Branding and performance marketing are two totally different aspects of product promotion and driving sales & revenue. Branding ensures that your product stands out in the market, but performance marketing makes sure that specific actions are taken or are in motion and is basically a result-driven approach. Today, in this blog, we are not going to learn the difference between them, but we will theorize how to create a good balance between long-term brand building and short-term results attained through performance marketing. This tension between branding and performance marketing isn’t new.
What really makes me sad is that performance marketing often receives all the love and appreciation, but branding is hardly given much attention. On top of that, it is still not considered a worthy investment. The problem with avoiding branding and relying only on performance marketing to grow is you’re essentially renting your growth. As a founder, you pay for every click, every customer, every time, and when the budget stops, so does the growth. Then what is your plan beyond that? This is why we have dedicated this blog to talking about not just stopping avoiding branding but using it in a way to create an equilibrium between it and performance marketing.
Alright, let’s get this started.
Understanding both
Branding we all know what it is, so let’s appreciate ourselves and our knowledge on this one. However, I believe most people still do not understand what performance marketing really is. So, by the book, the definition states that performance marketing is a results-based technique to induce digital marketing. Advertisers only pay when specific actions or outcomes are attained. It can be anything, such as clicks, leads, sales, or other desired customer behaviors. Performance marketing relies on affiliate marketing, pay-per-click (PPC) advertising, social media advertising, and search engine marketing (SEM). As a concept, performance marketing evolved from various direct-response marketing practices.
So, in a nutshell, it can be concluded that branding is a long-term game, but performance marketing is a short play. Now, the target is to strike a balance between the two. Now when we talk about performance marketing, it is undeniably important. But let’s be clear: it’s actually better when there’s a brand behind it. Google data shows that search ads with brand awareness behind them get 2x higher click-through rates compared to generic ones. So the scenario suggests that if people recognize the brand, they’re far more likely to engage with its ad. This shows that trust precedes action. Think about it: a brand can’t retarget someone who’s never heard of the brand itself. You can’t nurture a lead that never clicked. Brand awareness, familiarity, and mental availability must all work together in sync.
The 60/40 Rule
Popular marketing effectiveness experts Peter Field & Les Binet, backed by data from the Institute of Practitioners in Advertising, which found that the most successful marketing campaigns follow a 60/40 investment split: This simply refers to the bifurcation of the budget in such a way that 60% of the budget is allocated towards brand building and the rest, 40%, towards sales activation sources.
Now, you must wonder why this ratio in particular. The answer is quite simple. Brand building drives long-term growth through emotional connections, hikes customer loyalty, and pricing power. On the other hand, sales activation (aka performance) drives short-term sales through immediate conversions, but those results tend to diminish quickly. Binet and Field’s data shows that companies investing primarily in performance are more likely to see initial gains but struggle with long-term profitability and brand differentiation. This happens as their campaigns become less effective over time, as there's no brand memory to build on. So if I have to sum this up in one line: performance may spike your numbers, but brand lifts your baseline.
Branding vs Marketing ROI: The Real Metrics You Should Be Tracking
Branding has an ROI; it’s just not as instantly trackable. But it shows up in places that matter more over time.
- Decreases Customer Acquisition Cost: Brands that are doing well require few touchpoints to convert. A study found that companies with strong brands see cost-per-clicks 13% lower and conversion rates 200% higher than lesser-known competitors.
- Higher Customer Lifetime Value: Track whether your brand consistency is helping you in acquiring customers that remember you, recommend you, and return to you.
- Pricing Power: With branding, you become popular and rise above the pricing war and use your pricing power. According to a Nielsen Global Survey source, consumers will pay 25% more for products from brands they trust and recognize.
- Faster Trust, Shorter Sales Cycles: A Harvard Business Review study highlights that 64% of consumers cite “shared values” as the primary reason they have a relationship with a brand. This happens when people trust the brand, and so it automatically reduces the sales cycle span.
When and How to Invest
Let’s see when and how you should begin investing in branding and performance marketing following different allocations.
Early-stage (0–12 months): In this stage, target primarily on performance to validate your offer and generate early revenue. During this stage, follow a 70/30 split in which 70% goes to performance marketing, whereas the rest of 30% goes into branding. Do not skip brands entirely.
Growth stage (1–3 years): At this stage, it's your time to focus on branding. Make a smart shift toward a 50/50 split. Aim to build the brand story, messaging frameworks, customer experience, and thought leadership.
Scale-up (3+ years): This is not the last stage, but clearly, you’ll be leveling up and have expansion objectives. Follow the Binet-Field 60/40 rule here. At this stage, the brand becomes your moat. It is a long term brand strategy ROI. Start investing in emotional storytelling, content strategy, customer community, and higher-level marketing assets. Use performance marketing only to reap the demand your brand has cultivated.
Practical Tips for Founders and Marketers
It is never a question which is more important: branding or marketing strategy. Branding and performance marketing are not rivals. On the contrary, a company can reap the maximum benefits and returns when they strategically align both of them. Here are some techniques that can be used to fill in the gaps:
- Utilize performance marketing campaigns to examine brand messaging.
- Create content and use it in such a way that it serves the purpose of both performance marketing and branding.
- Keep monitoring the blended ROI by studying indicators and metrics.
- Look for qualitative analysis that gives more information than just quantitative figures.
Final Thoughts
Never go after one thing, leaving the other in the middle. The whole point of this session is to make you realize the importance of striking a balance between branding and performance marketing. I’ll not give you any metaphorical examples anymore. This is it. This is your cue to make the right choice and start executing actions and seek equilibrium. At last, I’ll only tell you not to fall for the false choice between branding vs. performance.
The question isn’t which one works; it’s how well they work together. This is Brand Professor signing off.
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