Does advertising pay?
A well-placed advert could be worth its weight in gold but there was also the chance that your advertising budget is poured straight down the drain. This article considers some of the pros and cons.
Advertising has been something of a dirty word in our profession. We tend to feel far more comfortable using euphemisms such as sponsorship, marketing and PR, while branding also comes into roughly the same category.
One way to define advertising is: 'spending money in order to promote a business or service by publicising its name or some other recognisable feature'.
Ignoring any possible distaste and certainly ensuring that we stick to any ethical guidelines laid down by the bodies to which we pay homage, there is a much more salient question which is whether the financial outlay brings in any tangible (or even intangible) benefit?
Accountants are very good at dealing with numbers. After all, that is how we make our money. However, frequently any income that we generate from advertising is very hard to identify and may take years to realise.
Realistically, not too many accountants are likely to take a two-minute advert during half-time in Super Bowl. Indeed, most of us would struggle to pay a satellite channel for a quick burst of publicity during the first qualifying round of the FA Cup.
A more likely outlet might be purchasing a dozen shirts for your seven-year-old daughter’s youth football team and emblazoning the firm’s name and logo all over them.
It could be argued that this is hardly advertising, and HMRC might well take that view when you seek a tax deduction. However, if the parents of the other kids are all prospective clients, then this modest investment could easily pay massive dividends. Even one new signing would put a big smile on your face and allow you to respond forcefully to any enquiry from the Revenue.
Similarly, if you operate in a small community then putting up a sign at the station (which one of my former firms did) or inserting an advert in the local free rag might offer an immediate return.
A parallel to this could apply to a practice offering niche services. If, for example, your firm is dominant in the needlework industry then a well-timed advert in the Knitter’s Gazette almost certainly makes sense. It consolidates everyone’s opinion of your specialist expertise at the same time as reminding them that you are there and ready to do business.
Most accountants are good with money, or mean, depending on one's perspective, and prefer to avoid any unnecessary expenditure. It probably makes sense to look at prospective advertising opportunities with a very critical eye, rejecting pretty much everything unless you can see a material benefit in the short to medium-term.
Having said that, the area where advertising could be really useful is recruitment. Bearing in mind the cost of employing an agent, who will charge 25% or more of the first year’s salary, going it alone and publicising your firm at the same time as trying to hook its next star could be really worthwhile.
The other area that has taken off recently is social media. Cleverly, companies in this field give the impression that your investment will be minimal, possibly only a penny or two. The problem here is that often it is multiplied up many times and can make a reasonable dent in your budget.
The bigger your firm, the more likely it is to have a real-life marketing budget that someone will be obliged to spend.
That is the time when the money really could be poured down the drain. Does it really make sense to take an advert in a charity brochure, football programme or national newspaper? The name recognition could be really good for the long-term future of a practice, but you may never know whether there has actually been a direct correlation between the hefty expenditure and additional income.
As with any other area of business development and improvement, someone needs to take decisions. Realistically, most firms will probably decide that advertising can be beneficial but the key is probably to give your most cynical responsibility for holding the purse strings.