One of the more frustrating situations for any business leader is reaching the point where the marketing budget has increased substantially over several years, the team is larger, the technology stack is more sophisticated and the organisation is investing in more channels than ever before, yet there is still very little confidence that marketing itself has become proportionately better.
The business may now have an internal marketing team, one or more agencies, a CRM, paid advertising, SEO, content production, automation, social media, reporting platforms, data tools, video suppliers, events and perhaps an expensive website that has been rebuilt more than once. On paper, this should represent a considerably more capable marketing function than the one the business had several years earlier, but in practice many organisations still find themselves asking remarkably familiar questions about where the results are coming from, why sales remains dissatisfied with lead quality, why the cost of acquisition continues to rise and why every attempt to improve performance appears to involve further investment.
It is easy, when those questions begin to appear at board level, to conclude that marketing has simply become too expensive, but I think that can oversimplify the real issue. An ambitious business may quite reasonably need to spend more on marketing as it grows, particularly if it is entering new markets, launching products, developing new customer journeys, expanding internationally or trying to create a stronger and more scalable commercial operation. The more useful question is not whether the budget has increased, but whether the increase has happened deliberately and whether the organisation can explain what additional capability or commercial value that extra investment has created.
In my experience, marketing budgets rarely become inefficient because of one obviously poor decision. They become inefficient through accumulation, as individually reasonable decisions are layered on top of one another until the business is funding a marketing function that nobody ever consciously designed.
A new agency made sense when it was appointed. An additional marketing hire solved a genuine capacity problem. A CRM was introduced because the existing process could no longer cope. New software improved reporting. Paid media was increased because sales needed more opportunities. The website was rebuilt because conversion was poor. An event was sponsored because it provided access to an important audience. None of those decisions necessarily looked unreasonable at the time, and many may have been entirely justified, but taken together they can gradually create a marketing operation that is significantly more expensive, considerably more complicated and not necessarily much more effective.
That is the central problem: a marketing budget can be made up almost entirely of sensible individual decisions and still become commercially irrational when nobody is periodically reviewing whether the whole system still makes sense.
Marketing budgets rarely grow according to a plan
Most established marketing functions were not designed from a blank sheet of paper; they evolved gradually as the business grew, new problems emerged and different priorities demanded attention. A company does not usually reach £10 million or £20 million in turnover because somebody, several years earlier, perfectly anticipated the combination of people, agencies, technology, customer journeys, reporting systems, channels and capabilities that the organisation would eventually require. Instead, marketing develops incrementally, with each new investment introduced to address the issue that appears most important at that particular point in time.
If the website is failing to generate enough enquiries, a web agency may be appointed. If sales needs more leads, the paid media budget is increased. If organic visibility is weak, an SEO partner is brought in, while inconsistent content production may lead to the recruitment of another marketer or the appointment of a freelance resource. Customer information scattered across spreadsheets and individual inboxes creates the case for a CRM, poor reporting creates demand for another platform, and before long the organisation is also investing in email marketing, automation, social media, video, prospecting tools, data providers and whatever other capabilities have become necessary as the business has grown.
None of those decisions is inherently wrong. In many cases they may have been entirely appropriate and may have solved genuine problems at the time they were made. The difficulty is that organisations are usually much better at adding new capability than they are at reconsidering the capability they already have, which means every new requirement tends to become another layer placed on top of the existing marketing operation rather than an opportunity to determine whether the overall structure still makes sense.
Over time, this creates a marketing function that has accumulated people, suppliers, platforms, processes, campaigns, reporting requirements and historical commitments, all of which can continue to appear individually defensible because each originated from a legitimate business need. What becomes much harder is determining whether the combination of those decisions still represents the right marketing model for the organisation today, particularly when suppliers have changed, teams have grown, commercial priorities have shifted and technology introduced to solve one problem may now overlap with something purchased several years later.
This is one of the main reasons marketing budgets can increase significantly without marketing performance improving at anything like the same rate. The problem is rarely that the business has made one catastrophic investment; it is that years of individually sensible decisions have accumulated without anyone periodically redesigning the whole marketing function around what the business now needs.
The real marketing budget is often larger than the number on the spreadsheet
Another difficulty is that organisations do not always have a complete view of what they are actually spending on marketing, because the true cost of the function is often distributed across several budgets rather than sitting neatly under one departmental heading.
