The State of Marketing Efficiency in 2023
After a year of tech layoffs and rising interest rates, 2023 marketing budgets got measured against a much harder question: does this pay for itself.
The mood around marketing spend in 2023 is different from anything the previous decade produced. For years, “growth at all costs” was a defensible strategy, especially for venture-backed companies where market share mattered more than near-term profitability. That era ended abruptly through late 2022 and into 2023, and marketing efficiency became the phrase everyone reached for to describe what replaced it.
What forced the shift
Rising interest rates changed the math for a lot of businesses. When capital is cheap, spending aggressively to capture growth now and worry about margins later is a rational bet. When it isn’t, investors and executives start asking harder questions about whether each dollar of marketing spend is generating a return, not just generating growth. That shift showed up clearly in the wave of layoffs across the tech and media sector through late 2022 and early 2023, at companies including Meta, Google, Amazon and Twitter, where marketing and growth teams were far from immune.
At the same time, the paid acquisition environment itself had gotten harder to work with. Apple’s App Tracking Transparency changes, in effect since April 2021, continued to erode how precisely advertisers could target and measure campaigns on Meta’s platforms. Google, meanwhile, kept pushing back its own timeline for phasing out third-party cookies in Chrome, leaving marketers planning around a deadline that kept moving.
What “efficiency” meant in practice
The term that gained real traction among performance marketers in 2023 was the marketing efficiency ratio, a simple comparison of revenue generated against marketing spend, used as a blunt but honest gut check on whether growth was profitable growth. It wasn’t a new metric, but it became a much more common one to see referenced in board meetings and earnings calls, replacing softer growth narratives that had been acceptable a year or two earlier.
In practice, this meant a few consistent moves across marketing teams: consolidating the number of tools and agencies a company paid for, cutting channels that were hard to attribute cleanly and shifting budget toward first-party data, like email lists and owned communities, that didn’t depend on a platform’s targeting still working the way it used to.
Who adjusted well and who didn’t
Businesses that had already invested in clean first-party data and a habit of tracking cost per acquisition against actual customer value going in were in a much stronger position to defend their budgets. Businesses that had built their entire growth model on cheap, well-targeted paid social had a rougher year, because the tactic that had worked reliably for years suddenly cost more and delivered less certainty for the same spend.
What this meant for smaller businesses
Smaller businesses without deep pockets were, in a strange way, better prepared for this shift than some larger competitors, simply because scrappy efficiency had always been a necessity rather than a choice. The lesson traveling the other direction, from small business discipline to larger company practice, was a notable feature of 2023: measure honestly, cut what doesn’t clearly pay for itself and don’t assume growth and profitability are the same goal.
Where this leaves things
Marketing efficiency isn’t a passing phase tied to one economic moment, it’s a return to a standard that always should have applied. The businesses treating 2023 as a temporary belt-tightening exercise are likely to be caught off guard again next time capital gets expensive; the ones building the habit of measuring spend against real return have built something durable.
Explore more Marketing Strategy guides or everything published in 2023.
