For many enterprises, advertising is absolutely necessary to attract new customers and growth. However, advertising can also be a huge expense. For example, over the past 12 months, Coca-Cola NYSE: Ko I spent almost $ 5 billion on advertising, which is about 11% of the company’s total income. However, some companies can significantly save on this cost.
This may be due to the nature of their products and the client base. Some products by nature can use the ads to the mouth, where the word of their products naturally spreads to users related to them. Here are two promotions surpassing in this area. Over the past 12 months, their advertising expenses accounted for less than 1% of the total income. All metrics are based on data as of March 19, unless otherwise indicated.
Reddit: Network effects keep an advertisement low as users grow
Reddit today
- 52-week range
- $ 37.35
▼
$ 230.41
- Value is valuable
- $ 162.68
Firstly, a company that perfectly illustrates the idea from mouth to mouth, reddit NYSE: RDDTThe field of an online daughter for discussion uses the form of crowdsourcing, relying on its users to publish and discuss interesting content. Over the past 12 months, Reddit spent only $ 9 million on advertising, which is only 0.7% of income of $ 1.3 billion for this period. As the platform grows, the value for users has increased, which makes users by nature to attract to it.
This phenomenon is often called a network effect. The network effect demonstrating it is the fact that although the company spent relatively little advertising, it was able to increase the daily active Uniques (Dauq) by 39%. Dauq are unique users who visited the Reddit page at least once a day.
Reddit shares forecast today
$ 162.68
40.58% growthHold
Based on 23 ratings of analysts
| The current price | $ 115.72 |
|---|---|
| High forecast | $ 220.00 |
| Average forecast | $ 162.68 |
| Low forecast | $ 54.00 |
Detailed information about the Reddit shares forecast
Further confirmation of the network effect of the company is that the growth rate of users has actually increased when advertising costs decreased. In 2022, the company increased Dauq by only 7%, despite the fact that it spent more than $ 34 million on advertising. Thus, the company reached only 0.2% of users growth for every 1 million dollars spent on advertising in 2022.
Another example shows how Reddit used AD, spending very efficiently in the past. Reddit, as you know, bought only a five -stage advertising in 2021 Super Bowl. Despite the fact that the announcement was so short, reviewing the advertising of Super Bowl Northwestern University School Super Bowl called him one of the most effective. It was considered the number one at the Super Bowl AD in Google and increased Reddit traffic by 25%. This showed a highly effective advertising ability to Reddit, although it spent much less than other firms.
Axon: Cooperation in law enforcement creates natural advertising
Axon Enterprise Today
As of 04:00 on the East
- 52-week range
- $ 273.52
▼
$ 715.99
- P/e ratio.
- 144.70
- Value is valuable
- $ 604.67
Another company spends very little Axon Enterprise advertising Nasdak: axonOver the past 12 months, the industrial shares spent only $ 4.4 million. The United States for advertising, which is only 0.2% of the total income. Despite this, the company in 2024 increased income by more than 33%. The main group of customers of the company, law enforcement agencies, makes a significant contribution to its ability to do this.
Law enforcement agencies should often work together to catch criminals. Thus, it makes sense that the word of popular products, such as Axon’s, will spread naturally. In addition, Axon software allows officers to exchange evidence with other departments. This spreads the word axon software when other departments see evidence used using technology.
Axon Enterprise Today Today Promotions
$ 604.67
9.03% growthModerate purchase
Based on 14 analyst ratings
| The current price | $ 554.60 |
|---|---|
| High forecast | $ 800.00 |
| Average forecast | $ 604.67 |
| Low forecast | $ 365.00 |
Axons of the enterprise forecast stocks
One of the warnings for Axon advertising expenses is that he still needs to use a significant seller. It can be argued that it acts instead of the company’s need for advertising. Nevertheless, the company’s expenses for sales and marketing were only $ 109 million, which is a little more than 5% of the revenue. This is relatively low. Axon sells a mixture of software, weapons and other equipment. Thus, it makes sense to compare them with both types of firms.
Software development companies may see that these sales and marketing costs account for 20% or significantly more income. The software amounted to 40% of the total Axon income in the last quarter. This makes low expenses of the company and marketing expenses especially impressive. McKinsey & Company says that companies with high -growth software can see these costs at 50% or more revenue.
Axon still has an advantage over the company that sells weapons, Smith & Wesson Brands NASDAQ: SWBIThe field in their last annual supply of Smith & Wesson had the cost of selling, marketing and distribution equal to almost 8% of income.
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