Why $5 Million Is The Same As $5 Billion

In the past week, articles about billion-dollar transactions were flying around MediaPost as if money meant nothing. Here's a sampling of what happened:
  • Both SC Johnson Global and L’Oreal USA put their respective media budgets up for review, each reported at $1 billion.
  • Comcast launched an entrepreneurial venture with $4 billion to play with.
  • The total value of media deals in the first quarter of 2015 was reported at $23 billion (flat vs. Q1 of 2014).
  • And ZenithOptimedia reported that global ad spend for 2015 is now expected to come in at $544 billion, which means Adland is the 23rd largest country in the world as measured by GDP --in between Poland and Sweden, according to Wikipedia figures.

All this makes Ello’s raising a fresh $5 million dollars pale in comparison. Some have pooh-poohed the Ello fund-raiser as meaningless, categorizing Ello as a has-been. Perhaps it is; only time will tell.

What we should not forget, however, is that the “tiny” $5 million for Ello, the $1 billion media budget -- or, indeed, the $544 billion of global ad spend -- must all be managed by dedicated and steady hands.



My former boss Chris Burggraeve used to favor “The Starving Artist Model”: The smaller your budget, the more you have to do to make the most of your limited means. In other words: The smaller the budget, the more innovative the budget manager is driven to be.

If you ask the global media director of SC Johnson how that billion-dollar media budget will be spent -- to what end and with what kind of oversight -- he or she will probably be able to give you a big-picture overview. If you ask the entrepreneur or small-challenger brand with limited funds where the company’s next investment will go, you will most likely get a very detailed and considered answer.

If I were Comcast, I would not have entered the fray with $4 billion. I would have entered instead with perhaps $4 million, to be divided into $500K investments. That way would make it easier to keep track of where you are investing -- and, perhaps more importantly, what the entrepreneurs who receive your investment will do with it. Accountability for $500K is much easier to establish than for $1 billion. And you will most certainly find very motivated and driven entrepreneurs looking to make the most of that “tiny” investment.

There have been quite a few articles recently about impatient investors. The investment community (VCs as well as Wall Street) seem to leave businesses -- large and small, start-up or established -- literally almost no time to accomplish their goals. The result is less and less time allocated to considered strategizing or planning for growth. Instead of finding new consumers, we just buy them through acquisitions.

Many investors seem especially drawn to the numbers game: placing enough bets and hoping one will be lightning in a bottle. Never mind all the broken careers, burnt-out people and wasted capital and energy of all the investments not given enough time or consideration.

In the marketing and start-up ecosystem, we all live with enormous responsibility. We manage or influence reputations, businesses and -- ultimately -- people’s livelihoods through the budgets we are entrusted with. It’s good to stop and think about that fact every now and then.

2 comments about "Why $5 Million Is The Same As $5 Billion".
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  1. Kevin Lee from Didit / eMarketing Association / Giving Forward, April 6, 2015 at 11:53 a.m.

    A good chunk of investments are made for PR reasons rather than cash needs. For better or worse this accelerates a venture to its destination. Once it arrives at that destination it better be sure that's the right destination. Investors aren't often interested in a "pivot" So far I've preferred bootstrapping, but one might never know where my businesses would be if I'd have taken institutional money.

  2. Paula Lynn from Who Else Unlimited, April 6, 2015 at 8:24 p.m.

    Wonderful article. It also gets to one's gut that the more money - here a Billion, there a Billion - spent on marketing/advertising, the more it's going to cost to live from aspirin to transportation.

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