Okay riddle me this why do big companies save on product but increase spending on marketing and admin?
I was reading though Blizzard-Activision financial statement and saw how they increased spending on both sales and marketing and admin by more than twice what they increased spending on product development.
This is coming Ib the wake of the flop on their newesr CoD game. The same thing is happening for Creative assenbly and the total war franchise. Way to much time spend on milking the product and not enough on making a good product.
It seem to be something that mostly happens when the companies think they cant grow anymore. They live on past glory while they slowly tank the product.
However this really seems like a bad strategy. We have seen that with games like BG3, but it also seem to be the goals with stratgies like content marketing.
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No point in having product sit on shelves. If you’ve got an okay product, then invest in marketing to move it!! It’s that simple.
Quick buck vs LT view.
But really there shouldn’t be a total trade off. I’m an ex ceo and ex cro and have to admit, the game has changed in my world (b2b tech). Now the buyer wants to do their research, deal with experts not BDRs, and they want to have confidence they’re partnering with the right providers. There’s also a trend in “build it yourself” given how efficiently and well companies can build technology.
If I have to rationalize dollars, I take the long view and try to be scientific about each penny, like yield management in the airline business. Instead of butts in seats and maximizing yield, we do that with investment allocations for outcomes. To be fully complete you need to incorporate the non financial “soft” things like reputation, brand, how it affects hiring, you name it.
But in practice most companies are weak and the people at then just don’t want to get fired.
I see this all the time working in the eCommerce sector. And tbh the only way to truly fail is to go to either side of the extreme.
Saw a startup basically do 90% on development to make a sick product. They thought “build it and they will come” and that couldn’t be farther from the truth. Ran out of budget to sell & market, so they ended up having to be acquired by another company for pennies on the dollar who did have the gunpowder for marketing.
Then you have the private label brands or companies who just barely “make” a product, but they already have a celebrity partnership lined up and all this elaborate marketing. That will appear to work right out of the gate, but since the product tends to be bad or nothing new it will fizzle out with no repeat sales.
Every brand I worked with who succeeded was somewhere between the two.