Scrimp on Marketing at Your Own Risk

scrimp on marketing

Scrimp on marketing and you’ll soon find you struggle to find success, especially if you’re a new business without an established following and reputation. Sure, Hershey’s Candy Company once went for 8 years without spending a dime on traditional advertising but it was the industry leader at the time. As competitors entered the market, drawn in part by the low cost necessary for advertising, Hershey found its market share decline to the point where it had to resume advertising to stay afloat. That’s what you get when you scrimp on marketing: increased competition and declining market share. The company is lucky they didn’t wait so long that the company went under.

scrimp on marketing
Photo by Lukas: Pexels

Of course, you don’t want to waste money either. That’s also the kiss of death when it comes to your survival. You must “right-size” your budget so you don’t scrimp on marketing or waste money. But, budgeting is just the first step because you also need to optimize your marketing spend to get the highest return for your investment. That’s the topic of today’s post.

Budgeting 101

Building the right budget to fund your marketing while not forcing the company into debt is a challenging issue, especially if you have a new business without a history to guide you. Remember 100% of your revenue comes from sales and marketing is the tool to get those sales. Finance, despite it being the shiny thing getting all the attention, incurs debt (even venture funding creates an obligation and loss of control) that weakens the company.

After working with the SBA (US Small Business Administration), I found many startups don’t allocate nearly enough to their marketing budget or, in too many cases, nothing at all. Think of marketing as a bucket. You need to fill the bucket to the brim before water spills over the side. In business, marketing dollars is the water used to fill the bucket and sales is the water spilling over the top. If you don’t spend enough to fill the bucket, you see a negligible return. Fill too much, and the pressure puts a hole in the bucket so your marketing dollars are wasted. Think of the market as the level of competition in this analogy. The more competition, the stronger the competition, the bigger the bucket. Now you see why marketing dollars are critical for success and spending just the right amount is difficult to determine, yet critical for your success.  Luckily, there are 4 budgeting methods you can use to build a marketing budget that doesn’t scrimp on marketing or waste money. Budgeting methods include:

scrimp on marketing
Image courtesy of Learn Marketing

Let’s expand on how you can implement each one and determine which one offers the “best” solution.

Percentage of revenue

This budgeting method is popular because it’s relatively simple to implement. You estimate your sales for the upcoming period (a month, year, or quarter), then allocate a fixed percentage of those sales (say 10%) as your marketing budget. Easy peasy.

Unfortunately, ease doesn’t mean right. Using this method might leave you without a sufficient budget to meet your performance goals or too much allocated to marketing, although the latter is very unlikely.

Have hands on board

You’re going to need some helping hands when it comes to driving marketing campaigns. Whether you opt for outsourced marketing support or develop an in-house marketing team will depend on your business’s individual needs and requirements. If you build an in-house team, make sure they have the equipment, Xfinity internet, and software they need to work to their full potential.

Match the competition

This method means you may have parity with your competition so your voice gets heard by prospective buyers. Of course, companies more adept at meeting consumer needs and communicating them effectively to their community still garners more sales since the budget isn’t the determining factor in consumer choice. This method gives you a fighting chance, however. If you face a strong, well-established competitor you might still have difficulties using this method and if your competition has deep pockets, they likely can outspend you by many times.

All you can afford

In my experience, this method almost always results in too little budget for marketing. That’s because when you skimp on marketing, the damage isn’t immediately apparent so there’s a temptation to spend money on the things with an immediate impact. I’ve seen many companies take their money, and allocate dollars to operational expenses such as rent, salaries, and equipment, then budget for products. Marketing dollars are whatever’s left after allocating to all other operations. That’s just not enough in many cases.

Objective/ task method

The most complex method to implement, the objective/task method results in a marketing budget with the best chance of delivering the desired sales. That’s because you calculate the budget based on sales, then work backward to how much you must spend to achieve those sales based on historical data or industry averages.

Hence, if you need to sell 1000 units and historically you spent $5 to sell each unit, you need to budget $5000 for marketing.

Inherent in this method is building an understanding of how your spend translates into sales.

Don’t scrimp on marketing

Budgeting the right amount is only the first step in achieving your marketing goals. The more effective you are at spending your money to convince customers to make additional purchases and attract new customers, the more revenue you generate per dollar. We call this ROI (return on investment). In this case, we only look at the marketing spend and how much revenue was generated per dollar spent.

This means digging deeper into your analytics than you did when implementing the objective/task method to build your budget in the first place. This means calculating the ROI of different marketing actions including channels, market research, product development, advertising, and other key marketing factors. Once you do this calculation, you find which marketing tactics produce the highest rewards and can focus on these tactics. For instance, email marketing produces an ROI as high as 40% so every dollar spent returns $40, see below.

marketing automation
Image courtesy of Data Mentors

These are industry averages and your actual returns might be higher or lower than those achieved by others. Also, you may find vast performance differences between one campaign and another. Here are some tools that will help you maximize your performance.


The first thing that we want to mention is that you need marketing on multiple channels where your target market hangs out. For younger consumers that might mean TikTok, Instagram, and SMS messaging, for older ones you may use Facebook and email marketing. when you consider media buying investigate your current engagement on different platforms where you participate then focus on those channels for advertising. For example, you should post on one or several social media on a regular basis choosing those that fit your bandwidth since you must post on a consistent basis based on platform norms.

You essentially just want to be everywhere your market is, while ensuring you can manage the platforms effectively with your staff. Hiring an agency might make sense both in terms of multiplying your bandwidth and providing expertise on what works. You may also find this option cheaper since the high cost of marketing tools is spread over multiple clients.

Creativity and on-point messaging

Another thing you need to ensure is that you have the right messaging that motivates your target market to action and have original ideas to work with so you stand out from the crowd. This can sometimes mean hiring creative brains so that fresh ideas start rolling out of them, boosting your marketing a little further. In some cases, you might even want to outsource the marketing department of your business so that you get the benefit of a professional without all of the costs associated with it.

Through the focus group

The final thing to consider is testing your messaging  using focus groups or A/B testing to ensure your message resonates the way you want. A focus group involves people who represent your target market. Getting feedback from them is valuable in hitting the right tone and message. Focus groups are expensive but you may find them very rewarding.

Alternatively, you might use feedback within your social platforms to help improve your messaging. You can monitor engagement with different post types to learn how your community responds. You can listen to members of your target market in groups or by viewing comments on the platforms owned by influencers in your market to see how they frame the problems they face. The downside to these techniques compared to focus groups is that you get screwed impressions because you only hear from the vocal elements of your market.


We hope that you found this article helpful, and now see that you can’t afford to skimp on marketing if you want to thrive. We talked about a few things that you can do to ensure that your business is tackling all of the different sides of marketing, appealing to as many people as possible. We wish you the very best of luck and hope that you see the success you are looking for by appealing to more people.

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Hausman and Associates, the publisher of MKT Maven, is a full-service marketing agency operating at the intersection of marketing and digital media. Check out our full range of services.