There may be an obvious marketing budget covering salaries, agency retainers, advertising and campaign activity, but employer costs sit behind those salaries, software may be charged to IT, customer data tools may sit within sales, website development may be treated as a separate project and exhibition costs may be allocated elsewhere depending on how the business is structured. Freelancers, photographers, video producers, consultants, PR support, research, hosting, domains, analytics tools, sponsorship and specialist software can all be accounted for differently, particularly in organisations where individual departments have historically been given the freedom to purchase their own platforms and services.
None of this is necessarily problematic from a financial reporting perspective, but it can make marketing performance considerably harder to judge. If the business believes it is spending £300,000 a year on marketing because that is the figure shown against the departmental budget, while another £100,000 of commercially related expenditure is spread across sales, IT and project budgets, any conversation about marketing ROI is already beginning with an incomplete understanding of the investment being made.
The same applies to internal time, which is often ignored altogether. A supposedly inexpensive campaign may absorb substantial amounts of time across marketing, sales, operations and senior leadership, while an apparently expensive supplier may actually remove a considerable operational burden from the organisation. Looking only at invoice value therefore does not always tell you whether something is expensive or efficient, because the real cost of a marketing activity includes the people, technology and processes required to make it work.
A sensible review of marketing spend therefore needs to look beyond media budgets and agency retainers and consider the total cost of operating the marketing capability. Without that view, it is surprisingly easy for an organisation to optimise individual line items while never really understanding whether the overall investment is working.
More marketing activity can create the illusion of greater capability
One reason rising marketing expenditure can remain unchallenged for so long is that almost every additional investment produces something visible. Another person joins the team, more work gets completed, another agency begins delivering campaigns, another platform produces another dashboard, more content gets published and the overall volume of marketing activity increases.
From inside a busy organisation, this can look very much like progress because there is more output, more reporting and more evidence that marketing is constantly doing something. The problem is that activity and effectiveness are not the same thing, and a marketing function can become significantly better at producing campaigns, content, emails, meetings, reports and creative work without becoming materially better at generating profitable demand, improving customer retention, strengthening market position or contributing to the wider commercial objectives of the business.
Additional capacity can sometimes make the underlying problem harder to see because people naturally use the resources available to them. More people create more capacity, and more capacity tends to produce more marketing, even when the strategic priorities remain unclear. The organisation becomes busier, but not necessarily more focused.
This does not mean growth in team size or marketing activity is inherently a problem. A growing business often needs more execution capability, and there will be situations where the existing team simply cannot support the scale of the commercial opportunity. The issue is that increased capacity needs to be accompanied by greater strategic clarity, because without that clarity the result is often an organisation doing more things simultaneously rather than doing the most important things better.
A larger marketing team should therefore be expected to create greater capability, not simply greater output.
Every supplier can be performing well while marketing still underperforms
Agencies often become the first target when marketing costs come under scrutiny, but the reality is usually more complicated because a business can have several perfectly competent suppliers and still have an underperforming marketing function.
A good PPC agency should concentrate on paid media performance, an SEO agency should focus on organic visibility, a web agency should improve the website and a CRM specialist should improve how customer data and automation are managed. Those are entirely reasonable responsibilities and, in many cases, those suppliers may be delivering exactly what they were contracted to provide.
The difficulty is that success within one discipline does not automatically mean the business has made the correct decision about how much resource should be allocated to that discipline in the first place. A paid media agency may genuinely improve return on advertising spend while the wider organisation would create greater value by redirecting some of that budget elsewhere. An SEO programme may produce impressive traffic growth while attracting users with relatively little commercial intent, and a website agency can deliver an excellent site against a brief that did not address the actual conversion problem.
This is where supplier management and marketing leadership become very different things. The question is not simply whether each supplier is doing a good job, but whether the combined allocation of marketing spend represents the best use of the organisation’s available resources.
That decision cannot reasonably be left to a collection of specialist suppliers because each has been appointed to solve a specific problem. Someone still needs to look across the whole marketing function, understand the commercial objectives of the business and determine how those individual components should fit together.
The absence of poor suppliers does not automatically mean the presence of good marketing.
