Why do Businesses spend money on Marketing? Types and Benefits of Marketing in 2023

Everything is so expensive now in this economy. We should save our spending at all costs. So you reduce spending for what you think is unnecessary or will have the least impact on your business. If you are planning on adding “Marketing” to that same list, we advise you not to. We know that most are cost-conscious now but reducing costs is not the ideal way to address the issue. Because according to the Co-Founder of Neil Patel Digital, around 8000 marketers have chosen otherwise and we did more research to see if it’s true.

In this blog, we will explore what marketing is, delve into the main types of marketing, explain why businesses spend significant amounts of money on marketing in 2023, highlight how marketers are allocating their budgets, and point out the numerous benefits of effective marketing.

What is Marketing?

Marketing encompasses a range of activities aimed at promoting products, services, or brands to target audiences. It involves analyzing customer needs, creating value propositions, and implementing strategies to satisfy those needs. By effectively reaching and engaging with customers, marketing helps businesses achieve their goals, boost sales, and foster long-term relationships.

Types of Marketing

We can divide Marketing into two based on the media they use to communicate. Traditional marketing and Digital marketing.

• Traditional Marketing: Traditional marketing relies on conventional channels such as television, radio, print media, billboards, and direct mail. It has been a tried-and-true method for decades, allowing businesses to reach a wide audience. However, its impact has diminished with the rise of digital marketing.
• Digital Marketing: Digital marketing is based on online platforms, including websites, search engines, social media, email, and mobile applications, to connect with the target audience. It offers greater reach, precise targeting, and measurable results. This form of marketing has witnessed exponential growth due to its cost-effectiveness and ability to deliver targeted campaigns. Learn more about the most effective Digital marketing types in Sri Lanka

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Why Businesses Spend Money on Marketing in 2023

In 2023, businesses and entrepreneurs continue to invest heavily in marketing for several reasons:

To stand out in Increased Competition:

The competitive landscape has intensified, with new businesses emerging and existing ones expanding. To stand out and attract customers, businesses need robust marketing strategies.

Example: A new jewelry business needs marketing campaigns to create brand awareness and differentiate itself from well-established competitors. With ongoing high competition for fashion items, starting a successful fashion business online presence and staying upto date with the latest fashion trends is a must.

Changing Consumer Behavior:

Consumer preferences and behaviors evolve with technological advancements. To remain relevant, businesses must adapt their marketing efforts to cater to the needs of modern consumers.

Example: A clothing retailer needs to invest in digital marketing to target younger demographics who predominantly shop online.

Brand Building:

Effective marketing helps build brand equity and enhances brand recognition. By creating a distinct brand image, businesses can foster trust, loyalty, and credibility among customers.

Example: An established automobile manufacturer allocates funds to marketing campaigns that reinforce its brand values, resulting in increased customer trust and preference.

Expanding Market Reach:

Marketing enables businesses to expand their reach and tap into new markets, both domestically and internationally. With the right marketing strategy, businesses can explore untapped customer segments and drive growth.

Example: A software company invests in content marketing and SEO strategies to reach a global audience and generate leads from different regions. Learn how you can easily optimize your eCommerce platforms with SEO.

How Marketers Spend Money in 2023:

In 2023, marketers are allocating their budgets across various marketing channels and tactics to maximize their reach and impact. According to Neil Patel, this is how marketers spend their money in 2023.

Search Engine Optimization (SEO):

By optimizing their websites and content for search engines, marketers can enhance visibility, increase organic traffic, and improve rankings on search engine result pages (SERPs). Out of 8032 marketers 68% of them had said that they are increasing their SEO budget on marketing while only 21% would decrease.

Organic social media:

42% will decrease, 26% will maintain the same budget and 32% will increase. The decrease is due to organic reach continually declining and organic social media not providing as high of an ROI as it used to.

Digital Advertising:

Marketers allocate a significant portion of their budget to digital advertising channels such as search engine marketing (SEM), social media advertising, display ads, and influencer marketing.

