Google, throughout its history, has notoriously spent little on
advertising. For example, in 2006 it spent just 8 percent of its annual
revenue on sales and marketing, compared to the more-standard 15 to 20 percent Microsoft and Yahoo spent that year.
Recently, Google’s ad budget swelled to over $2 billion – drawing the ire of critics – and yet that’s still less than 5 percent of the tech giant’s annual revenues ($66 billion in 2014!). But, then again, Google still spends a lot on branding, another type of branding.
The branding Google spends the most money on is its employer brand.
Specifically, that means spending money on its famed “People” team and its people itself. That includes paying some of the highest salaries around, giving out some of the best perks around and, also, having one of the most stringent and data-centered hiring processes around.
The People team also does a ridiculous amount of research into improving management structures and empowering employees via its much-ballyhooed 20 percent time,
among other initiatives. All of this equates to a lot of people wanting
to work for Google, a highly-effective way to screen through those
people to find the absolute best ones and then a great culture that
brings out the most in those already-great people.
Bottom line,
Google made a decision early on in its existence: rather than spending
money on getting a lot of customers; it spent money on getting the best
employees, knowing the customers would follow. And that is the key to it
becoming one of the most successful companies in the world.
Takeaway
The
day-to-day work in business is generally focused on building a product
more people will like or existing customers will like more, getting
people to buy that product or existing customers to buy more of it and
then ensuring those customers have a great experience. So, the obvious
thing for a leader to spend money on is something that will improve the
life of their customers or a way to get more customers.
But that
strategy is a classic penny-wise, pound-foolish move. Yes, leaders need
to spend money on their customers, but equally important is to spend
money on their employees.
Getting back to the example in the
beginning, imagine a company spent $100,000 on its employees, instead of
its customers. What will be the ROI on that money?
Morale will
improve, which will lead to more engaged workers and less turnover. The
good word will spread, so more people will want to work for the company,
which means a better talent pool to pick from. And the employees
bragging about the investment will serve as a form of organic marketing
in its own right.
In 2015 and beyond, traditional advertising seems to be losing its effectiveness.
Rather than just spending more money on that and enjoying the comforts
of doing the same old thing, bold companies should try a novel,
employee-focused and perhaps more-lucrative approach to branding.
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