Marketing technology quietly becomes a major source of cost and complexity
Technology deserves particular attention because marketing software has a remarkable ability to become almost invisible once it enters the monthly or annual operating budget.
A platform costing a few hundred pounds a month may appear insignificant compared with salaries, agency retainers or advertising expenditure, which makes the original decision relatively easy to approve. As more systems are introduced, however, the cumulative cost can become significant, particularly when several platforms offer overlapping functionality or when software has been purchased for capabilities that the organisation never properly adopts.
The issue is rarely that the technology itself is poor. Quite often the opposite is true. Businesses can find themselves paying for highly sophisticated CRM, automation, analytics or personalisation platforms while using only a fraction of what they are capable of doing. One department may purchase a data tool that overlaps with something already available elsewhere, another may introduce a reporting solution because the existing platform was never properly configured, and sales and marketing can easily end up paying separately for systems solving very similar problems.
There is also a natural tendency for technology to survive long after the original reason for buying it has disappeared. Cancelling a platform feels like a decision that requires justification, whereas allowing an annual renewal to go through can feel like doing nothing, which means continuation often becomes the default even when the business would struggle to make the same purchasing decision again today.
The cost of unnecessary marketing technology is not limited to the subscription fee either. Every additional system creates another place where data can live, another integration that may need maintaining, another process employees need to understand and another opportunity for information to become inconsistent across the organisation. The result is greater operational complexity, and that complexity itself creates cost.
The sunk-cost problem keeps weak marketing alive
One of the more difficult decisions in marketing is stopping something after the business has already invested heavily in it, particularly where considerable time, money or internal credibility has been committed to making it work.
A company may have spent £100,000 developing a website, several years implementing a CRM, significant amounts building a brand or considerable money sponsoring an annual event, and once that investment has been made the discussion can easily shift from asking whether the activity remains the right thing to do to asking how the organisation can justify continuing with what it has already paid for.
Sometimes that is entirely reasonable. Marketing initiatives can take time to mature, brand investment should not always be judged by immediate sales and abandoning programmes too quickly can be just as damaging as allowing weak ones to continue indefinitely. The problem arises when historic expenditure begins to influence future decisions more heavily than current evidence.
A useful question in these situations is whether the organisation, knowing what it knows today, would make the same purchasing decision again if the product, supplier or initiative did not already exist. If the answer is no, there should at least be a clear explanation for why the business continues to invest in it.
The point is not that everything producing imperfect results should be stopped. The point is that continuation should remain an active decision rather than becoming the automatic consequence of previous investment.
Marketing budgets become inefficient when nobody is responsible for saying no
Most organisations are very good at creating new marketing requirements. Sales wants a campaign for a particular sector, the CEO has seen a competitor doing something interesting, HR needs recruitment materials, a product launch requires support, a senior stakeholder wants to attend an exhibition and somebody has decided the business should be more active on a new social platform.
Individually, most of these requests can sound entirely reasonable, which is exactly why marketing budgets expand so easily. Every request has a logic behind it, but they tend to arrive independently of one another and without an equally disciplined process for deciding what should stop.
A new campaign is added without an old one being removed, a new supplier is appointed without an existing relationship being reviewed, a new platform is purchased without considering what it replaces and another target audience becomes strategically important while all the previous audiences apparently remain equally important.
Eventually, the marketing plan stops being a prioritised strategy and becomes a record of everything the business has ever decided matters.
The budget follows the same path.
One of the less glamorous but more important responsibilities of senior marketing leadership is therefore deciding what the business should not do. Resources are finite, and money spent on one opportunity cannot simultaneously be spent somewhere else, just as employee capacity committed to one project is unavailable for another.
A meaningful marketing budget should represent choices, because if everything is treated as a priority, the strategy has probably stopped being one.
More budget does not always produce proportionately more return
Another reason marketing budgets can become less efficient as they grow is that additional investment does not always produce the same return as the investment that came before it.
Paid media provides one of the clearest examples. A business may be spending £20,000 a month very profitably on a particular channel, but it does not automatically follow that doubling the spend to £40,000 will double the commercial return. The strongest audience may already be receiving the advertising, and additional budget may require broader targeting, more expensive inventory or weaker opportunities, meaning the marginal return begins to decline even though the channel remains profitable overall.
