Performance vs. Branding Advertising

Wondering how much sales and brand advertising you should be doing? We got the answer!

Discover the ideal balance for your marketing budget between branding and sales, tailored to your business’s unique stage and growth trajectory.

As your business grows, expect shifts in how you budget brand advertising and sales oriented marketing. 

Take this quick survey to uncover the perfect blend of branding and sales investment for your business’s current situation.

How are these numbers calculated?

The tool’s calculation method is grounded in the influential research of Les Binet and Peter Field, two leading figures in the field of advertising effectiveness. Their groundbreaking work, titled “Effectiveness in Context,” revolutionized the approach of marketers and advertisers.

Their research involved a detailed analysis of thousands of data points from the IPA Databank and entries for the biennial Advertising Effectiveness Awards. This extensive study covered various aspects of campaign planning and execution, including strategy formulation, media selection, brand context, and outcomes like business effectiveness, efficiency metrics, return on marketing investment, and brand performance indicators. Any references made in this blog are directly sourced from “Effectiveness in Context.”

General Rule of Thumb

Binet and Field established a general guideline for marketers: allocate approximately 60% of your budget to long-term brand marketing efforts and 40% to short-term sales promotions. This 60:40 ratio is a starting point but needs to be adjusted based on several factors, including your brand’s sector, purchase processes, size, product innovation, and the maturity of your market category.

High-consideration decisions, like a senior living community or buying a car, alter your marketing budget. These big decisions are often made after careful research and rational thinking. Therefore, focusing more on brand building can be more beneficial since sales activation might be easier to achieve.

On the other hand, lower-priced purchases might be more spontaneous and emotionally driven. Here, brand building is easier to create. Making the offering more appealing to potential customers. Due to this nature, you’ll want to focus more on sales activation to create transactions and drive repeat customers.

For offline purchases, sales activation becomes the strongest focus as getting people to your store and purchasing is of the highest necessity.

The competitive nature of online options means that a strong brand can be a crucial differentiator. For brands primarily transacted online, a larger portion of the budget should be allocated to brand building.

However, buying a subscription online is usually a well-thought-out, logical choice. This can make brand building more challenging. If your brand offers online subscriptions,  invest more in building your brand’s presence.

Innovation plays a key role in brand perception. Whether introducing a new type of senior care facility or a unique real estate platform, innovation needs the support of emotional brand building.

It’s a misconception that innovative products sell themselves. To ensure long-term success and not just a fleeting interest, innovative brands in these sectors must focus on building a strong, emotionally resonant brand presence.

The size of your brand dictates how you should balance your marketing efforts. Newer brands, still gaining traction, should focus more on short-term activation to quickly gain market share. This also has a more short-term return on investment.

As the brand becomes more established, the focus should shift towards brand building to establish a lasting presence in the market. Larger, well-known brands in these sectors can afford to focus more on long-term brand-building strategies, as they don’t need to rely as heavily on short-term activations.

Newer industries, perhaps a novel type of senior care like a CCRC without walls, should focus more on brand building due to their innovative nature.

Growth industries with stable or growing demand can benefit more from brand-focused strategies.

While mature or declining industries might find better results in activation-focused strategies.

The price point plays a crucial role in marketing strategies. High-priced offerings, like luxury retirement homes or premium retail stores, require a thoughtful approach. Making premium-priced products default more towards the default percentages.

For more affordable options, where decisions are made quicker and with less deliberation, strengthening brand attachment is key. This approach ensures that when a quicker, lower-cost decision is made, your brand stands out as the go-to choice.

Brand Building Models

Branding Building Models sourced from Applied Brand Science - Features the Binet & Field model and the Kite & Roach models of how companies market their companies
The "Long & Short" by Binet & Field

This is a foundational model in marketing strategy that suggests a balanced approach to brand-building and sales activation. The model recommends a 60:40 ratio of investment between the two, with 60% of the budget dedicated to long-term brand-building initiatives and 40% to short-term sales activations.

Binet and Field’s research found that this balance is generally the most effective for sustainable growth, as long-term branding efforts create a foundation for the brand in the consumer’s mind, while short-term activations drive immediate sales and capitalize on this foundation.

This model suggests that after a period of long-term sales activation (the ramp-up), businesses should add brand-building efforts when sales activation plateaus. This approach is about maintaining momentum in marketing effectiveness by increasing brand-building investment when you can’t further optimize sales activation.

This model looks at what happens when the focus is too much on short-term sales activations. It shows that relying solely on activation can lead to a fall in brand-building metrics, which can be a risky strategy as it may harm long-term brand equity and growth.

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