Let me start by saying that I’m NOT an accounting nerd, but I have a very high regard for accounting nerds like our John Williams.
But, it occurs to me as people are crunching their year-end accounting for marketing costs, they are probably designating marketing investments as “operating expenses.”
What is a Marketing Expense?
Many people take their marketing decisions much too lightly. This may be in part because they commit “random acts of marketing” like exhibiting at a trade show without a proper follow up program, or running a beautiful ad in a glossy aviation magazine without providing a response code or other method of tracking the results.
It’s true that “random acts of marketing” can be wasteful monthly expenses. We’d like you to think about your marketing activities in terms of investing in permanent assets that add lasting value to your company.
Here’s what we mean: We believe that your customer list and your prospect list are, by definition, the most important assets that your company can own.
Since your client list and your prospect list are vitally important assets, then materials and infrastructure that are used to build and maintain these lists are capital investments.
As an example, let’s say that you have a healthy prospect list of several thousand and a client list of several hundred.
If all of your airplanes were (amazingly) wiped out by a tornado and you were (even more amazingly) uninsured; or if (somewhat less amazingly) your product became somehow unsellable because it was overtaken by more current technology, you still have an active file on hundreds of people who already know, like and trust you. You also have an active file with varying amounts of information on thousands of people who have heard of you and have had at least one positive interaction with you.
You can always create another product, or sell someone else’s product that fits the demographic of your client list.
As long as you have customers and prospects, you’re still in business.