Business Why spending more doesn't always equate to better performance

Why spending more doesn’t always equate to better performance


Markus Kreth, CEO of Asia Media Publishing Group and a PR & Media Specialist for Thailand and Asia Pacific.

Spending on digital advertising is increasing at a frantic pace. Yet 47% of small businesses spend less than $10,000 on marketing. To some, this may seem too frugal, but these companies may have the right idea.

Spending more doesn’t necessarily mean you’ll get the best results. There is a clear inequality (registration required) between digital marketing spend and digital marketing performance, showing that the dollars spent on marketing alone do not predict success or failure.

So, what is the reason behind this gap and how can you close it? How do you get the most out of your digital marketing spend? At the heart of these questions lies not so much in valuing the quantitative aspects of marketing spend, but much more in the qualitative aspects of how that money is spent.

Why investments in digital marketing failed in 2022

Here are some reasons why the gap between marketing spend and marketing performance is widening:

1. Data analytics was the name of the game in 2022 – and many weren’t good at it.

When we talk about investing in digital marketing, our focus has always been on spending on the legacy components of marketing, primarily storytelling and website optimization. In 2022, however, data analysis received much more attention.

Analyzing data gives us a more targeted “buyer persona” profile that allows us to create convertible targeted ads. The problem is that most of the technologies used to aggregate and analyze that data are becoming increasingly complex. Understanding these changing technologies is time consuming, leaving less time to focus on the actual marketing part. It also requires a different kind of skill to effectively interpret the data output – one that isn’t necessarily common in older marketing teams.

2. Converting data into useful statistics is not easy.

We have access to an overwhelming amount of data. But not all marketers can turn this data into important metrics, which can lead to indecisiveness. Part of the reason for this is that the easily accessible information has made marketers impatient; they want to scale up quickly. This leads to a lot of information without context, which can hinder the pace at which you have to make decisions. It can also be difficult to separate the signal from the noise in your data sets.

Volume doesn’t always mean value, and sometimes your data aggregation services simply bombard you with unfiltered information. Drawing conclusions or statistics from incorrect or irrelevant data streams can lead your teams to make poor decisions or reinforce the wrong type of “buyer persona” bias. Information is always a double-edged sword – you need to make sure you’re on the right side.

3. Mapping the customer journey is more complex than before.

Companies today focus on reaching their customers through a growing variety of media such as blogs, vlogs, social platforms and third-party applications. This versatility makes mapping the customer journey more complex. This challenge is compounded by the rapid changes within the engagement media pantheon.

Imbalances within your broader customer journey blueprint can also lead to distortions in data feedback, which can provide false metrics to confirm or obscure the effectiveness of your customer journey ecosystem. As with all things, it is important to sit at the table, but it is equally important to do things correctly.

Maximizing your digital advertising potential

Based on my experience in the marketing industry, here are three ways to strategize your digital marketing spend to drive returns.

• Don’t rant on all marketing media.

Spreading the wider net makes it easy to catch a fish, but the same philosophy doesn’t go down well on the internet. Selecting all the platforms to market your product or service from scratch can be a waste of time if your business is small. Generating massive amounts of non-sophisticated marketing data poses a similar problem and can render your analytics virtually useless.

Start small. Adjust the Pareto principle, also known as the 80/20 rule, when selecting the platforms to broadcast your message: 20% of the traffic sources generate 80% of the good results. So choose what works and go with it. Functionality is better than quantity in this space.

• Check your budget and targeting.

Focus on platforms that give you full control over setting the budget and creating a target demographic. This will help you cut the fat out of your marketing budget and make your ad accurate to get the best results. It’s also important to make sure you get accurate reporting and full access to your raw data analytics so you know what you’re being told is what’s actually happening.

• Don’t scale too early.

It can help if you scale your business only after it starts to generate excess profit. With excess profit in hand, you can focus on experimenting with different types of campaigns on the same platform. This prevents you from focusing on less profitable endeavors and focusing your marketing efforts on the one that brings you the most ROI. However, it’s important to establish your key demographics first and ensure that any experimentation doesn’t alienate your stable revenue-generating customer base.

The gap between digital marketing spend and performance tells us that spending more doesn’t necessarily equal better results. The key to closing the gap and maximizing digital marketing spend lies in the qualitative aspects of how the money is spent. By implementing data analytics, turning data into actionable metrics, and effectively mapping customer journeys, small businesses can strategize their digital marketing spend to maximize returns. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?

Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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