Is Your Marketing Spend Increasing Revenue & EBITA Now?

This is one of the most important — and most overlooked — questions during valuation preparation.

Many companies allocate a significant portion of their marketing budget toward brand-focused efforts at the same time they are actively preparing to sell the business. In some cases, more than half of total marketing spend is directed toward brand visibility rather than near-term revenue generation.

Brand matters. But during a valuation window, buyers prioritize revenue performance, efficiency, and proof of demand.

When marketing spend is disproportionately weighted toward brand activity, EBITDA often understates the company’s true revenue potential.

Branding supports long-term perception. Revenue-focused marketing supports current performance.

During periods when companies are preparing for ownership transition, misalignment between these two objectives can suppress EBITDA. Buyers are evaluating:

• How efficiently revenue is generated today 
• How dependent growth is on ongoing spend 
• Whether marketing activity produces measurable, attributable demand
   

Refocusing marketing expense toward revenue-producing activity — even temporarily — can materially improve financial outcomes.

One of the most common sources of inefficiency occurs in paid search.

Many agencies rely heavily on paid advertising for brand-name search terms. These campaigns often appear highly efficient on the surface, with low cost per acquisition, because the consumer is already searching for the company by name.

In reality:

• Much of this traffic would likely be captured organically 
• Paid spend is reinforcing existing demand rather than creating new demand 
• Reported efficiency is artificially inflated
   

This approach can obscure the true cost of customer acquisition and divert budget away from growth-oriented channels.

New revenue is generated by reaching buyers who are searching for:

• Products 
• Services 
• Solutions to specific problems
   

These non-branded searches represent incremental demand. Capturing them requires:

• Deeper understanding of consumer behavior 
• More disciplined targeting and messaging 
• Stronger attribution and lead-to-sale tracking
   

While acquisition costs may initially appear higher, these efforts expand the revenue base and improve long-term value creation.

When marketing spend is reallocated from brand-heavy activity to revenue-focused demand capture:

• Incremental revenue increases 
• Marketing efficiency improves over time 
• EBITDA expands 
• Performance becomes more defensible during evaluation
   

Buyers respond favorably to marketing systems that clearly demonstrate how new revenue is created — not just how brand awareness is maintained.