Why You Should Spend Money on Brand Awareness

Posted by Andres Aguerrevere on

Why You Should Spend Money on Brand Awareness

Small businesses and startups don’t have money to waste, so it can sometimes be hard to justify directing your cash flow towards something as difficult to measure as “brand awareness.”

Brand awareness is the extent to which customers are familiar with a company’s brand, which includes things like logo, product design, advertisements, and other distinguishing features. When a company has great brand awareness, it’s always top-of-mind when consumers consider making a purchase in their field.

There are many schools of thought on how to develop brand awareness and differentiate a company, but the bottom line is this: You need to spend some money on it. Here’s why.

You won’t get market share without “mind share”

For new businesses, especially those that are primarily e-commerce, or otherwise don’t have highly visible distribution channels, brand awareness is more about developing “mind share” than “market share.”

Branding is often broken down into two categories: identity and media spend. One reason you know about Target and Walmart is because they spend a lot of money on media buys to stay top-of-mind. 

But before Target was able to spend millions on media, they needed to establish their identity, such as their iconic logo. And any new business that fails to develop its identity will find it difficult to gain traction in the marketplace.

Start with creating a clear identity by settling on a branding necessities—voice and style, company name, domain name, website design, logo and colors, and engaging web copy. Doing so will help you begin to take up space in consumers’ minds, which will lead to greater recognition when it comes time to buy.

Most marketing spending is wasted on the wrong point in the funnel

Word-of-mouth is considered one of the strongest forms of marketing, yet it’s perhaps the most difficult to quantify. The hope is that all of the marketing and advertising you do increases word-of-mouth, which builds invisibly unless you capture data from incoming customers who say they heard about you through a friend.

According to the Harvard Business Review, one of the most powerful deciders when it comes to making a purchase is another’s recommendation. Yet according to their analysis, 70% to 90% of marketing spend goes toward promotions that hit consumers at the “consider” and “buy,” stages, well after the evaluation stages, when brand awareness is key.

If your company is spending a ton on marketing and advertising but finding little results, this may be your problem. Move instead towards strengthening how you company appears upon initial evaluation and that could change.

Brand is what helps you stand out among competitors

There are a few reasons that Gmail is the email platform of choice for over a billion monthly users, and it’s not just because of the product. Gmail positioned itself as the go-to email platform for young people; an intangible “cool” factor, compared to Yahoo or Hotmail, was the brand positioning that helped catapult it above competitors at a time when there wasn’t a dearth of email options on the market. Its design and integrations with Google products only contributed to that brand position.

It’s okay to sell a product or service that other businesses sell. What will help differentiate you is your branding, and how well you help consumers connect the dots between what they want to buy and what you sell.

Increased brand awareness can cut acquisition costs

Overall customer acquisition costs are up nearly 50% over the past five years, a worrying trend for digital marketers. One key way to lower these costs is to create a more recognizable brand.

Acquiring new customers typically involves running ads or campaigns on social media platforms, or optimizing content in order to be found more easily on Google. But creating a stickier brand experience draws customers to you without spending a ton on ongoing marketing. A singular investment in branding can lower your overall marketing costs in the long run.

Additionally, your brand can help re-target leads you lost just before they became customers. Following up with consumers who made it to checkout but didn’t purchase is easier when those consumers recognize your brand. Consider offering them a coupon or free shipping to get them to complete the purchase and recapture lost revenue (and hopefully create a new returning customer).

You can boost customer loyalty by improving brand recall

As mentioned above, acquisition costs is on the rise, and therefore retaining customers needs to be a priority for all businesses. According to a Bain and Co. study, increasing customer retention rates by just 5% increases profits by anywhere from 25%-95%.

Brand awareness and loyalty are intertwined, and marketing isn’t the only way to increase both among existing customers. Creating a smooth purchasing experience (excellent website design, or free shipping), providing excellent customer service, or being responsive and engaging on social media can all make an impact on your existing market base, helping you stay top-of-mind when they consider their next purchase.


Brand awareness may seem intangible, and it’s easy to let it take a backseat in favor of spending that delivers harder metrics and splashier campaigns. But spending money on awareness is a more sustainable play that can deliver lasting results for one simple reason: It permeates almost every aspect of your business. When you invest in brand, you invest in your company.

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Post created by Meredith Wood


Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.

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