Brand vs performance marketing: how to split the budget

How should you split budget between brand and performance?

Start with about 60 per cent on brand building and 40 per cent on sales activation. Then adjust for your category and buying cycle. The 60:40 ratio comes from Les Binet and Peter Field's report The Long and the Short of It (Binet & Field, IPA, 2013). For B2B, the same authors put the optimum at 46 per cent brand and 54 per cent activation (Binet & Field, The B2B Institute, 2019).

At IW Agency, we treat these ratios as the lowest safe level for brand, not as a fixed formula. The percentage is the easy part. The harder part is whether leadership will keep funding the half of marketing that pays off after the quarter has closed.

Conclusion: The split is a decision about time, not channels.

What is the difference between brand building and sales activation?

Brand building creates memories and feelings that make people more likely to choose you in the future. Sales activation, often called performance marketing, prompts people to act now. Here are the two compared on the same five criteria.

Brand building

• Goal: to be chosen later, more often and at a better price.

• Time horizon: years, not months. Binet and Field describe it as a long-term strategy that pays off over years (The B2B Institute, 2019).

• How it works: emotion, distinctive assets and broad reach that build memory.

• How it is measured: slowly and indirectly, through preference, pricing power and share over time.

• Cost of stopping: hidden at first. Memory fades slowly, so cuts look free in the short term.

Sales activation

• Goal: a sale, a lead or a click today.

• Time horizon: immediate and short-lived.

• How it works: rational messages, offers and targeting at the moment of need.

• How it is measured: quickly and directly, through conversions, cost per acquisition and return on ad spend.

• Cost of stopping: visible within days, because the response ends when the spend ends.

The two do not compete with each other. Brand creates the demand. Activation collects it.

Why does the 60/40 rule keep coming back?

The 60/40 rule keeps coming back because growth comes from the balance between brand and activation. Neither side delivers it alone. In a later study, Effectiveness in Context, Binet and Field found an optimum of 62:38, almost the same as the original ratio (Binet & Field, IPA, 2018). As the IPA summarises it, "it was the balance between long-term and short-term communication that was key."

Most budgets drift away from that balance because of measurement. In The B2B Institute's own survey, only 4 per cent of B2B marketers measured impact beyond six months (The B2B Institute, 2019). If the dashboard only covers six months, activation will always look like the better investment.

At IW, we think this is where the budget conversation goes wrong. Performance gets credit for sales that the brand made possible. Feeling is what gets you into the consideration set. The click only confirms a choice that was already half made.

Conclusion: Measure six months, and you will always underfund brand.

When should you spend more on brand, and when more on performance?

Spend more on brand when the purchase is emotional, the category is crowded or the brand is losing relevance. Spend more on activation when the purchase is rational and considered, and buyers compare options on specifications. These are the situations we see most often, and what we recommend for each.

1. Consumer brands in crowded categories: 60 per cent brand or more. When products look alike, price cuts and promotions mostly teach buyers to wait for the next discount. Göteborgskex faced private labels growing by imitating Swedish cookie classics. OLW risked losing its emotional edge as private labels multiplied. In both cases the answer was brand work, because a copy can match a price but not a feeling.

2. B2B with long buying cycles: around 46 per cent brand. Binet and Field's B2B ratio leans towards activation because "rational activation messages come a bit more to the fore" (The B2B Institute, 2019). We recommend treating 46 per cent as a minimum, not a target. Buying committees are people too, and they shortlist the names they remember.

3. Heritage brands that have lost their audience: above 60 per cent, for a period. Activation cannot fix a brand people no longer feel anything for. Rebuild the feeling first.

4. New brands and launches: brand first. Activation works on memories that already exist, and a new name has none yet. Use activation to test and learn while the brand builds memory.

5. Short-term cash pressure: keep a floor for brand. Cut the activation that returns the least before you touch brand presence. Every cut to brand looks free today and gets paid for later.

The answer depends on three things. How emotional is the choice? How crowded is the category? How long is the buying cycle? There is also a fourth factor that is becoming more important. When AI assistants shortlist options for buyers, the brands that get named are the ones that are clear, distinctive and widely known. That is long-term brand work.

What does this mean for your brand?

• Make the split a leadership decision. It decides your growth horizon, so the CEO and CFO should own it together with marketing.

• Start from the evidence. Use 60:40 for consumer brands and 46:54 for B2B as starting points. Write down why you deviate.

• Measure beyond six months. Track preference and pricing power over years. If you only track short-term results, activation will keep winning budget it has not earned.

• Spend the brand budget on distinction and feeling. A brand budget spent on generic messages is really activation under another name. A clear brand platform tells you what to build.

• Review the balance once a year. Reviewing it campaign by campaign lets short-term thinking take over.

Frequently asked questions

What is the 60/40 rule in marketing?

The 60/40 rule says that about 60 per cent of the marketing budget should go to long-term brand building and 40 per cent to short-term sales activation. It comes from Les Binet and Peter Field's report The Long and the Short of It (IPA, 2013).

Is the brand and performance budget split different for B2B?

Yes. For B2B, Binet and Field found the optimum split to be 46 per cent brand and 54 per cent activation. The report was published by The B2B Institute, a think tank funded by LinkedIn (IPA).

Is performance marketing a waste of money?

No. Activation turns existing demand into sales and is easy to measure. In our experience, it works best when it has a strong brand behind it. On its own, it has to work harder for every sale.

How long does brand building take to pay off?

Brand building pays off over years, not months, according to Binet and Field (The B2B Institute, 2019). That is why you should judge it on measures you track for longer than a quarter.

Where to start

The right split is the one your leadership will keep when a quarter goes badly. Decide it deliberately, protect the brand share and measure long enough to see it work. If you want to talk through your own balance, write to us at hello@iwagency.com.

Sources

• The next chapter for 'The Long and The Short of It' — IPA

• The 5 Principles of Growth in B2B Marketing — The B2B Institute, 2019

• Five Principles of Growth in B2B Marketing — IPA EffWorks