Brand vs performance marketing: why both are needed

Business owners often ask us to choose sides: should we invest in brand marketing that builds long-term recognition, or performance marketing that drives leads this month? It’s the wrong question. Both are needed, and picking only one is a mistake regardless of which one you pick.

What the research says

The clearest evidence for this comes from Les Binet and Peter Field’s research for the IPA, which analysed roughly 1,000 advertising effectiveness case studies spanning over 30 years. Their headline finding, often called the 60:40 rule, is that the most effective campaigns split spend around 60 percent toward brand building and 40 percent toward short-term activation. Brands that pushed activation spend past 70 percent saw a short-term sales bump followed by a longer decline in market share and pricing power.

For B2B specifically, the LinkedIn B2B Institute worked with Binet and Field to adapt the framework, and found the optimal split sits closer to 46 percent brand to 54 percent activation. B2B buying is slower and more relationship-driven, so the ratio shifts, but the underlying principle holds. Neither side wins alone.

Why both are needed

Performance marketing captures demand that already exists. It is built for people who are actively looking to buy right now. But at any given time, most researchers agree only a small fraction of your total market, often cited around 5 percent, is actually in-market. The other 95 percent are not ready yet. If all your marketing budget targets the 5 percent, you are ignoring almost everyone who will eventually become a customer.

Brand marketing is what reaches that 95 percent. It builds the recognition and trust that means when someone finally is ready to buy, your business is the one they think of first, and the one they are willing to pay a fair price for rather than shopping purely on cost. Without it, performance marketing has to work harder and cost more over time, because there is no accumulated goodwill doing any of the work.

We see the imbalance most often go one way: all budget into paid ads and lead gen, nothing into brand. It feels efficient because it is measurable. But WARC’s advertising spend data has tracked a steady industry-wide shift toward short-term performance tactics over the past several years, and the businesses correcting course back toward a healthier mix are the ones seeing customer acquisition costs stabilise rather than climb every quarter.

The practical takeaway is not “spend exactly 60/40” or “spend exactly 46/54.” It’s this: if every dollar in your marketing budget is chasing an immediate click, you are underinvesting in the thing that makes those clicks cheaper and more valuable a year from now. And if every dollar is going toward awareness with no activation layer, you are leaving demand you’ve already created unclaimed.

Both jobs need doing, by design, on purpose, not by accident.