Which 50% is working? – variations on a quotation

A business owner I spoke to last week reminded me of the famous quote about marketing “I know 50% of my marketing is wasted, the problem is I don’t know which 50%”.
He asked me if I believed this was true in most small and medium sized businesses. My answer to him was that I think it is often true, although in my experience working with the owners and directors of these types of businesses there are four variations I could make to the original quote:
My first variation relates to the word “know”. Most of the SME businesses I have met in the last 9 years don’t know that 50% (or whatever the figure really is) of their marketing is wasted, they just have an instinct. This is usually based on a mix of common sense, gut feel and anecdotal feedback. That doesn’t mean it’s wrong, but it’s hard to be sure it’s right and that can be a barrier to action.
Experience suggests that it’s probably not 50%; it could easily be 75%. If we’re just talking about activities that are a complete waste the number will be lower, but if we are looking at what return we get compared with what we ought to be able to get with the same investment, it can be a very sobering analysis.
When we say “isn’t working” what do we mean? How do we define working? Too often, the objective of a marketing activity, campaign or even a full year’s plan is not specified, so it becomes very difficult to evaluate how well it worked. Effective and measured implementation isn’t easy!
Identifying waste is important, but sometimes it’s taking action that is the real problem, especially if that means moving away from what we have always done, what the competition do or what everyone else says we should do.
My questions to you are:
What is the percentage of your marketing that isn’t working?
What can you do with it – release the cash to the bottom line or re-invest in effective activity?
What difference would that make to your business and to you personally?