A Fresh Perspective on the Great 'Marketing as a Cost Centre' Debate
Marketing has been called a number of things by other parts of the business since its inception.
From the earliest days of commerce, at best, marketing was viewed as an overhead expense, a support function to help sell products. At worst, it was viewed as “the colouring-in department” and seen as adding little to no value at all.
In the early 20th century, marketing’s primary tasks were practical: figuring out how to get goods from factory floors to store shelves and persuading customers to notice them. Scholars of the era literally aimed to justify marketing’s existence.
Bartels (1988) writes that the first marketing academics set out to “describe, explain, and justify prevailing marketing practices”. In other words, marketers had to prove they were adding value.
They debated whether wholesalers and advertisers were creating helpful “time and place utilities” for consumers or merely adding another layer of cost. Early marketing departments focused on distribution strategy, advertising copywriting, trade promotion and market research – all viewed as necessary costs.
However, by the mid-20th century, this “sales orientation” began to shift. After World War II, academic Kotler and others documented the rise of a true marketing orientation: businesses started focusing on customer needs, product planning and branding.
Marketing became more integrated into strategic planning, but it was still largely treated as a budget to be managed, not an independent revenue centre. Think of mass-market pioneers like Procter & Gamble or Ford: they invested heavily in brand image and creative campaigns to make products recognisable, but top executives often saw those as long-term bets rather than immediate profit engines.
In fact, John Wanamaker’s famous quip from the early 1900s – “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half” – perfectly captured management scepticism about marketing spend.
As a 2024 Harvard Business Review article notes, Wanamaker’s complaint has long given financial executives cover to slash marketing budgets, since “proponents of advertising have always struggled to prove that the money is well spent”.
In short, historically, marketing functioned as a cost centre: it built brands and markets, but the link to immediate sales was indirect and hard to quantify.
Digital Disruption: New Tools, New Expectations
Starting in the 1990s, digital technology dramatically changed this picture.
Suddenly, marketers had an array of new tools – search engines, email, social media, CRM systems and advanced analytics – that could tie every campaign to concrete metrics.
Pay-per-click search ads and social ads meant you could literally “pay for results” (a click, a lead, a sale) and track them in real time.
As HBR observes, “performance marketing” – defined as paying only for measurable outcomes – became the dominant playbook in recent years. Thanks to Google Analytics and CRM databases, companies could see exactly how many people clicked an ad, visited the site, and converted into customers.
The era of gut-feel and broad awareness was giving way to data-driven, ROI-focused tactics.
This tech revolution changed budgets too. Brands now poured much larger shares of their spend into channels that could be tracked.
A 2024 HubSpot survey found that B2B marketers’ top ROI drivers were all digital: their own website/SEO, paid social media ads, and even social-shopping tools.
For B2C brands, email campaigns, paid social and content marketing led the pack. These channels generate hard numbers – clicks, downloads, or purchases – so marketing teams could present crisp dashboards to the C-suite.
In short, digital channels turned marketing into a granular revenue funnel. Suddenly, every email blast or banner ad could be linked to dollar figures, and marketers learned to report on cost-per-lead and lifetime value rather than just impressions or brand awareness.
The result was clear: modern marketing teams became obsessed with efficiency and measurable outcomes.
From Overhead to Engine: The Push for ROI
This explosion of data ushered in a new era of expectation. No longer was marketing just a cost of doing business; it was increasingly treated like any investment that had to pay for itself.
CEOs and CFOs began insisting, in their best Jerry Mcguire impressions: “Show me the ROI!”
Ads and campaigns were expected to produce tangible leads or sales. Marketing leaders who could demonstrate a favourable cost-per-acquisition or sales lift were rewarded with higher budgets. Those who couldn’t were told to cut costs.
The battle to justify marketing dollars continues unabated: Financial executives still cite Wanamaker’s maxim to defend cutting ads, because marketers have always struggled to prove that the money is well spent.
On the flip side, advocates of the data-driven approach highlight its virtues. Performance marketing’s appeal is obvious: it solves that century-old problem by delivering “measurable ROI”.
HBR explains that this model, ie running highly targeted campaigns through search or social and paying per click or lead, is so compelling precisely because marketers can tie spend to revenue.
In practice, companies benchmark every tactic: digital analytics, A/B tests, and multi-touch attribution models aim to show which ads or channels drove actual sales. The pendulum swung so far toward accountability that in many organisations, marketing is now evaluated against sales targets, and any effort that doesn’t move the revenue needle is met with scepticism.
The ROI Trap: When Obsession Backfires
This modern obsession with short-term ROI has a dark side.
By demanding that every marketing dollar be justified by immediate sales, companies risk undermining the very brand-building that drives growth.
Industry analysts warn that a narrow focus on the bottom line can blind businesses to valuable “long-term” returns. For example, a recent WARC/Google study found that companies prioritising short-term ROI may be “overlooking half (50%) of media returns” – the benefits that come from brand-building activities
In other words, treating marketing like a pure sales funnel captures only the quick-hit leads and leaves out the compounding gains of awareness, reputation and customer loyalty.
Experts put it bluntly: performance ads can look great today but erode future health if overused. Boots Media Director Peter Grant warns that sacrificing long-term brand health through constant promotions and conversion tactics “may look and feel great today, but more is needed for tomorrow to be sustainable”.
Likewise, a Cannes Lions survey found that 25% of marketers even reduced their creative/brand budgets under economic pressure, while 24% said proving short-term effectiveness had become their main focus.
Yet that same research shows why this is perilous: high-quality creative pays off at roughly four times the profit ROI of mediocre creative.
In plain terms, the ads that build emotional connections and stand out in memory drive far greater business value – but only if companies make room for them.
By contrast, when every campaign is ruthlessly measured by last-click attribution, creativity gets stifled. (As marketing expert Rand Fishkin has quipped, chasing only what can be tracked “nudges” firms to spend on ads at the expense of anything that’s hard to measure, even if that harder-to-measure work is what makes a brand memorable.
The bottom line: an inflexible ROI mindset can turn marketing into just another line on the P&L sheet, sidelining the strategic vision that sparks big ideas.
The Long Game: Brand, Trust and the Real Returns
In reality, most marketing investments are better viewed as building blocks of long-term growth rather than short-term profit levers. Consider brand equity and customer trust – the invisible assets that marketing creates.
When a brand keeps its promises and consistently delivers value, customers become loyal and even advocacy-minded.
Qualtrics research finds that when brand experience fails to match promises, 65% of consumers will switch loyalty to a competitor.
Conversely, trusted brands can weather ups and downs: another finding is that once customers trust a company, they stick with it even after a rare misstep, seeing it as an anomaly.
These are not just feel-good ideas; they have a hard economic impact. Harvard’s Jim Stengel (ex-P&G CMO) and others note that lasting brands create customer attachment that enables premium pricing and repeat business over years, returns that simply cannot be captured in a month’s spreadsheets.
So what is a sustainable view of marketing’s role?
It’s a balanced one. Short-term tactics and tracking have their place, but only as part of a broader strategy. Marketers should purposefully invest in brand-building – creative campaigns, market education, and customer experience – even if these don’t yield an immediate spike in sales.
Above all, leaders should remember that marketing’s greatest contributions often arrive on a lag. A clever ad or a meaningful brand promise built this year might drive sales for a decade.
By embracing marketing as a (strategic) cost centre in the short run, companies can capture that future payoff. After all, trust and awareness don’t depreciate quickly – they compound.
In the end, the true ROI of marketing is the customers who stick around. By valuing that long-term equity, businesses turn marketing from a “cost” into a core investment in their future growth.