The Simple Difference Between Expense and Investment

In today’s media world, we often hear the term “investments” being bounced around. “The cost of our digital investment is $100MM,” one might say. There are plenty of times when this word is used when the person actually means “expense.”

An expense is incurred when someone pays for a product or service that is meant to be a one-time transaction. An investment, however, is an expenditure that is meant to have more of a lasting value than a one-time transaction. In finance, something is an investment if it is intended to produce a higher return than what can be obtained if the money was not placed in the investment.

In media, a lot of spend should not be described as “investments” because they are really expenses. Take, for example, digital campaigns. Advertisers place money on these campaigns to build awareness of their products in the market, but when they don’t think strategically and keep planning campaign by campaign, they are incurring expenses. They buy advertising space on different sites in each of these campaigns, serving impressions on very different audiences that was somehow justified along the way as being within the brand’s target audience. The advertiser gets reach and frequency delivery reports from the agency or the publisher. Then they do the same thing again. Then again. Then again. The advertiser treats the audiences they are reaching as if they are new people each time. They don’t think about the full picture: how many of those people were actually served advertising at a given time, then reached again a few weeks or months after? Of those people served the first time who remembers the ad later, then reached by advertising again, shouldn’t they be considered differently than someone who sees an ad for the first time, or don’t remember the previous campaign at all?

In this case, when advertisers don’t look at the full picture, their marketing “investment” ceases to become a true “investment,” it merely becomes an expensive cost.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s