

HOW TO JUMP START YOU RETURN ON EXPENSES!

The first step is critical. Clarify for yourself your difference between expense items and investment items. Read that sentence again. The key idea is in ‘clarify for yourself your difference’. We all know the accounting definition of expenses and investments. And your CFO probably has his or her personal way of looking at expenses and investments in terms of your business. But what is your definition? We want you to acknowledge that some ‘expenses’ are actually ‘investments’ that you know you must make to secure a better future for your business. The problem is that as long as you think of them as expenses you will hesitate to make the required investment, irrespective of your financial situation. As long as you talk about these investments as ‘expenses’ or ‘costs’, managers will automatically want to minimize them. Many a growth strategy has failed because managers have set out to minimize the expenditure instead of optimizing the investment.

During difficult times, some companies see their media budgets as an easy place to look to cut operational expenses. Cutting advertising and media to protect profit is a short term fix at best. At worst it can be a costly long-term mistake as you miss out on the opportunity to grow market share as the market rebounds. And yet, the pressure to survive the short-term can be enormous. So what should you do?

The purpose of any media plan is to reach as many different potential customers as possible before the money runs out. Pretty simple, isn’t it? Now think effectiveness and efficiency – the two main ways your media buy should work for you. Before we go any further, let’s agree on what we mean by effectiveness and efficiency – concepts that we think are used too broadly. Effectiveness has to do with your planned outcome (the effect) while efficiency relates to the ratio of resources used to create the outcome. Simplistically, the one has to do with output and the other with input.

Now, if you can achieve the same output with less input (money), you’ve hit a home run. Flip it, and you’ve also done alright if you can achieve more output (media) for the same input. In both cases you have maintained your effectiveness at greater efficiency.

A. Ask for help: Many people like to be helpful. If you don’t like asking for help, then ask questions. Many people like to show off what they know. People at media agencies are no different. Ask. You have nothing to lose and much to gain.

B. Be flexible: Before you develop a (media) plan, develop a flexible mind set. Rigid plans look good on paper, but don’t work in changing environments. Few things hamper your ability to find cost savings than a historic attachment to ‘but we’ve always done it this way’. Next, make sure this flexibility mindset is passed on to your media partners so they can also uncover opportunities for you.

C. Create your plan: Be clear on the outcome you want from your media strategy. Modify and strengthen your media plan as appropriate to deliver the desired results. Only then should you look for savings in a more efficient execution of the best plan possible. Don’t make the classic mistake of looking for savings first at the buying end of this equation.

D. Definitely negotiate: Everybody wants the best deal they can get. This is why negotiation matters. Many people still assume that negotiation is about persuading others to accept your terms. It is not. Negotiation is about finding terms of agreement that best suit your goals. Be smarter, more flexible, user friendly, and fair minded and you will be successful in negotiating. This is especially true in today’s media marketplace where relationships are very important.

E. Excel before moving on: Plans are least effective when too many actions are attempted at the same time. It’s usually a case of limited resources spread too thin. Make sure you hit your goals effectively and efficiently in your primary media choice before moving to the next one. Your plan will gain traction and momentum if your priorities are exactly right.

Our ABCDE of media buying is aimed at helping you keep the longer term in mind (investments) while you make day-to-day cash-flow decisions. We plan to expand on these ideas in a future article. Until then, keep in mind that we have all become conditioned, in an economic downturn, to react to expenses. In preparation for the upturn, we must become proactive. Begin by thinking, speaking and deciding in terms of investments.

-- Jeff Jones and James McIntosh collaborated in writing this article. They have had a classic vendor-client relationship for the past three years that has morphed into a good example of the theme of this article. They took an expense item (consulting fees) and turned it into an investment that has paid off for both parties – well beyond their original intention. Jeff is CEO of WFofR Media (www.wfofr.com) and James is Chief Nonsense Officer of Nonsense At Work (www.nonsenseatwork.com).