Is The Way You Think About Advertising Completely Wrong?


If you are like most business owners that I know, you think of advertising as an expense which is the wrong mindset. I will explain why below.

Liability Versus Asset

For accounting purposes, you have to put everything on your balance sheet as income or as an expense. Accountants consider advertising a liability because you have to spend money in order to advertise.

Even though advertising is listed as an expense on your balance sheet, this doesn’t mean you have to think of it as a liability or as an expense even though you probably do.

Advertising As An Asset

Experienced marketers test every ad they place and know whether that ad has a positive or negative ROI. The ads that break even or lose money are rewritten and run again or they are discarded.

Great marketers take their winning advertisements and test variations of them to see if they can increase the already positive ROI. Once an ad is the best it can be, most will scale up its use and run it until tracking shows that its effectiveness has diminished to the point it is no longer profitable.

How can you consider an ad that makes you more money than it costs an expense?

If you have an advertising campaign that cost you $150 every time you run it but it generates $300 in profit each time it is run, how often would you run that ad?

The $300 I mentioned in the example is just for the initial sale it does not take into account the lifetime value of a new customer. So the ultimate ROI could be much, much greater.

I think one reason so many business owners and marketers think of advertising as an expense is that they do not know how to track their ad campaigns so that they know which ads are generating revenue and which ads are costing them money.

Local business owners have a plethora of advertising options open to them and, unfortunately, too many of them fail to track the advertising done in each medium that they use.

When you do not track each and every ad that you place, you are using what is called a shotgun approach to marketing. Every time you use the shotgun advertising approach, you have no idea which advertisements are generating revenue and business for you and which ad campaigns should be modified or discontinued.

If you are a local business owner that is proud of your do-it-yourself mentality, your mindset may be one roadblock that is holding your business growth back.

You are probably very good at what you do but you need to seriously consider getting a professional marketing consultant that can help you build your business.

A good marketing consultant will help you better understand your business by asking questions so that they can adequately advise you on the marketing plan that should be implemented so your business can grow the way the that you dreamt that it would.

Once you become a business owner that views advertising as an asset that makes you more money, you will see your business move forward and the business owners that only view advertising as an expense will often fail before they find their path to success.

Is The Way You Think About Advertising Completely Wrong?

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