Performance Marketing and Brand Building: What’s the Right Ratio for Growth?

Performance marketing and brand building both play vital roles in growing your business. But what’s the right budget allocation for each to optimize your efforts?

According to a 2023 survey from Gartner, 71% of CMOs believe they don’t have sufficient budget to fully execute their marketing strategy. If you share that concern for your business, it’s important to make sure your constrained budget has the right balance between these two strategies. 

Let’s take a look at a few studies that touch on marketing budget allocation:

Gartner CMO Spend Survey 2023: First, let’s return to the aforementioned Gartner study. This annual survey of CMOs found that companies spend an average of 40% of their overall budget on long-term brand building and 60% on short-term performance. However, most of them report that they would ideally spend about an equal amount on each category.

Statista Brand vs. Performance Mobile Marketing Budget Distribution 2019: This survey of marketers predominantly from the United States and the United Kingdom found that 32% of respondents said their mobile ad budgets were split equally between brand and performance marketing efforts.

Les Binet & Peter Field: In their 2017 analysis Media in Focus: Marketing Effectiveness in the Digital Era, Binet and Field found that the ideal ratio to be 60% brand marketing and 40% performance marketing. They based their findings on an analysis of over 600 companies between 1998-2016.

These studies suggest a fairly consistent range of budgetary allocations for either of these strategies. There is a general trend towards spending more on performance marketing than brand marketing. However, there is also a growing recognition of the importance of both types of marketing, and businesses should aim for the most suitable ratio to achieve their objective with the highest priority.

A Budgetary Balancing Act

The key to achieving sustainable growth in today’s competitive landscape is finding the right balance between performance marketing and brand building. There isn’t a one-size-fits-all answer, as the ideal split between these two types of marketing can differ significantly. The perfect ratio will depend on your industry, business goals, and the stage of your company’s growth. 

For example, companies that are launching new products or entering new markets may need to spend more on brand marketing to build awareness and generate demand. Companies that are focused on increasing sales in established markets may be able to get more mileage out of performance marketing.

Here are some considerations to help you find the right budgetary balance:

1. Define your objectives: Start by setting clear, measurable objectives. Determine whether your primary focus should be short-term sales or long-term brand recognition. Both are important, but the ratio depends on many factors that you need to evaluate.
2. Budget allocation: Allocate your marketing budget based on your objectives. Short-term goals may warrant a higher allocation to performance marketing, while long-term growth requires investment in brand building.
3. Monitor and adjust: Continuously monitor the performance of your marketing efforts. Look at your key performance indicators (KPIs) to assess whether you need to make any adjustments.
4. Customer insights: Own the relationship with your customers, listen to them and gather their feedback. Understand what they value in your brand, and use this information to inform your marketing strategy.
5. Experiment: Don’t be afraid to experiment with different ratios. You’re not going to be locked into the same budget forever, so adjust as you see fit based on the results of your marketing efforts. Even if you find the right balance initially, adjustments will be made as your business grows and your market changes. Your KPIs will help you determine what levers need to be pulled.

Finding the right balance between performance marketing and brand building is crucial for achieving sustainable growth. By carefully assessing your objectives and adapting your strategy as your business evolves, you can create a marketing mix that drives both short-term results and long-term brand equity, ensuring the continued growth and success of your business.