>Here is what I'd like to know. If they stopped marketing and advertising, what profitability does the company show?
Marketing spend was circa $4m last quarter. EBITDA was breakeven. Revenue was about $26m
Make your own assessment of how much of the marketing spend is wasted.
Do you want to know how much money Woolies and CBA would make if they didn't do marketing too?
I think what you are getting at is that the business wouldn't succeed without an ongoing marketing spend, but that is true of most businesses. So I think you are suggesting that the business continues to break even quarter after quarter not because management is reinvesting profits for further growth, but because there is no opportunity to profit.
Where you see a business doing nothing, I see one that is so carefully managed they can match growth investments to incomes quite precisely.
After watching the results video, Barrie gives some examples on how they spend money for growth. One is the about to launch Escrow.com feature that will allow eCommerce websites to integrate it as a payment option alongside credit card or paypal. Will it be successful? I don't know, but once it has been developed and productised the feature adds value to the platform and doesn't need ongoing investment.
I like this type of business that makes a capital investment that results in ongoing revenue streams. Businesses doing this include SEEK or Carsales or REA.
I like this approach, and am happy to ultimately own a fraction of a very large business, versus a fraction of a smaller business that paid some paltry dividends.
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