Say you have $100,000 to invest on “branding.” What’s the best place to spend it?

You could buy a commercial on local television, although then again, nobody really watches commercials anymore thanks to DVR and Netflix. You could buy an ad on YouTube, which people will skip in five seconds, or a banner ad, which garners a click-through rate of 0.04 percent.

You could try pay-per-click, but that is both expensive and becoming less effective. You could try podcast commercials, although everyone just hits the 30-second forward button when those come on. You could try a newspaper, which is fantastic if your business caters to the 65-and-older population.

Or you can invest in your people. You can offer a new benefit, give out bonuses, install a cereal bar at the office. In other words, rather than spending your money on your external brand, you could focus on your internal one.

Think that’s crazy? Well, that’s pretty much what Google did. And all they are is one of the most successful companies on planet Earth.

What Google Did

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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