Is advertising an investment? or Money spent on advertising is an investment not a waste examine or it is not expense but investment. Today, I will express my thoughts on this issue.
I am starting my talk with Indian PM ads in punjab. In my city, I am seeing lots of big banner ads of PM in which PM is telling that BAN of Rs. 500 and RS. 1000 notes is good. I also say this is good. Why there is the need of spending money on it. Flower never wastes extra energy for providing information that it is spreading goodness and purity. All know automatically this truth. Is it waste of money, is it expenditure or is it investment.
After few days, there is the time of election in Punjab. There is big lines of common person on the front of banks. Note ban is big issue and way of stress for many whether rich or poor or businessman or salaried person. So, it is investment.
1. If I am seeing the big banner ads on my city of PM, it means, same ads will be all other cities in Punjab. So, budget of spending money is big which we can not show in small expenses of same party.
2. This is investment. Investment is car which drives you to your office. PM has the reason for this. People votes are the real return for any leader in India. So, PM knows the situation is critical and votes are near. So, there is no time to reach personally without ads. So, with this investment, they can send the message what is the purpose of ban. It is not financial emergency in India but it is the fight against black money and fake currency in India. People are reading his message. I was on the bike. Still, I read his message. When I can read it on bike. It means, it will surely reach to public. It has clear aim to get its return. Which will be long run and whether it is profitable or lossable investment, we can find after Punjab elections.
Now, it is clear, there is should be following point for saying advertising as investment.
1. Advertising cost must be big. It must cover big public in small time.
2. There should be the expectation of big return from this investment.
3. It will increase long term band of company.
In financial statement, it should be shown as fixed asset in balance sheet and should be written off in income statement. It depends on the return time. If you will get return on this investment in 10 years, 10 th part of each year should be the expenditure of our business for getting net profit in each year.