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

Many businesses, especially small and medium-sized ones, try to cut corners in their marketing budgets, believing they are being financially responsible. While it’s wise to be cost-conscious, undervaluing marketing investment can lead to poor brand visibility, weak lead generation, and ultimately, 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 it’s in-house staff, freelancers, or agencies, skimping on experienced marketing professionals often leads to poor execution, wasted ad spend, and missed revenue opportunities.

For example, 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, only to see sales plummet by 30% because their 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 remained stagnant. And finally, the worst, and most common mistake that I see is putting more than 50% of the total marketing budget into paid spend while ignoring staff.

The reality is, you have to spend money to make money, but that doesn’t mean wasting it. A well-balanced budget should include:

• Paid Advertising (Google Ads, Programmatic, PR, Meta, TikTok) to drive targeted traffic.

• Content & SEO to build long-term brand authority.

• Marketing Automation for nurturing leads efficiently.

• Creative & Branding to ensure consistency and credibility.

• Skilled Marketing Professionals who know how to execute, optimize, and scale.

Whether you’re in B2B or B2C, the right balance of ad spend, staff investment, and data-driven strategy makes all the difference. In this post, we’ll explore the real cost of marketing, what businesses should be spending, and how to get the highest return on investment.

The True Cost of Marketing: What Does It Take to See Results?

B2C vs. B2B Marketing Costs

Marketing costs vary significantly between B2C and B2B businesses due to differences in audience behavior, sales cycles, and conversion processes. Understanding these differences helps companies allocate their budgets more effectively.

B2C Businesses

B2C brands—especially e-commerce and direct-to-consumer (DTC) businesses—often face higher upfront marketing costs due to heavy competition and the need for broad audience reach. Their marketing strategies focus on paid advertising, brand awareness, and conversion optimization.

• Average Cost Per Click (CPC) for Facebook Ads: $0.94

• CPC for Google Ads (Search Network): $2.69

• Conversion Rates: Typically range from 2-5%, depending on the industry.

Refer to our blog: Decoding Digital Advertising Costs: Where Should Marketers Invest? for a detailed breakdown of how to distribute your spend across channels.

For B2C brands, success depends on consistent ad spend, strong content marketing, and a seamless user experience that drives conversions. Paid social and search engine advertising tend to be key drivers of revenue.

B2B Businesses

B2B marketing often requires a more strategic, long-term approach focused on lead nurturing and account-based marketing. The sales cycles are longer, and decision-makers require more information before converting. As a result, content marketing, SEO, and LinkedIn advertising play a more significant role.

• LinkedIn CPC: $5–$8 per click (we've been seeing very low success rates from LinkedIn lately).

• Google Ads for B2B Software: $3–$6 per click

• Conversion Rates: 1-3% due to longer sales cycles and complex decision-making processes.

B2B brands must invest in high-quality content, email automation, and CRM systems to effectively nurture leads and convert them over time.

Typical Business Marketing Budgets (By Revenue Size)

A company’s total revenue typically determines how much it should allocate to marketing. Below are standard marketing budget allocations based on revenue size:

• Small Businesses (<$1M revenue): Should allocate 7-10% of revenue to marketing.

• Mid-Sized Businesses ($1M-$10M revenue): Typically allocate 5-8% of revenue to marketing.

• Large Businesses ($10M+ revenue): Allocate 4-6%, as they usually have stronger brand recognition and organic reach.

While these percentages provide a benchmark, how the budget is distributed across different marketing functions is just as critical.

Where Should Your Marketing Budget Go?

A well-balanced marketing budget doesn’t just focus on paid advertising—it also accounts for strategic investments in staff, content, automation, and branding. Here’s a recommended budget breakdown:

• Paid Advertising (40-50%): Includes Google Ads, Meta (Facebook & Instagram), TikTok, LinkedIn, and programmatic advertising. This budget fuels customer acquisition and brand visibility.

• Content & Branding (15-25%): Covers content creation (blogs, videos, social media), SEO, website optimization, and branding elements (logos, brand messaging, and design).

• Marketing Team & Software (20-30%): Hiring experienced in-house marketers, freelancers, or agencies is critical for execution. This budget also includes essential marketing tools like CRM (HubSpot, Salesforce), automation software (Klaviyo, ActiveCampaign), and analytics tools (Google Analytics, SEMrush).

• Testing & Data Analysis (5-10%): A/B testing, customer research, audience segmentation, and analytics help optimize performance and ensure smarter spending.

How Much Should Go to Staff and Software?

Within the 20-30% budget allocation for marketing teams and software, businesses should aim for:

• Staffing (15-20%): Whether hiring an in-house team, outsourcing to an agency, or working with freelancers, this budget ensures skilled professionals are in place to execute campaigns effectively. Underfunding marketing staff often leads to inefficiencies, poor execution, and wasted ad spend.

• Software & Automation (5-10%): Essential tools like CRM systems, email marketing automation, social media scheduling platforms, and data analytics software streamline marketing efforts and improve performance. Investing in automation prevents inefficiencies and reduces reliance on manual tasks.

For businesses looking to scale, balancing ad spend with experienced talent and automation tools is crucial. Overinvesting in one area while neglecting the others can lead to wasted resources and missed growth opportunities.

By properly distributing the budget across paid media, content, branding, skilled professionals, and automation, businesses can maximize efficiency, improve ROI, and achieve sustainable growth.

What Happens When You Nickel-and-Dime Your Marketing?

