Why Most Startups and SMEs in Kenya Waste 80% of Their Marketing Budget (and How to Stop It)

At the beginning of the year the government of Kenya shut down 116 companies and warned 115 more. "Pursuant to Section 897 (4) of the Companies Act, 2015, it is notified for information of the general public that the following companies are dissolved and their names have been struck off the Register of Companies with effect from the date of publication of this notice.” There’re many reasons why a company would dissolve; directors could get bored, infighting, change of direction etc. A big reason however, is the numbers just don’t make sense. 

The numbers don’t make sense because no one is buying at a rate that would make the business sustainable. And the reason they aren’t purchasing is because they haven’t been given a compelling reason to buy. To put it in another way, many small businesses aren’t good at marketing. There isn’t a core message that makes the business distinctive or meaningful or differentiated. What is relied on instead are gimmicks. 

Here's a reality check: a significant number of Kenyan startups are haemorrhaging money on marketing that doesn't work, and I have a theory why.

Remember when digital marketing was the golden ticket? Around 2018, every business owner with a smartphone thought they could build an empire through Instagram posts. Then COVID happened and TikTok was the way, the truth and the life. The barriers to entry were low, the potential reach was massive, and suddenly everyone was a "digital marketer." Fast forward to 2025, and we're seeing the consequences of this oversimplified approach.

Let's talk about what's actually happening in Kenya right now. Walk into any co-working space in Westlands or Kilimani, and you'll find startups spending thousands of dollars on influencer campaigns while their customer acquisition costs skyrocket. Many small businesses are addicted to performance marketing, which is is the very definition of demising returns. Meanwhile, medium-sized businesses like Davis & Shirtliff are quietly dominating their sectors without a single viral “Nyash” TikTok dance. 

The global economic landscape isn't helping. The decade of low-interest rates is over. They’re rising worldwide and with venture capital becoming more selective, the era of "growth at all costs" is dead. Yet somehow, Kenyan startups missed the memo. They're still operating like it's 2021, throwing money at digital marketing like David Ndii throws insults.

The micro-economic factors in Kenya tell us something crucial. With the rising cost of living and decreased disposable income, Kenyan consumers have become increasingly pragmatic. Late last year in a WhatsApp group we were talking about the fact that according to reports the Kenya Urban Roads Authority that gets its funding through the road levy is banking 50% of what it did three years ago. It’s much more economical to send money than go for funeral up-country. Kenyan’s aren’t driving.  And that’s only one sector. Yet scroll through social, and you'll see startup founders still pushing aspirational lifestyle marketing to a market that's primarily concerned with value and utility. That’s until they get caught using clients’ cash to prop up facades.  

Consider this: a year ago in January 2024, while startups were busy planning their next big social media campaign, Kune Foods' story was still fresh in everyone's mind. A cautionary tale of beautiful marketing masking fundamental business issues. The problem wasn't their marketing - their social media game was top-tier. The problem was believing that good marketing could compensate for real business challenges.

So what's working in 2025? Marketing fundamentals that have lasted since time began. It’s not about creating FOMO or social status. It's about addressing customers’ real pain points. In our current moribund economic climate, success will come from empathy, from understanding that in today's Kenya, practical value trumps perceived value.

So, here's how to stop burning your marketing budget:

1. Understand that Kenya's consumer psychology has evolved. The rise of digital payments and mobile commerce hasn't made marketing easier - it's made it more complex. Every consumer with M-PESA is now hyper-aware of value. They're not just looking at your product; they're comparing prices in real-time across multiple platforms.

2. Recognize that social media metrics are vanity metrics. A startup with 100,000 followers and no profits is still a failing startup. The businesses thriving in Kenya right now are focusing on community building over content creation,  not through flashy campaigns, but through deep community engagement and understanding local needs.

The solution? Start with these practical steps:

1. Allocate 40% of your marketing budget to customer retention, not acquisition

2.  Invest in community building over social media followers

3. Focus on solving real problems instead of creating perceived ones

4. Measure everything, but measure what matters (hint: likes don't pay bills)

In a country where smartphone penetration is relatively high as compared with other sub-saharan countries yet disposable income is constrained, your marketing strategy needs to reflect economic realities, not Runda dreams. The startups and small businesses that will survive aren't the ones with the biggest marketing budgets or the most engaging social media presence. They're the ones who understand that in Kenya's current economic climate, word of mouth from a satisfied customer beats a viral post any day.

If you want to know if your marketing is working? Look at your customer acquisition cost versus lifetime value. If you're spending more to acquire customers than they're worth, no amount of social media wizardry will save you.

The next time you're tempted to boost that post or hire that influencer, ask yourself: Are you marketing to create value, or are you marketing to mask the lack of it? In today's Kenya, only one of these approaches is sustainable.

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