Using EBITDA as a Strategic Metric for Media, Marketing, and Product Decisions - Episode 28
Burning Cash? How EBITDA Can Save Your Marketing, Media, and Product Teams.
Welcome to the 28th Edition of Marketing Concepts!
Most businesses obsess over revenue, but EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) is the real MVP. It separates sustainable growth from fleeting trends.
High-growth companies and investor-backed startups already use EBITDA to assess profitability and operational efficiency, but marketers and product teams can also extract valuable insights from this metric to drive customer acquisition, retention, and lifetime value (LTV).
If you’re not incorporating EBITDA into your decision-making framework, you’re basically throwing darts in the dark while blindfolded.
In this episode, we’ll explore:
What is EBITDA?
How to use EBITDA to inform media, marketing, and product decisions
How can you apply it?
What is EBITDA?
EBITDA is a profitability metric that helps businesses evaluate their core operational performance by stripping away financial noise like interest, taxes, and depreciation.
It provides a brutally honest look at how well a company operates before fancy accounting tricks come into play.
Why EBITDA Instead of Just Revenue?
Revenue can be misleading – just because money is coming in doesn't mean you're actually making a profit.
EBITDA offers insights into sustainability – it reveals how much profit a company retains.
It helps companies evaluate business efficiency without any smoke and mirrors.
EBITDA Formula:
EBITDA = Net Income + Interest + Taxes + Depreciation + AmortisationHow EBITDA Can Stop You from Burning Cash
Marketing: Make Every Dollar Count, Not Just Disappear
Marketing budgets get slashed when EBITDA is ignored. Optimising Customer Acquisition Cost (CAC) to align with EBITDA means fewer wasted ads, better ROI, and marketing strategies that don’t require a bottomless pit of cash.
Smart, EBITDA-Driven Marketing Moves:
CAC vs. EBITDA Ratio Matters: If CAC is eating too much EBITDA, it’s time to rethink paid ads and focus on retention.
High-margin channels = More Love: Stop throwing money at high-CAC, low-return platforms.
ROAS is a Lie, EBITDA is the Truth: Ensure ad spend actually contributes to profitability, not just ‘brand awareness’.
Retention > Blind Acquisition: Stop pouring money into lead gen if customers churn faster than a leaky bucket.
Media: Are Your Ads Making You Money or Just Making Agencies Rich?
Media buying is full of vanity metrics. Likes and impressions don’t pay the bills—profits do. EBITDA ensures ad investments actually make financial sense.
Media Buying, The EBITDA Way:
Performance-Based Media is King: If an ad doesn’t drive EBITDA-positive results, kill it.
Forget Vanity Metrics, Track Profitability: CPPD (Cost-Per-Profit-Dollar) > CPM.
Negotiate Like a Boss: High EBITDA? Use it to secure better media deals and bulk discounts.
Reallocate Ad Spend Smartly: If EBITDA is tanking, pivot from high-CAC media (Google PPC, YouTube Ads) to low-cost retention plays (organic social, SEO).
Product: Build Features That Make Money, Not Just Noise
Your product roadmap shouldn’t be dictated by gut feelings. If a feature doesn’t support EBITDA growth, it’s a nice-to-have, not a must-have.
Product Decisions That Don’t Kill EBITDA:
Revenue-Generating Features First: No more ‘cool ideas’ unless they actually make money.
Cut the Fat: Shrink operating costs by streamlining product infrastructure.
Freemium? Only If It Leads to Real Cash Flow: Don’t offer free forever—use premium upsells to boost LTV.
Segment Customers by Profitability: Not all users are equal; prioritise the ones who pay and stay.
How to Stop EBITDA From Being an Afterthought
Benchmark Your CAC to EBITDA Ratio
If CAC is >30% of EBITDA, time to rethink your marketing mix.
If CAC is <10% of EBITDA, you have room to scale acquisition efforts.
Reallocate Budget Toward High-Profit Channels
High EBITDA? Experiment with new acquisition methods.
Low EBITDA? Focus on retention and organic strategies.
Use EBITDA to Call Out Useless Media Spending
Kill ‘awareness’ campaigns that don’t add to the bottom line.
Focus on high-ROI, low-CAC media placements.
Make EBITDA-First Product Development Decisions
Features should drive profit, not just engagement.
Self-service, premium add-ons, and scalable pricing = EBITDA wins.
Closing Thoughts
If you’re making marketing, media, and product decisions without considering EBITDA, you’re setting money on fire.
What’s your biggest EBITDA-related challenge? Drop a comment or reply—let’s talk profitable growth strategies!
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