The Cost of Being Cheap: How Underinvesting in Marketing Can Stunt Business Growth

Many businesses, especially small and mid-sized ones, cut corners on their marketing budgets and call it financial discipline. Being cost-conscious is wise. Underfunding the work that brings in customers is a different thing, and it tends to show up later as poor brand visibility, weak lead generation, and lower revenue.

As a consultant, I focus on maximizing efficiency, but there's a difference between being strategic with your budget and crippling your business growth by underfunding essential marketing functions. A well-balanced marketing budget doesn't just include ad spend and content. It also accounts for the people who execute the strategy, whether that's in-house staff, freelancers, or agencies.

Here is the short answer. Underinvesting in marketing costs you in three ways: competitors who keep spending take your visibility, you never collect enough data to learn what works, and you overload too few people with too many jobs. A healthy budget funds media, content and brand, people and tools, and testing in balance, with enough in each bucket to do the job well. Spending smarter means putting money where the return is, and that requires a budget big enough to find out.

1. What does underinvesting in marketing actually look like?

It rarely looks like a decision to stop marketing. It looks like a series of reasonable-sounding cuts. I've seen companies allocate thousands of dollars to product development but hesitate to spend on advertising, SEO, or social media strategy, expecting customers to magically find them. One business I worked with slashed its Google Ads budget to save money, and sales dropped because its main acquisition channel was cut off. Another client tried to rely solely on organic social media, but without paid amplification, influencer partnerships, or a dedicated strategist, their reach was limited and conversions stayed flat.

And the most common mistake I see is putting more than 50% of the total marketing budget into paid spend while ignoring staff. Media without skilled people to run it, test it, and read the results is one of the most expensive ways to save money.

2. Why is cutting ad spend so expensive?

If your competitors are outspending you, their brand gets seen while yours disappears. Many businesses turn off ads during slower seasons to save money, only to find their pipeline dries up. A home services company I worked with drastically cut its PPC budget in the winter. When peak season arrived in the spring, they had to start from scratch and spent far more to rebuild the momentum they'd lost. Steady, strategic spend keeps your brand visible and keeps customer interest alive year-round.

There's also a data problem. Not all clicks convert, so a very small campaign can't gather enough data to optimize. One e-commerce company spent $500 a month on paid ads but expected to compete with brands spending $10,000 or more. They weren't getting enough impressions to run meaningful A/B tests, which led to poor performance and wasted spend.

Here's a simple example of why. These are illustrative numbers. At an average cost of $1.00 per click, $500 buys about 500 clicks a month. At a 2% conversion rate, 500 clicks times 2% is about 10 orders. Ten orders a month is not enough to tell whether one ad, audience, or landing page is better than another, so every decision ends up being a guess. If you want a current view of what clicks actually cost by channel, my breakdown of what digital advertising costs in 2026 walks through it.

3. What happens when you underfund content and brand?

A brand's first impression matters. A cheap logo, a DIY website, and weak messaging tell customers you aren't a serious player. Picture two fitness brands launching similar products. One invests in high-quality video, professional branding, and influencer partnerships. The other relies on low-budget ads with stock images. The first one earns trust faster, and the second struggles to convert because customers doubt its legitimacy.

Social proof matters just as much. A startup I worked with tried to build credibility but didn't invest in professional photography, case studies, or testimonials. Without those trust signals, potential customers hesitated to buy, even though the product itself was high quality. Content that shows customer success, credibility, and product value is part of what makes your paid media convert.

4. What happens when you refuse to invest in people and tools?

A great marketer with no budget or tools is like a chef with no ingredients. Expecting one person to handle ads, social media, email, SEO, and content creation without the right tools is a recipe for failure.

One company I consulted with had a single marketer managing everything, from ad campaigns to graphic design to analytics. Without automation tools or specialized help, their marketing was scattered and inefficient, and hours went to manual tasks that software like HubSpot or Klaviyo could have streamlined. In another case, a business owner insisted on running the company's social media instead of hiring a professional. With limited time and no strategy, the presence stayed inconsistent, engagement dropped, and customer conversations were missed. A dedicated strategist would have done better work and freed the owner to focus on growth.

