Your Marketing Is Growing. So Why Aren't Your Profits?

Your marketing margins are killing your profits. And you didn’t even notice it.

I’ve met founders celebrating record sales while secretly wondering why there’s never any money left over. On paper, the business looks like it’s growing because revenue is up every year. But somehow, they’re still squeaking by.

The tricky part is that it happens slowly. You don’t necessarily notice it until you stop and really look at the numbers. You’ve got all of your normal expenses around production, packaging and shipping, and you’ve probably already tightened those as much as you can. If you sell through distributors, they’re great at getting your products out there and generating sales, but they take a cut too.

Then there’s marketing. You have to market your brand, but everything costs money, time, or both. You need branded photos, to build your email list, stay active on social media, run ads, and improve your website. And somehow all of those things need to happen while you’re also actually running the business.

A lot of brands start with social media because it’s accessible. You can do it yourself, or you can hire someone to help. You can post regularly, grow an audience, connect with influencers and get pretty immediate feedback. And social media absolutely can work.

But I also see founders spending a huge percentage of their time creating content for Instagram or TikTok, only to look at their analytics and realize organic social contributes a tiny percentage of their actual revenue. If you’re doing all of that yourself, it might not show up as a marketing expense on your P&L, but that doesn’t make it free. You’re paying for it with your time, and that’s time you don’t have to spend on everything else your growing business needs from you.

Paid advertising can create a similar problem, just in a much more obvious way. And to be clear, I’m not against ads. I think they can be incredibly valuable for product businesses. But you need to understand what those sales are actually costing you.

Say your average order value is $70 and you’re spending $50 in ads to acquire a customer. At first glance, you might think you made $20.

Except you didn’t, because you still have to account for the cost of producing, packaging and shipping the product. You may also be paying a freelancer or agency to manage those ads. Suddenly, a business can be generating a lot of sales without actually making much money from them.

And that becomes particularly difficult as you grow. More orders mean more inventory, more production, more fulfillment and potentially more people to keep everything moving. If you’re scaling on very tight margins, increasing revenue can actually make the business feel harder to run rather than easier.

The other risk is becoming too dependent on paid acquisition. If ads are responsible for a huge percentage of your sales, you have to keep paying to keep those sales coming in. Turn off the ads and a major source of new customers disappears with them. That doesn’t mean you shouldn’t run ads. It means you probably don’t want your entire business dependent on them.

Two Numbers Every Founder Should Know

Before we go any further, I want you to look at two numbers.

I know, I know. The thought of digging through analytics probably makes you want to rip your hair out. You’d rather do just about anything else. But these two numbers take only a few minutes to find, and they’ll completely change how you think about your marketing.

1. Where does your website revenue come from?

If you also sell through wholesale distributors, events, or other channels, and you have a good way to pull that data, you can look at that too. But for now, to keep things simple, let’s just focus on your website.

We want to know which traffic channels are actually bringing people to your website who end up buying.

If you use Shopify, look at Sales by Referrer (you can search for it in Analytics if you can't find it).

If you use GA4, look at Revenue by Channel in the Monetization reports.

2. How profitable is each of those channels?

Take the revenue from each channel and subtract what you spend to generate it.

That might include:

• Ad spend

• Agency fees

• Software or tools

• Other marketing costs directly tied to that channel

Now I'm going to make a few assumptions based on what I see frequently, especially with businesses that have never invested in organic search. I'm going to guess you have a healthy percentage of revenue coming from email marketing if you have strong retention and repeat customers. If you have a subscription model, I’m going to guess that's one of your highest revenue channels. You'll probably see revenue coming from direct traffic, referrals, and maybe social media. If you're running ads, I'm also going to guess they contribute a large percentage of your revenue. - But probably with the tightest margins.

The channel I really want to talk more about is organic search.

If you've never invested in SEO, I'm going to guess organic search contributes somewhere around 10–15% of your website revenue.

Check yours.

