Marketing's Chicken/Egg Investment Paradox

In the tug-of-war for company resources, marketing budgets are a battleground where CFOs demand ROI proof while CMOs scramble for benchmark data to justify their existence. Not that benchmarks are a great way to set budgets.

What's puzzling about this ritual is the fundamental truth that small, fast-growing companies consistently invest more in marketing than slow-growth competitors. This is a truism like reducing costs improves margins, or you know, the sky is blue.

We can look to decades of research to support this, from Binet & Field's Long & Short ESOV work, to Gartner studies, to Hinge Institute's professional services benchmark research, the the Duke/Deloitte CMO Survey, to the recently released study on B2B tech marketing investment benchmarks.

But which comes first? Does marketing drive growth for smaller firms,* or does growth beget more marketing investment? More importantly, what are the consequences of investing too little—and is that even a thing?

* By smaller firms, I mean startups, scaleups, nano- and micro-cap business. This might hold true for smaller small-cap firms. Larger enterprises with significant market share behave quite differently.

Numbers don't lie

Recent data from the 2025 B2B Marketing Benchmarks Report (surveying 300+ tech SaaS marketing leaders | source: LinkedIn) reveals companies growing at 30%+ allocate more than twice the budget to marketing compared to those growing under 10%. For companies above $50M in revenue, the fastest-growing firms invest nearly triple what their slower-growth counterparts do.

This isn't coincidental. It reflects a fundamental truth about early- to mid-stage business growth mechanics.

It's not just how much, but how well

The Hinge Research Institute's annual high growth study for professional services reveals something counterintuitive: there isn't always significant difference in total marketing budget between high-growth and average-growth companies.

The differentiator? Execution quality.

It appears that a marketing team's competence and strategic focus determines growth outcomes more than raw dollars.

This aligns with what we see in the 2025 Benchmarks, where product-led growth companies allocate budgets differently (more to programs, less to people) than their sales-led counterparts.

Minimum Viable Marketing Budget

This brings us to a potentially provocative question: Is there a minimum threshold below which marketing investment becomes pointless?

I'd argue the answer is yes.

When companies allocate such minimal resources that marketing:

• Can't properly research the market
• Can't create memorable campaigns
• Don't have the boots on the ground to deliver
• Don't have the capability to build mind and market share, and
• Don't have the skills (in-house or otherwise) to leverage causal analytics to deliver their marketing efficiently and effectively, then ...

They have created a function that by designed will fail.

Beyond maintaining fundamentals like developing distinctive brand assets, having clearly defined but relative positioning, sales assets, and a basic website, they're setting up talented professionals for inevitable failure. Guaranteed.

These organizations might as well eliminate their marketing department entirely, focus on building a great product/service that customers will refer, and save everyone the burnout and disappointment.

If that sounds like a great way to not beat your competition, trust your instincts.

The metrics that (don't) matter

The B2B Marketing Benchmarks Report highlights a telling disconnect between what they do in practice and what actually drives rapid growth:

• 34% of companies still track MQLs as a top-three metric
• Only 15% monitor customer acquisition cost ratios, and
• A truly feeble 8% measure brand awareness.

The last statistic is barely believable. Let me ask, when as the last time you bought something you didn't know existed? Yet only 8% of survey respondents measure whether anyone is aware of their brand.

This reflects a persistent "gumball machine" ROI mentality—insert budget, collect leads—rather than understanding marketing's complex role in shaping buyer preferences early in the decision journey when 80% of purchase decisions are actually forming.

Framework for growth

For businesses seeking to grow in a market that appears to be generating significant headwinds, consider this approach:

1. Assess your true minimum viable marketing budget based on industry, competition, and growth targets (benchmarks are, if nothing else, a reasonable place to start).
2. Invest in marketing talent before programs. Great marketers with even modest—but not too small—budgets outperform mediocre ones with large budgets.
3. Track metrics that span the entire buyer journey, not just lead generation, and include brand-oriented metrics.
4. Gradually increase investment as execution proves worthy, but also understand if you invest too little you may as well invest those resources somewhere else in the business.

On benchmarks

Quickly on benchmarks, are are a few commonly accepted rule about marketing investments. As a percentage of revenue:

• ~5% maintains market share
• ~8% grows market share

Related:

• Enterprise B2B companies spend ~6% of revenue on marketing
• High-growth early stage companies spend at least ~12-15%

Counterpoint

The evidence suggests marketing investment drives growth, but marketing effectiveness earns the right to increased budget.

It's not solely about spending more. It's about spending effectively on the right activities with the right team. This requires market research, good segmentation, targeting, clear positioning, and a very clear promise to the customer.

For companies serious about growth, marketing isn't a discretionary expense. It's a strategic investment that requires both adequate funding and excellent execution.

What's clear from the data is that companies willing to make this investment consistently outpace their peers. Companies that invest in the "market diagnosis" described above outpace their peers.

The question isn't whether you can afford to invest in marketing, but whether you can afford not to.

I can say from experience and with confidence that dipping one's toes into the marketing waters isn't an option. It is a guaranteed path to stagnation.