The effects of marketing on a company’s value
Good marketing is hard to come by, but when it sings, it can literally create buzz for a product that might otherwise be pretty lackluster or at least not all that original. Vital tweets from brands can send product sales soaring, create new streams of unexpected revenue (brand merchandising, for example), and generate new awareness for a company that might need a visibility boost.
If the hype can be captured and sustained, it can have far-reaching implications for the company’s financial health. A well-managed company can take this kind of wild ride and turn it into real, permanent growth. For an investor, that’s really the good stuff. When you can see returns that are years ahead of your expected timeline, you quickly realize the value of marketing.
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Other ways marketing can influence markets
Creating a new source of income is obviously a positive that comes from marketing, but there’s also a flip side to it when it comes to investing. A 2019 investigation by Jura Liaukonyte and Alminas Zaldokas discovered that retail investors can also be heavily influenced by marketing efforts when it comes to their favorite stock picks.
The pair found that television advertisements lead to an increase in both SEC EDGAR queries and Google searches for a company’s financial information within 15 minutes of the airing of an advertisement. The searches increase trading volume in the stock of the specific company being marketed.
Building brand awareness is one of the most important functions of marketing, and the link between retail investors and marketing is undeniably influential.
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