Content Marketing:

Content is King. Investing in high-quality content creation, such as blog posts, articles, videos, and infographics, is crucial for attracting and engaging audiences. Content marketing helps drive organic traffic, foster customer trust, and establish thought leadership. So, 83% of the companies are increasing their budget for content while only 9% is decreasing because the AI tools make it affordable.

Social Media Marketing:

Marketers are leveraging the power of social media platforms to connect with target audiences, promote their products or services, and foster community engagement. They invest in paid social media ads, influencer collaborations, and organic content strategies.

Podcasting

This is one of the marketing channels that is not being widely used in Sri Lanka or other countries. But 92% of the marketers are spending their money in 2023 for podcasting because they believe it as a viable channel for the future of marketing.

Community building

Even the market specialists can’t control the algorithms. So, they resort to the next best option by building communities and gathering loyal members to it. 84% of them are increasing the budget for this and other 12% are maintaining and 4% are decreasing because of the economy.

Paid Ads

In Google and Bing Ads, they are looking to increase the budget because the ROI is high compared to other marketing channels.

Social media ads

They are decreasing the budget for Facebook and Instagram while increasing the budget for TikTok and LinkedIn. Learn more about Social commerce here.

Traditional Ads

They have majorly (Over 70% for each) decreased their budget on traditional marketing including Print, Billboard, Television and Radio. The main reasons is the lack of ability to return on investments. However, there are marketers who believes that traditional marketing channels are still important to reach out to their consumers. So they are either maintaining or increasing the budget.

Overall in B2C and B2B both markets over 77% of marketers are either increasing or maintaining their budget for marketing in 2023 even with the difficult economy.

10 Benefits of Marketing

Increased Sales and Revenue:

Effective marketing strategies drive sales and revenue growth by reaching potential customers, increasing brand visibility, and encouraging purchase decisions.

Targeted Audience Reach:

Marketing allows businesses to precisely target their desired audience, ensuring that their efforts and resources are focused on those most likely to convert into customers.

Brand Recognition and Equity:

Consistent marketing efforts build brand recognition, foster trust, and enhance brand equity, making it easier for customers to choose a familiar and trusted brand. Zudio has implemented cost-effective marketing strategies and now has become the most famous clothes retailer in India.

Competitive Advantage:

Businesses that invest in marketing gain a competitive edge by differentiating themselves from competitors and establishing a unique position in the market.

Customer Engagement and Loyalty:

Effective marketing initiatives foster customer engagement, loyalty, and long-term relationships by providing valuable content, personalized experiences, and excellent customer service.

Market Expansion:

With targeted marketing efforts, businesses can expand into new markets, tap into new customer segments, and diversify revenue streams.

Data-Driven Insights:

Marketing generates valuable data and insights that help businesses understand customer behavior, preferences, and market trends. These insights enable informed decision-making and continuous improvement.

Enhanced Customer Experience:

With targeted marketing efforts, businesses can expand into new markets, tap into new customer segments, and diversify revenue streams.

Adaptability and Agility:

Marketing allows businesses to adapt quickly to changing market dynamics, customer needs, and emerging trends, ensuring their continued relevance and growth.

Measurable Results:

Unlike many other business functions, marketing efforts can be measured and analyzed for their return on investment (ROI), enabling businesses to optimize their strategies and budgets.

Successful businesses understand the importance of marketing as a strategic investment. With the multitude of marketing channels and tactics available, marketers are spending their money on diverse approaches, including digital advertising, content marketing, social media marketing, and search engine optimization. By leveraging these strategies effectively, businesses can harvest the numerous benefits of marketing, including increased sales, brand recognition, customer engagement, and market expansion.

As per the charts you see that marketers are spending money for marketing even in this difficult times. Hence, we suggest that include a good proportion of marketing, investing in marketing in your business plan when you consider the long run in 2023 and beyond.