The danger of the “fixed” marketing budget

Hey Founder,

I just got off a call with a founder who told me he keeps his marketing budget fixed to “protect cashflow.”

Here’s why that’s often the wrong way to think about it.

I completely understand the instinct to keep ad spend fixed when cash feels tight or growth is slow.

But in DTC, paid spend - especially Meta and Google - works very differently to most other business expenses.

Counterintuitively, ad spend usually creates cashflow.

Let me explain.

Every dollar you put into Meta or Google isn’t just “spending on marketing.”
You’re effectively turning inventory (sunk cost) into cash.

If your ads are performing well - say you're getting a 3–4x return on ad spend - that means:

• $1 into Meta turns into $3–4 in revenue in your bank account.

• Even after ad costs and product costs, you’re usually left with real profit on each order

• In other words, your ad spend is cashflow-positive

It’s not just money going out - it’s money coming back in.

And if you have your ROAS goals worked out well - it should also bring in incremental profit, not just cash to cover more product.

Cutting ad spend doesn’t preserve cash. It limits it.

When you reduce paid spend, you shrink the inflow of new customers.
Which shrinks your cash in-flow.

And it shrinks the pool of new customers you can have coming back.
Which limits your growth.

And there’s a momentum effect too:

• Paid traffic fuels organic and returning customer sales

• When you cut Meta or Google, search volume and returning buyer activity often drops too

• Even your “free” revenue slows down eventually

Of course, there are exceptions.

Sometimes cutting spend can help short-term cashflow, but only in very specific cases:

• Your customer acquisition cost (CAC) is higher than your AOV (you’re losing money on the first order)

• There’s a long delay between ad spend and cash in (e.g. high shipping times or post-pay)

• You’re capturing customers via ads who would have bought anyway (i.e. high “branded” dependence)

But unless you fall into one of those camps, the truth is:

Reducing ad spend doesn’t protect your business.
It starves it.

The better approach?
Track it closely. Test methodically. Run the numbers.

If you're unsure, start with a clean test - reduce one channel, not both.
Watch the impact on total sales and cashflow in your daily dashboard.
You’ll see very quickly whether your spend is working or not.

If you want to go deeper on this or get help figuring out your break-even point, let’s talk.
(We help our Ecomm Rockets clients run these numbers every week.)

👉 Here is a link to my Calendly where you can book a call at a time that works: https://calendly.com/jessiehealy/coffee_with_jessie

x Jessie