How Marketing Can Help to Increase Your Company's Share Price by 26.5% in Less Than a Year

How Marketing Can Help to Increase Your Company's Share Price by 26.5% in Less Than a Year

In recent years, total advertising spending has surpassed the $100 billion per year mark. Though you could be forgiven for thinking that all of this money was used to increase the sales of goods and services, marketing dollars can actually accomplish much more than this.

In particular, it can have an astonishing impact on a company's share price.

Whether your company's ad spending impacts your sales, or your share price, will ultimately depend on the advertising methods that you employ.

For instance, companies who launch fairly straightforward "buy our product" marketing plans will usually notice an increase in their short-term sales figures. 

However, businesses that develop a more detailed brand-building advertising plan can see growth in both their sales figures and their share price.

It is worth noting that achieving this result can be quite difficult if you are advertising your business on your own.

This effect was perhaps best evidenced by McDonald's "I'm Lovin' It" advertising campaign from 2003. This marketing strategy was instrumental in improving the reputation of McDonald's, and the fast food industry as a whole, in the wake of increased criticism of the restaurant and the industry.

McDonald's saw some quick results too - just eleven months after the "I'm Lovin' It" campaign was launched, their share price had risen by a whopping 26.5%.

Why does the marketing strategy matter?

The marketing strategy employed by a company matters because of the impression that it makes on their target audience. Advertisements that announce a sale, discount, or promotion will generally be quite effective at driving consumers to the store or website to take advantage of the event.

However, once they have made their purchase or the event has finished, they will generally end their association and engagement with the brand - at least until they hear about the next deal.

On the other hand, marketing plans that do not seek to capitalize purely on the value of an instant sale can often have a much more long-lasting impact. That is because these commercials tend to tell their audience something about the business or brand besides the fact that it is currently available for a low price. 

Instead, these advertising campaigns focus on conveying the fact that their product is superior, their service is more thorough, or that their brand is hip and cool.

These long-lasting consumer sentiments eventually begin to build goodwill and intangible value for the company.

Of course, this then makes the business as a whole more valuable - increasing its share price. Indeed, some estimates state that this brand equity accounts for around 8.5% of the market cap of the world's largest companies. 

Put simply, by focusing on branding instead of selling, you are giving customers a reason to keep coming back again and again.

Investors will see that your customers are likely to continue working with your business and will build this fact into your (now higher) share price.

Which marketing technique should your company opt for?

When deciding whether to choose sales-first or brand-building marketing strategies, you will need to consider a number of important things. First, you need to think about your immediate and long-term goals.

If your main priority as a business is to generate some short-term cash flow, then a sales-first marketing plan is probably a good idea.

However, if you are more interested in increasing your company's reputation, share price, and chances for long-term growth, then a brand-building campaign might be a better option. You can always cash in on your brand's heightened reputation at a later date.