The same principle applies to people, agencies and technology. The first marketing hire may solve a critical capability gap, while the fifth may create considerably less incremental value. The first specialist platform may transform a broken process, while another overlapping system simply introduces greater complexity. The first external partner may bring expertise that the organisation genuinely lacks, while another may increase fragmentation and make decision-making harder.
This is why marketing budget allocation should not be reduced to a binary question of whether something works. An activity can be working and still not deserve additional investment, because the more useful question is what the next pound spent on that activity is likely to achieve compared with the next best alternative.
Once that question is introduced, marketing optimisation starts to become less about individual channels and more about the intelligent allocation of capital.
Cutting marketing spend is not the same as improving efficiency
When businesses eventually recognise that marketing costs have increased too far, the instinctive response is often to reduce the budget, and there are circumstances where that is entirely appropriate. However, spending less does not automatically create a more efficient marketing function any more than spending more automatically creates a better one.
Across-the-board cuts are particularly problematic because they assume every element of the budget creates roughly the same level of value. Reducing paid media, customer research, CRM, technology, people and agency support by the same percentage may be administratively simple, but it risks weakening the areas that are actually working while preserving activities that should have been removed altogether.
A proper review should therefore be much more selective. Some expenditure may need to disappear entirely, some should remain unchanged, some may need restructuring and some may actually require additional investment.
That final point matters because marketing efficiency should not become shorthand for cost cutting. The objective is not to create the cheapest possible marketing function, but to create one where investment is deliberate, aligned to the commercial priorities of the business and capable of producing an appropriate return.
A company spending £500,000 intelligently can be in a considerably stronger position than one celebrating the fact that it has reduced marketing expenditure from £300,000 to £200,000 while simultaneously undermining the growth it expects marketing to deliver.
Marketing ROI becomes meaningless when the business cannot agree what it is measuring
The obvious response to rising marketing costs is to demand stronger evidence of marketing ROI, which is entirely reasonable, but only if the organisation has first established what it actually means by return.
Marketing may report leads, sales may care about qualified opportunities, finance may care about recognised revenue and advertising platforms may attribute conversions according to their own measurement models. Analytics may provide another version of events, while the CRM contains a customer journey that does not entirely match any of them.
A campaign can therefore appear successful or unsuccessful depending on which system somebody opens first.
This does not mean marketing measurement is impossible, nor should it be used as an excuse to avoid commercial accountability. It simply means organisations need agreed definitions, reliable data and a realistic understanding of the customer journey before performance can be interpreted properly.
The danger is that weak measurement can actually encourage greater spending. A channel appears profitable, so the budget is increased. Another platform reports additional conversions, so the activity continues. Lead numbers rise, so everybody assumes marketing is improving.
If those outcomes cannot be connected with sufficient confidence to commercial value, the business may simply be using unreliable measurement to justify further investment.
More data does not necessarily solve that problem; better definitions and stronger governance usually do.
Sometimes the issue is not the budget, but the expectation placed upon it
There is another side to the discussion, because marketing budgets are not always becoming inefficient simply because the function has lost control of spending. Sometimes the commercial expectation placed on marketing increases much faster than the investment itself.
A business may increase its revenue target substantially while making only a modest increase to the marketing budget. It may enter a more competitive market, launch a new product, move away from a historically strong referral model or expect marketing to generate a much larger proportion of the sales pipeline than it has in the past.
From the board’s perspective, the organisation is spending more on marketing. From marketing’s perspective, the function may actually have fewer resources relative to what it is now expected to achieve.
This is why the absolute size of a marketing budget tells you relatively little without the commercial context around it. A £1 million budget could be excessive for one business and completely inadequate for another.
The better question is what the organisation expects that investment to achieve, what assumptions sit behind those expectations and whether those assumptions remain credible.
A good marketing budget should reflect the strategy
One of the simplest tests of any marketing budget is whether somebody could understand the strategic priorities of the business by looking at where the money, people and time are being allocated.
If the organisation says customer retention is critical but almost the entire budget is focused on acquisition, something does not align. If a particular customer segment is supposedly the priority but expenditure remains spread equally across several audiences, the financial allocation is not supporting the stated strategy. If the business acknowledges that CRM and customer data are significant weaknesses but continues to direct almost all of its investment into campaigns, there is again a disconnect between what it says matters and where resources are actually going.
