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  • Kavanders & Co.

Why you should never spend a dime on marketing

When savings are needed, this often hits the marketing budget. Alternatively, with start-ups, marketing is sometimes seen as a cost that can be delayed, and there never was a budget for it in the first place. Will cutting marketing drive savings in? After all, you are then not moving money out of your account. Or is that financial cosmetic surgery and a crime to your business? It depends. It depends on whether you are spending on marketing or if you are investing in marketing.

If you are spending on marketing and the only KPIs you have are whether “people liked it” and if “it looked nice” then your marketing budget should be cut – to zero. Suppose you, however, are investing in marketing. In that case, you will show what each dime you have put into it has brought in. It can be e.g. customers, revenue or brand awareness. You will also show what you have learned with failed activities and how you will turn this knowledge into a higher return on investment (ROI) for the future. You will see and obsess over trend lines and take immediate action when something goes in the wrong direction, and with every decision you make, your first thought and guide is ROI.

And here’s where the difficulty lies. Despite much talking of growth hacking, optimization, and data-driven marketing, there are still many companies where those buzzwords remain on the level of wishful thinking and not translated into actions. Start-ups tend to go cowboy style and just try everything, like a puppy that tries to bite anything it can get its teeth on. It is only natural, as the energy and drive are high. One wants to build the next unicorn or viral campaign without worrying too much about the reporting part. But that will be your downfall, as only data will allow you to get better and build your ROI.

While the cowboy style may work in some instances, we need to keep in mind that overnight success usually takes ten years to build. Freestyling is not the way to create proper marketing operations and long-term customer or user growth, and it is a dramatically unscalable and costly path. Without a sound strategy, you can’t have a plan. Without a plan, you have no clear direction, segment, or message. The price to be paid will not only be lost money but time. It can be time to market penetration, time to brand awareness, and often – time to investment into the venture. If you can’t show investors that your venture is taking off in a steady manner, you will struggle to get investors on board. So, instead of being that puppy, be the shepherd dog that can circulate all moving sheep (here symbolic for your campaigns, visuals, channels and posts) into one big group that you are guiding onto the green and sunny fields to grow and prosper.

You don’t want just fast results

One other key challenge can be the company’s failure to balance short vs. long-term objectives and thus OKRs (objectives and key results, made famous by Google or KPIs (key performance indicators). It takes courage and conviction from everyone up to the CEO to openly build and stand behind the entire matrix of OKRs, where among the short-term indicators, such as conversions, purchases, cost per new or existing customer, traffic, average basket/purchase size, search volume, the share of voice or media hits, etc., also the long-term indicators, such as customer return rate and lifetime value, brand health/love and ROI are considered. Pushed to reach the short-term quarterly OKRs, the whole organization is frequently falling into the trap of potentially doing something harmful for the brand in the long run. Only when the holistic matrix of both short and long-term indicators has been established and benchmarked against the company’s business, brand, and marketing objectives can we start talking about a wise marketing investment.

However, even the world’s best matrix won’t do you any good without the appropriate measurement systems in place. All of those identified indicators need to be regularly measured to see the trends and the appropriate corrective actions taken in time if need be. The availability of different data pools and measurements system is vast, so there is something for every company and budget. Starting from simple Facebook Ads Manager statistics to Google Analytics to sophisticated 3rd party tracking and panel surveys, typically run by specialized research agencies for campaign evaluation or brand tracking. Adding to it also the SEO measurement that is crucial for your Google rankings, search marketing and eventually traffic. There are quite a few free tools out there, such as the Neil Patel's SEO Analyzer or Screaming Frog's Website Crawler.

What is essential is not to forget to put your CRM systems into use, as your customers are an excellent (and often missed) resource for different surveys and test communities. Important is that you keep those to the point and incentivize the respondents.

Empower for best results

If you have a marketing team that you trust, also remember to empower them to make decisions and cultivate the learning mindset in your company. What that means is that when you want to base your marketing investment on data, you need to give means, time, and full management support for A/B testing, trying of different approaches, taking quick decisions by the team member whose role it is to make them, and thus constantly improve. That also requires tolerance for occasional mistakes; it is the only way to learn.

Empowering your team also means refraining from what can be called “committee decision-making”, especially common in a topic like marketing, where everyone feels they have some understanding of it. It seems tempting – after all, we are then including everyone’s opinions and being collaborative, right? We are ensuring everyone’s buy-in and commitment, right? In reality, this leads to ineffective time and processes management, demotivated people without clear direction - and worst of all, to mediocre results in the best case. Suppose you ask everyone for their opinion e.g. on the visuals for a creative campaign. In that case, most statements are based on deeply rooted personal preferences about a particular color or a design item or idea, virtually on an “I like” / “I don’t like” basis. This has no real value for your business, leaving you at the end with a combination of summarized opinions and something “nice and pleasing to everyone”. At the same time, you probably have people whose experience qualifies them to make those decisions, so why not stop micromanaging and start trusting your people to do their job well? If you don’t trust them to do a good job, either you or they are in the wrong place.

To summarize:

Get your matrix with the most important short and long-term OKRs in place, set regular multi-platform measurement systems in place, and empower your marketing people to excel in delivering in their roles. If you have done that, you can be sure that you will never spend a dime on marketing. Instead, you are investing in the growth of your business.


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