Overloading one person with several specialist roles, such as expecting a social media manager to also run ads, create content, and analyze data, usually means every one of those jobs gets done halfway.

5. How much should you spend on marketing overall?

There's no single right number, but there is a useful reference point. Gartner's 2025 CMO Spend Survey found marketing budgets holding flat at 7.7% of overall company revenue. Keep in mind that most of the 402 marketing leaders in that survey work at companies with more than $1 billion in revenue, so treat it as a large-company benchmark. Younger and smaller brands that are still building awareness often need a larger share of revenue to grow, and established brands with strong repeat business may need less.

As an example of the math, a $20M company spending at the Gartner average would budget 7.7% times $20,000,000, or $1,540,000 a year for marketing. Whether that's too much or too little depends on your growth targets, margins, and how much of your demand already comes in without paid support. The percentage matters less than how you split it.

6. How should you split your marketing budget?

A well-balanced budget makes sure no single element is underfunded. Here is the starting framework I recommend pressure-testing against your own business. Pick numbers inside these ranges that add up to 100%.

• Paid advertising, 40% to 50%: Google Ads, Meta, LinkedIn, TikTok, and programmatic. This fuels acquisition and visibility.

• Content and branding, 15% to 25%: website design and UX, SEO content, video and photography, and thought leadership.

• Marketing team and software, 20% to 30%: about 15% to 20% for in-house staff, freelancers, or agencies, and about 5% to 10% for CRM, automation, and analytics tools.

• Testing and data analysis, 5% to 10%: A/B tests on ads, landing pages, and email, plus customer research and audience refinement.

Here's a worked example using a $1,000,000 annual budget and a 45/20/25/10 split. Paid advertising gets $450,000. Content and branding get $200,000. Team and software get $250,000, split as $175,000 for people and $75,000 for tools. Testing and data get $100,000. Those four lines add back up to $1,000,000. Notice that a quarter of the budget goes to the people and systems that make the other three-quarters work.

7. What does it take to get a new brand moving?

Again, this is an illustrative example with hypothetical inputs, meant to show the math. Say a new DTC skincare brand wants $50,000 in monthly revenue with a $50 average order. That's $50,000 divided by $50, or 1,000 orders a month. At a 2% site conversion rate, 1,000 orders requires 50,000 visits a month. If 60% of those visits come from paid media at $1.00 per click, that's 30,000 paid clicks and $30,000 in monthly ad spend, which is 60% of the revenue target. That is why a new brand also needs content, email, and repeat customers to carry part of the load, plus a skilled team or consultant to refine targeting and stop wasted spend.

B2B is different. Sales cycles are longer, and decision-makers need more information before they act. That shifts more of the budget toward content, SEO, case studies, and CRM automation that nurtures leads over months, alongside paid search and LinkedIn.

8. How do you spend smarter without just spending less?

Start by finding out where your current budget is leaking. A marketing audit will show you which channels, tools, and roles are pulling their weight and which ones aren't. Then fix measurement so you can see what each dollar contributes. Marketing mix modeling and analytics are how you separate the spend that drives revenue from the spend that only takes credit for it. Once you know what's working, you can grow it with discipline, which is the approach I lay out in my guide on how to scale paid media without blowing up your CAC.

Cutting marketing without a strategy leads to stagnation. Efficiency comes from knowing where to put each dollar and funding every part of the system well enough to work. If you're unsure whether your budget is too thin, badly split, or both, you can book a free 30-minute introductory call here, and I'll give you an honest read on where to invest first.

Dr. Linda Orr, PhD, is the founder of Orr Consulting, a fractional CMO and marketing analytics practice serving brands from $5M to $500M in revenue. She built Upwork's first enterprise marketing mix model, covering an $88M annual media portfolio, and spent about 20 years as a marketing professor before moving fully into consulting.