A budget is therefore more than a financial control document; it is one of the clearest expressions of strategic choice available to the organisation.
The business can write almost anything in a marketing strategy document, but where it allocates money, people and time reveals what it has genuinely decided to prioritise.
This is also why simply carrying last year’s budget forward and adjusting individual lines by a percentage can be problematic. It assumes that the strategic priorities of the next twelve months will remain sufficiently similar to the previous twelve for the same allocation model to remain appropriate.
Sometimes that assumption will be correct. Sometimes the business has changed materially while the shape of the marketing budget has barely changed at all.
Marketing spend needs to be reviewed as a system
When a marketing budget has grown significantly, the most useful starting point is rarely to begin cancelling individual suppliers or trimming line items. The better approach is to understand how the whole system currently works and whether it is still appropriate for what the business is trying to achieve.
That means looking at the commercial objectives, the customer groups that create the greatest value, the role marketing is expected to play, the true level of investment across people, technology, agencies and media, and the degree to which those resources are actually working together.
It also means understanding where capability is duplicated, where obvious gaps remain, whether suppliers still serve the purpose for which they were originally appointed, whether technology is being used properly, whether the internal team has the necessary skills and capacity, whether reporting can be trusted and whether marketing and sales are using the same definitions when they talk about performance.
These areas are interconnected, which is why reviewing them individually can easily produce the wrong conclusion. A CRM may appear expensive until the business understands how dependent its future retention strategy is on customer data. Paid media may appear excessive until it becomes clear that it is driving a substantial proportion of profitable new business. An agency retainer may appear reasonable until the organisation discovers that much of the same work is already being duplicated internally.
Equally, a member of the marketing team may appear unproductive until it becomes apparent that a large proportion of their time is being spent compensating manually for systems and processes that do not work properly.
The purpose of the review is therefore not simply to identify what can be removed, but to understand cause and effect before changing the cost base.
Senior marketing leadership should challenge investment, not simply defend it
One of the most important responsibilities of a senior marketing leader is being willing to challenge the marketing budget themselves.
Marketing leadership should not exist simply to secure more budget from the board and defend every pound already being spent. There will be situations where the correct recommendation is to invest more aggressively because the commercial opportunity justifies it, but there will also be situations where the right decision is to reduce spend, stop a campaign, change an agency, remove a platform or accept that something has not delivered what was expected.
Credible marketing leadership requires both.
As marketing functions become more complex, someone needs enough visibility across strategy, people, agencies, technology, data, channels and commercial performance to make those trade-offs properly.
A Marketing Manager focused primarily on day-to-day delivery may not reasonably have that remit. An agency responsible for one specialist discipline should not have it. Finance can challenge the total cost, but it cannot always determine which marketing capabilities the organisation genuinely requires, while the CEO should not need to personally diagnose every campaign, supplier, system and customer journey before deciding whether the marketing budget is appropriate.
At some point, somebody needs responsibility for looking across the entire marketing function and connecting investment with commercial priorities.
Whether that person is a permanent Marketing Director, a Chief Marketing Officer, a Fractional CMO or another suitably experienced marketing leader matters less than the responsibility itself. Without that level of oversight, marketing budgets tend to grow through accumulation rather than deliberate allocation.
A bigger marketing budget should create a better marketing capability
Marketing will often become more expensive as a business grows, and that should not automatically be treated as a problem. Larger organisations tend to require stronger systems, better reporting, more sophisticated customer journeys, greater reach, more capable teams and stronger governance, while businesses entering new markets or pursuing more ambitious growth targets may quite reasonably need to increase marketing investment substantially.
The warning sign appears when the organisation can explain why the budget has increased but struggles to explain what additional capability, commercial advantage or measurable improvement the extra investment has created.
Marketing expenditure rarely gets out of control because somebody approves one obviously ridiculous amount of money. It grows through dozens of smaller decisions, each reasonable enough to avoid serious challenge, until the organisation eventually steps back and realises that the whole looks very different from the individual decisions that created it.
The answer is not automatically to spend less. It is to become much more deliberate about what the business is funding, why it is funding it, what that investment is expected to achieve and who is responsible for making those decisions across the marketing function as a whole.
Because ultimately, a bigger marketing budget should buy a better marketing capability, not simply more marketing.