✅Cutting Ad Spend = Lower Visibility & Sales

If your competitors are outspending you, their brand gets seen while yours disappears. Many businesses make the mistake of turning off ads during slower seasons to save money, only to find that their pipeline dries up completely. A "home services" company I worked with drastically cut their PPC budget in the winter to save money. When peak season arrived in the spring, they had to start from scratch, spending far more to rebuild their lost momentum. A steady, strategic ad spend keeps your brand visible and maintains customer interest year-round.

Not all clicks convert, so running only a low-budget ad campaign limits your reach and prevents you from gathering enough data to optimize properly. One e-commerce company spent just $500 per month on paid ads but expected to compete with brands spending $10,000+. They weren’t getting enough impressions to run meaningful A/B tests, leading to poor performance and wasted spend.

✅ Underfunding Content & Branding = Weak Customer Trust

A brand’s first impression matters. A cheap logo, a DIY website, and weak messaging tell customers you aren’t a serious player. Consider two fitness brands launching similar products: one invests in high-quality video content, professional branding, and influencer partnerships, while the other relies on low-budget ads with stock images. The well-branded company gains immediate trust, while the other struggles to convert because customers doubt its legitimacy.

Social proof is also critical. A startup I worked with tried to build credibility but didn’t invest in professional photography, case studies, or testimonials. Without these trust signals, potential customers hesitated to purchase, even though the product itself was high-quality. Investing in content that showcases customer success, brand credibility, and product value leads to higher conversions.

✅ Refusing to Invest in Team & Tools = Inefficiency & Burnout

A great marketer with no budget or tools is like a chef with no ingredients. Expecting a single person to handle ads, social media, email marketing, 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. Because they lacked automation tools and specialized staff, their marketing efforts were scattered and inefficient. They spent countless hours on manual tasks that software like HubSpot or Klaviyo could have streamlined. Their competitors, who invested in automation and specialized roles, outperformed them with half the effort.

Another example: A business owner insisted on handling their company’s social media instead of hiring a professional. With limited time and no strategy, their social presence remained inconsistent, engagement dropped, and they missed countless customer interactions. Hiring a dedicated strategist would have driven better results while freeing up the owner’s time to focus on growth.

Businesses that overload a single person with multiple roles (e.g., expecting a social media manager to also run ads, create content, and analyze data) see weaker results than those that invest in specialists. The most successful brands hire experienced marketers, invest in training, and provide the necessary tools to execute campaigns effectively.

Nickel-and-diming your marketing may seem like a way to save money, but it often costs far more in lost revenue, missed opportunities, and brand stagnation. Strategic investment in ads, branding, staff, and automation leads to sustained growth and a stronger competitive position.

Where Should You Actually Be Spending Your Marketing Budget?

This was just said previously, but it can not be overstated enough. We've worked with so many businesses that think marketing budget equals marketing spend. When we have conversations with partner agencies, we hear similar stories.

A well-balanced marketing budget ensures that no single element is underfunded, allowing for a more sustainable and effective approach. Here’s a breakdown of where your budget should go:

Advertising (40-50% of the budget): Ads drive awareness, traffic, and conversions. This includes Google Ads, Meta (Facebook & Instagram), LinkedIn, TikTok, and programmatic advertising. A strategic mix of paid search, paid social, and display advertising ensures you reach the right audience at the right time.

Content & Branding (15-25%): High-quality branding and content improve trust and engagement. This includes:

• Professional website design and UX enhancements

• SEO-driven blog posts and articles

• Video marketing and high-quality photography

• Thought leadership and social media content

Marketing Team & Software (20-30%): Having the right team and tools is essential for execution and efficiency. This category includes:

• In-house staff or agency services for digital marketing, social media, and content creation.

• CRM systems like HubSpot or Salesforce to manage leads and customer interactions.

• Marketing automation tools (e.g., Klaviyo, Marketo, ActiveCampaign) to streamline campaigns.

• Analytics and tracking tools (e.g., Google Analytics, SEMrush, Hotjar) to measure performance.

Testing & Data Analysis (5-10%): A portion of the budget should always be allocated to experimentation and optimization. This includes:

• A/B testing for ad creatives, landing pages, and email campaigns.

• Market research and customer surveys.

• Continuous refinement of target audience segments based on data insights.

How Much Does It Take to Get a Business Moving?

💡 B2C E-Commerce Example

A new direct-to-consumer (DTC) skincare brand aiming for $50K in monthly revenue would typically need:

• $5K-$10K in monthly ad spend to generate 1,000–2,000 site visitors per day.

• $3K–$7K in content creation & branding for high-quality product photos, influencer marketing, and social media engagement.

• A skilled team or consultant to analyze data, refine targeting, and prevent wasted ad spend.

  
  

💡 B2B SaaS Example

A new SaaS company targeting enterprise clients might need:

• $10K-$30K per month in ads & LinkedIn outreach to generate qualified leads.

• A strong inbound strategy with SEO, high-value content, and case studies to build credibility.

• A sales team & CRM automation to nurture leads through the longer B2B sales cycle (typically 3-6 months).

Final Thoughts: Spend Smarter, Not Just Less

Cutting marketing spend without a strategy leads to stagnation. Being efficient doesn’t mean being cheap—it means knowing where to allocate funds for maximum ROI.

The best businesses understand that investing in marketing isn’t an expense—it’s a growth driver. A smart marketing budget isn’t just about how much you spend but how strategically you distribute it across essential functions. When done right, a well-funded marketing strategy fuels sustainable business growth and competitive advantage.