The mistake is looking at marketing as an expense to cut whenever you want to improve EBITDA. Cutting $100,000 from your marketing budget might make the bottom line look better immediately, but that doesn’t mean you created a better business.
Instead, figure out what that marketing spend is actually producing. Track your spend through to leads, booked jobs, revenue, gross profit, and ultimately EBITDA. If you can consistently spend a dollar and generate enough gross profit to cover that dollar plus the additional overhead required to service the work, you have a channel worth continuing to fund.
That also means evaluating marketing alongside gross margin. You can generate a huge amount of revenue and still create a bad outcome if you’re buying work that isn’t profitable. With a target of 50%+ gross margin, you have more room to invest aggressively in customer acquisition while still working toward a healthy EBITDA margin.
The tactical approach is to look at each channel individually. PPC, Local Service Ads, SEO, direct mail, and every other source should earn its budget. Ask: How much did we spend? How much revenue did it produce? What was the gross profit on that revenue? What did we actually keep after the cost of acquiring and servicing those customers?
Then reinvest where the economics work. If a channel can absorb another $10,000 while maintaining acceptable acquisition costs and margins, increasing the budget may be smarter than protecting an extra point of EBITDA.
That’s the balance we’re after: don’t chase revenue at any cost, but don’t starve profitable marketing just to make your EBITDA percentage look better. The goal is to build a larger, healthier business while keeping the underlying economics intact.
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