If you’ve got 10-15% revenue coming from organic search, you might be thinking, "Wow...that's great! I haven't even invested there yet. I'm killin' it!"

And I don't want to burst that happy bubble…

But I've got some disappointing news about that 10%…

Most of the time (I’d say nine out of ten) it’s almost entirely coming from brand-name searches.

Let me explain…

Someone goes to Google, types in your brand name, clicks on your website, and makes a purchase. Those aren't new customers. They're people who already knew about you. 👀

They could have discovered you through social media, ads, a retail store. And maybe they're repeat customers. How they discovered you is what we don't know. But what we do know is that they were already looking for you. Which means another marketing channel already did the work of creating that customer relationship. Organic search simply got credit for the last click.

Which means that organic search may not even be creating discoverability at all. It was simply serving people who had already discovered you somewhere else. And that means your website isn't really bringing in new customers organically. 😬

If you're curious whether this is happening on your own website, there's one more simple metric to check.

Open Google Search Console.

Click Performance.

Look at the list of search queries that are actually generating clicks.

If they're pretty much only your brand name... There's your answer.

Imagine If It Were Different

Now imagine something different. One of my current clients started in almost exactly this position, with only about 10% of their revenue coming from organic search. Now organic search regularly accounts for around 40–50% of their monthly revenue.

The difference is that people aren’t just finding them by searching for their brand name anymore. They’re discovering them through searches for specific products and ingredients, questions they have, problems they’re trying to solve, and broader product categories. They’re finding the business because they’re searching for something it sells or something it can help them with, even if they’ve never heard of the brand before.

Those searches turn into website visits, and those visits turn into purchases, email signups, and subscriptions. That means organic search is now introducing the business to hundreds of new customers who might otherwise have needed to discover them through an ad, social media, retail, or some other marketing channel first.

This isn’t just one of my clients. I have similar stories with all of my clients.

Plus, the work we’ve already done doesn’t disappear when we stop actively working on it. Pages we optimized months ago can continue showing up in search. Content can continue getting discovered. Links and mentions can continue building authority. Obviously rankings can change and websites need maintenance, so I’m not going to pretend SEO is something you do once and benefit from forever. But you aren’t starting from zero again every month.

SEO isn't free. It requires an investment of time and/or money just like any other marketing channel. The difference is that you're building an asset as you go. The work you pay for today can continue contributing to your visibility and bringing in customers months or even years later.

That’s why I’m so interested in organic search as part of the larger marketing mix. It isn’t about replacing ads, social media, email, retail, or anything else that’s already working. It’s about building another way for new customers to discover you so you aren't relying on the same expensive or time-consuming channels to create every sale.

So What's the Real Problem?

There’s nothing wrong with using ads or social media. In most cases, I think product businesses should probably be doing both. The problem is when you become so dependent on those channels that you have to keep spending more money or more time to keep bringing in the same stream of new customers.

If most of your growth depends on paid ads, your margins are always going to have that acquisition cost built into them. If it depends heavily on organic social, you have to keep creating content to stay visible. Both can be incredibly valuable, but neither should have to carry your entire marketing strategy.

That’s where I think organic search can create some balance. SEO requires an investment too, but you're building something that can continue working after the initial work is done. A product page you optimize today can keep bringing in customers, an article can continue getting found, and the authority you build doesn't disappear at the end of the month.

You shouldn’t replace the marketing channels that are already working. But SEO is a powerful way to have more ways for customers to find you, so your business isn’t dependent on continually paying for or creating every new customer interaction. Over time, that gives you a much healthier mix of channels, and a website that is actually contributing to your growth rather than just sitting there waiting for people who already know your name.

Curious what your own numbers look like?

I put together a free Organic Search Growth Assessment that walks you through the exact data you should know if you are thinking of investing in an organic search strategy. (BTW if you did the ones in this article, you’re already halfway done.)

Most founders can complete it in about 15 minutes.

Even if we never work together, you'll walk away understanding your marketing a whole lot better.