Brand Building vs. Performance Marketing: Achieving the Optimal Balance for Growth

Brand and Marketing Work Hand-in-Hand

Branding and marketing are two sides of the same coin. A useful analogy is that brand “writes the love letter” (crafting the message and emotional connection) while marketing “hits send” (delivering that message to the world). In other words, brand building creates desire and loyalty, and performance marketing activates that demand to drive immediate sales. Far from being at odds, brand and performance functions complement each other and drive better results when aligned. Recent research even shows that brands with stronger awareness make performance campaigns far more effective, boosting conversion rates and ROI.

Why Branding Matters (Long-Term Value)
A brand is compound interest for reputation, turning trust into pricing power and cushioning profits when economies skid.

Brand-building is a long-term investment that pays off in trust, loyalty, and even pricing power. A strong brand makes customers more likely to choose you over competitors and stick with you. It builds reliable, emotional bonds with consumers, translating into higher customer lifetime value and retention. Importantly, strong brands can charge premium prices, improving profit margins. For example, Kantar research finds strong brands are able to charge more for their products, driving higher revenue than weaker brands. In economic downturns, companies that keep investing in brand come out stronger, with consumers willing to pay a premium for brands they value. In short, branding is not “bullshit” – it's a proven driver of sustainable business value.

The Perils of a Performance-Only Approach (Short-Termism)
Run only performance and you end up on an ROI treadmill—fast at first, then exhausting as fresh demand runs out.

Performance marketing (sales promos, search ads, targeted digital ads, etc.) is excellent for generating quick wins and measurable short-term ROI. However, an over-reliance on performance tactics alone is risky. Short-term metrics can be misleading, as they often over-attribute sales to the last click and ignore the influence of brand familiarity. Studies show that ~30% of paid search conversions are actually driven by brand or upper-funnel marketing, with another 30–60% driven by factors like seasonality or customer loyalty. In other words, performance campaigns often “harvest” demand that brand-building created. Without continuous brand investment, the well of demand eventually runs dry. Indeed, cutting brand spend can erode marketing ROI across the board – one analysis noted that a company which shifted heavily to performance saw ROI drop 44% within two quarters due to weakening the brand foundation. Short-term sales activations alone cannot sustain long-term growth and may even become less efficient over time as customer acquisition costs rise with a weak brand.

Evidence for Balancing Brand & Activation
Study after study agrees: a 60/40 brand-to-performance split lets two gears drive farther together than either alone.

Decades of marketing effectiveness research (Binet & Field’s classic “The Long and the Short of It” and many modern studies) conclude that the best results come from balancing long-term brand building and short-term sales activation. Recent data has reinforced the 60/40 rule (around 60% of budget to brand, 40% to direct response) as a guideline for many businesses. For example, an extensive study by Analytic Partners found that brand marketing outperforms performance marketing 80% of the time in driving sales and ROI. Similarly, a 2024 TikTok × Tracksuit study of 147 brands showed that brands with ~60% awareness had ~2.9× higher conversion rates than brands with ~20% awareness, and even a modest increase from 30% to 40% awareness made performance marketing 43% more efficient. Google and Kantar’s 2023 analytics concur: media spend yields maximum long-term growth when roughly 40–60% is devoted to brand-building, and they observed that the long-term sales impact of marketing (months 5–24) is equal to the initial short-term impact (months 0–4). In practice, this means marketers who only chase short-term results are leaving half of the total impact on the table. The clear takeaway is that brand and performance marketing perform best in tandem, each reinforcing the other.

A new brand typically begins with about seventy percent of its budget in performance channels and thirty percent in brand building. Early revenue keeps the lights on, yet even modest brand activity—PR, content, small awareness pushes—plants seeds for scale.

As growth kicks in, the ratio should approach parity or tilt toward sixty percent brand. With traction in place, every performance dollar benefits from a wider reputation halo.

Binet and Field’s work shows that mature brands thrive at roughly sixty-two percent brand and thirty-eight percent performance. Category leaders often invest seventy percent or more in brand because their future depends on expanding the category and deepening loyalty, not chasing individual conversions.

In short, smaller brands cannot ignore sales today, but they stall if they never fund tomorrow. Larger brands cannot grow by acquisition alone; they must widen appeal and fortify equity. The chart above visualises this evolution across four business stages.

Strategic Recommendations
Blend the two, up-weight brand as you mature, prove its profit math to finance, and watch the growth flywheel whirl.

Companies should resist the urge to treat branding and performance as an either/or choice. The optimal strategy blends both: use performance marketing to “seal the deal” with in-market buyers, while continuously investing in brand to “build the hype” and future demand. Ensure a balanced budget allocation – experts recommend roughly 50–65% of marketing spend on brand in most cases (with newer brands starting a bit lower, then ramping up). Adjust the mix based on business maturity: e.g. a startup might begin with ~30–40% on brand, whereas an established leader might dedicate 70% to brand-building. Internally, CMOs and marketing teams should translate brand impact into financial metrics that the CFO cares about (e.g. showing how raising brand awareness drives revenue uplift, or how brand equity enables premium pricing and higher margins). Invest in brand tracking and marketing mix modeling to measure brand health and link it to sales outcomes, so that branding efforts are as accountable and visible as performance campaigns. In summary, the marketing leaders who treat brand building as an ongoing investment (not a cost) will reap both immediate sales and sustained growth, outpacing those who chase only short-term wins.