Spending Blindly = No Clear Vision

I was reading a story about RedEnvelope (I’m not affiliated with them) today. It started out as a typical marketing case study – with the usual woes of what was going on before massive change and an insertion of marketing talent, followed by the high success of the marketing efforts of those same people.

It is a positive story, overall, and granted, the story was written in 2002, so it is a little old, and I have no idea how well RedEnvelope is doing now. There website is still online, but that doesn’t necessarily mean they are doing well. That is not the point I’m trying to get at though.

The thing I found interesting about the story, was actually the comment made at the end of the story. After all the build-up of a huge marketing success, the story is slammed down by stating coldly that the company spent $4 in marketing for every $1 in gross sales.

That’s four times the amount of gross sales in marketing. To me, there is no reason this story should have been considered a success at all – of course, that is not taking into perspective what happened after that initial investment in marketing. The point remains, however; without a clear and guaranteed return on that investment, spending four times the amount of sales on marketing is not acceptable by my standards – regardless of the amount of sales generated.

Marketing efforts must be able to demonstrate a clear, measurable path to a return (and hopefully a large one) on investment. Even social media, for example, has the ability to be measured, and it most certainly should be.

Blindly spending vast amounts of money on marketing is not a sure solution to success, especially in today’s society of advertising and marketing bombardment on consumers. People are increasingly turned off by traditional marketing efforts, and are leery of the new marketing efforts being employed. Spending money without a strong indication of the return on investment is just plain stupid.

I don’t mean to pick on RedEnvelope, especially because I don’t know what the overall success of that initial marketing effort was, they may now spend $1 in marketing for every $4 in gross sales – and that very likely could be the case because of that initial effort. But on the surface, the story does not yield itself to a positive light for RedEnvelope’s initial thinking.

Before spending 30%-50% of your startup capital on marketing, make sure that you spend that money in a way that is 1) trackable, 2) measurable, and 3) as close to guaranteed to give you a return as is possible.