Performance vs Brand Marketing: Strategy Beyond the 60/40 Rule.
Why Brand Still Outperforms
Les Binet and Peter Field’s analysis of the IPA Databank remains clear: long-term brand building drives superior growth. Their evidence shows that allocating around 60% to brand and 40% to activation delivers the best mix of sales uplift, pricing power, and equity resilience (IPA, WARC). Activation spikes revenue, but without brand spend margins collapse.
Procter & Gamble’s consistent brand-heavy model is a case in point—its resilience during inflationary spikes was underpinned by sustained advertising that allowed price increases to stick.
Context Redefines the Split
The 60/40 ratio is not universal. In Effectiveness in Context, Binet & Field show the balance shifts by sector (IPA Effectiveness in Context).
Financial services: trust drives acquisition. HSBC’s global campaigns like “Together We Thrive” reinforced stability during market turbulence. Optimal allocation here leans 70–80% to brand, because trust reduces conversion costs.
E-commerce: Amazon deploys high-intensity activation, but its sustained brand investments, Prime Day branding, Alexa ecosystem, keep repeat rates high. Here the balance approaches 50/50.
Luxury: LVMH spends heavily on brand storytelling (flagship stores, fashion shows, cultural tie-ins). Conversion is secondary. The effective split is closer to 75% brand.
The Strategic Risk of Over-Activating
Binet & Field warn that short-termism “rapidly deteriorates overall marketing impact” (Marketing Across Borders). The danger is visible: Uber and other digital-first challengers leaned heavily on performance to drive installs, but later faced escalating acquisition costs and weak loyalty. Over-activation generates growth ceilings, churn rises, margins thin, and long-term equity suffers.
Strategy by Market
Executives should treat allocation as a lever of growth strategy, not a universal rule.
High-trust markets (finance, healthcare, enterprise tech): Overweight brand to build confidence and reduce churn.
High-volume, price-sensitive categories (retail, e-commerce, subscriptions): Push performance harder but defend brand to avoid loyalty erosion.
Premium and luxury markets: Reinforce brand equity as the moat; activation plays only a support role.
Bottom Line
Binet & Field’s 60/40 remains the strategic anchor. But the evidence shows that leaders must calibrate by category and elasticity.
Brands that sustain heavy brand spend, like HSBC, Amazon, and LVMH, grow stronger pricing resilience and equity.
Brands that over-index on performance chase short-term dashboards at the expense of long-term cash flow. The directive is blunt: optimize allocation as strategy, not as reporting hygiene.
