Where Your Marketing Budget Is Wasting Money

The bigger your business gets, the harder it is to oversee your marketing department — and the more likely it is that marketing dollars are being spent on efforts with little to no trackable return on investment.With budgets tighter than ever, now is the time to identify the sneaky habits and tactics that could be draining your marketing dollars without you even knowing about it. 

Where your marketing budget is wasting money 

Forging ahead without a strategy.

If you don’t have a clear idea of your target customer, where to find them, and what they want to see from you, how could you ever hope to see solid marketing results?

Be like Abe: If you're given 6 hours to chop down a tree, spend the first 4 sharpening your axe. Get that strategy sharp before you try to go bag a few customers.  

Market Research

While most companies don’t perform market research in-house, many do hire outside firms to supply them with marketing data. But this is a waste of money, especially if your business has an established customer base and you’re trying to reach more of the same type of customer.

Instead of spending money on private data or costly custom studies (which can often be biased one way or another), simply take a moment to talk with your existing customers. Use tools like surveys, email marketing campaigns, and personal outreach to learn more about their likes, dislikes, and pain points.

You can also take advantage of publicly available “big data,” which is often less biased — but not always.

Promotional Items

At some point, you may feel the urge to buy a bunch of pens with your logo on them. Resist that urge. Unless a swag item is really useful AND industry-relevant, it has a bigger chance of ending up in a junk drawer or trash can than bringing you new leads. 

If you’re really attached to the idea of seeing your logo on a pen or key chain, check out “How to Ensure You Don’t Waste Money on Useless Company Swag” from our partners over at HubSpot. 

Sponsoring Unrelated Events

Brands are constantly trying to expand their presence in the real world through events, logo placements, and sponsorship. Once you reach a certain degree of exposure, other businesses, charities, or events may come to you looking for sponsorship.

Though it can be tempting to say yes, especially when flattery is involved, you should take a critical approach to spending your marketing money on sponsorships. Ask yourself:

  • Who will see the sponsored item or logo? If it’s an event, who will be attending? How does this audience match up with your target audience?
  • How much money will it cost? Contrast this number with the value of the leads you expect your sponsorship to bring in.
  • Is there another quantifiable or qualifiable benefit? For instance, if your sponsorship won’t connect you with the right audience, but will help you forge a link with another business that could be valuable to you, you might want to consider this marketing cost an investment.

Awareness Campaigns

Too many brands spend enormous amounts of money on “awareness campaigns”. The idea behind this aimless, all-encompassing flood of logo placements is that the more a potential customer sees your brand, the more they trust it.

There are two issues with building brand awareness like this. The first problem is that you can’t track your results. When your goal is “awareness,” not a measurable metric, how do you know when you’ve hit it? Instead of marketing your brand, market your products or services. You’ll make a much more solid connection with prospects, and you’ll see your sales rise.

The second problem, lack of targeting, is tied to the first one. Lack of targeting is a basic mistake that marketers make all the time. By doing some research into where your potential customers spend time, both online and off, you can learn how to spend your marketing budget where it counts. For instance, if most of your target customers are hanging out on Twitter, it might not  make sense to spend time on Facebook (unless you’re running a targeted Facebook ad campaign to find more fans there, of course).  

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Letting Your Agency Call All the Shots


If you work with an advertising or marketing agency, you know how shocking those bills can be. 

You get the invoice for that job you thought was going to be a quick and easy and wonder "Is that decimal in the right place?!" 

One of two things are likely happening here: way more time was spent on the project than was budgeted or someone(s) who bills at a really high rate touched the job. According to ToughNickel.com, the top grossing jobs in marketing are the following: 

  • International Marketing Executive
  • Sales Channel Development Officers
  • Chief Marketing Officer
  • Chief Marketing Research Officers
  • Marketing Director
  • E-commerce Marketing Director
  • VP of Database Marketing
  • Internal/Employee Communications Director
  • Executive Creative Director Range
  • Top Account Management Executive Salary Range

If you need any of these well-compensated individuals rubbing their big brains all over your project, by all means, let em have at it. But lots of jobs don't require their efforts and can't justify the price that comes with it.  

Sometimes you just have to tell your account service person "We can't justify involving anyone who bills over $XXX an hour. Tell Don Draper he can go back to sleep."

Going over your time budgets is a little more complicated. 

Did the goal posts move, were there 21 rounds of revisions, was your direction unclear, was the work just bad and had to be redone, was the project started before you knew what you really needed, did the creative team concept for 423 hours? 

If you're with an agency that bills by the hour – and not on a predictable and controllable points scale – this could be a recurring problem. 

That's why we don't believe in charging clients based on the time we spend. We charge for accomplishments. 

Changing Direction Mid-Campaign

Sometimes it's unavoidable. A few weeks after starting a project, the situation changes and so to must the marketing campaign you've been working on. 

But you need to be aware of the costs associated. Because they're not insignificant and can sap your marketing budget. 

With an internal marketing department, look at the hours already invested, the amount of those hours that will have been wasted if you do change course, and the opportunity cost of that squandered time. If you're only a few hours into the project and are only shifting a little, no big deal. But if you've had an entire team working on the project for weeks and the change in course will require totally starting over – you're looking at a decision that will incur a lot of waste. 

Another thing to consider is the project(s) that will now be delayed by the extra work of changing direction. Did your marketing team have an important project on deck that other departments are waiting on? If so, even a small change of direction on the current project can have drastic implications. 

If you have an advertising or marketing agency, the consequences can be even more severe. 

Their hours are marked up for profit – including those wasted. And depending on who's been working on the project, the costs associated can be huge.  

Story Time

Once upon a time, I was a copywriter at a relatively large advertising agency working on a Fortune 500 client. 

We had a big kickoff meeting with about 30 people – including Group Creative Directors and Account Supervisors, (two positions that bill at a very high rate), where we got a brief for a big TV project where the client wanted to go all in on attacking the competition.

After breaking into smaller creative teams, we spent about three weeks brainstorming, writing, reviewing with various creative directors and coming up with story boards to prepare for a big internal creative review. Except, in that meeting we learned that the client decided the campaign should play it safe and promote product features instead. And he needed us to stick to the original timeline. 

So not only did the client waste hundreds of hours and tens of thousands of dollars, but in the end, they got a national TV spot that was both over budget and thrown together at the last minute by a frustrated creative team.

The results were exactly as you'd expect. 

The surprising thing was how regular this was. I wouldn't be surprised if they wasted over a million dollars while I was there. And they probably never even knew they were hemorrhaging money because they never stopped to take an honest look at their process. 

Recap: A national brand spent a ton of money on a bad TV spot by changing course two-weeks into the project.  

This can seem like a downer. 

With all these pitfalls (and a few you no doubt recognize a little too well), is marketing a big money pit that you pitch hard-earned dollars into to keep up with that competitor that is gaining market share?

No. You just have to be smart about it. 

Now that you've identified wasteful ways to burn through your marketing budget, you can shift those dollars to the tactics that have great ROI. That's your metrics like CLV, RoAS, CoCA and the like.

If you want to learn more about maximizing the value of every dollar you put into your marketing budget and build consistent growth for your business in a predictable, scalable way, sign up for our extensive whitepaper and start putting together a smart strategy tested to deliver success. 

Want to learn more tips for spending your marketing budget where it counts? We've got you: Marketing Budget Best Practices.