How to allocate marketing funds between brand building and closing sales: the 60/40 rule

The 60/40 rule from Les Binet and Peter Field comes from the analysis of over 1,400 marketing campaigns in the IPA Databank in the UK, accumulated over decades. The conclusion is that businesses achieve the best financial results when they allocate about 60% of their marketing budget to long-term brand building and 40% to short-term sales activation. This ratio is not a fixed formula. However, it highlights a deviation that most businesses are making in the opposite direction.

Two types of activities, two timelines

Binet and Field clearly distinguish between two types of marketing activities. Sales activation, or brand activation, targets those who have an immediate need: running ads with calls to action, promotions, retargeting (marketing to those who have visited before). The effectiveness appears quickly, is measurable right away, but fades quickly when spending stops. Brand building, on the other hand, targets the majority who do not have an immediate need to purchase. It creates emotional connections, reinforces identity, and ensures that the brand is the first name people think of when a need arises. The cumulative effect is slow and difficult to directly translate into sales this week. However, it lasts longer and reduces activation costs over time.

The issue is that these two types are often measured by the same short-term metric. When the dashboard only shows ROAS (return on ad spend) weekly, brand-building efforts appear wasteful. That’s why most budgets lean towards activation.

Why pure self-cannibalization activation

Byron Sharp and the Ehrenberg-Bass research team describe this using the concept of mental availability, meaning the presence in the buyer's memory when a need arises. The potential market for each brand includes those who have not yet considered the product today. Sales activation can only convert the portion of the market that is ready to buy, which is a much smaller segment.

If nothing nourishes the rest, the potential market gradually shrinks. Businesses continue to spend the same budget but target an increasingly smaller pond. A practical symptom: the cost per order increases each quarter despite no changes in strategy. This is the consequence of neglecting the brand, not due to algorithm changes.

A strong brand reduces activation costs

This is the point that many marketing materials overlook. Binet and Field indicate that a well-built brand makes every dollar spent on activation more effective. This is because people convert more easily with brands they recognize and feel positive about. In other words, the two parts complement each other rather than compete for budget: the 60% expands the potential market, while the 40% harvests from that market.

Kantar BrandZ reports that brands perceived as meaningful and different can command prices up to 38% higher than the industry average. This means that activating a strong brand not only sells more but also sells at better profit margins.

Brands grow by reaching all buyers in the category, not just those ready to purchase today.

Byron Sharp, How Brands Grow, Oxford University Press, 2010

60/40 is not a hard and fast number

Binet and Field acknowledge that this ratio may vary depending on the industry, buying cycle, and stage of business development. Some adjustments are based on data.

• Frequent purchase categories, short cycles: brand building rates may be higher because buying opportunities arise multiple times a year.
• B2B or one-time purchase sector: activation rates may be higher due to complex buying decisions that require more detailed information in the final stages.
• Newly launched brands: need to build identity before activation can work effectively, so the brand-building ratio is often higher than 60% in the early stages.
• The brand has saturated the market: it may adjust to activate more in the short-term harvesting phase, but not indefinitely.

The important thing is not to hit the exact numbers of 60 or 40. It lies in having two separate allocations, measured by different metrics, with different goals. And not using the short-term performance of one allocation to justify cutting the other.

Measurement traps and quarterly pressure

The practical issue is not a lack of knowledge about the 60/40 rule. The problem is that the internal measurement systems in most businesses are designed to reward activation and penalize branding. Every meeting often starts with ROAS, CPA (cost per action), or this week's conversion rate compared to last week. In that room, brand building has no way to defend itself.

Binet and Field propose measuring brand health through cumulative metrics: unaided awareness (the percentage of people recalling the brand when asked about the category without prompts), preference levels, and relative pricing compared to competitors. These metrics change over long periods, not within a week. Therefore, they should not be measured weekly. The appropriate measurement cycle is usually quarterly or annually.

Without separating these two measurement systems, budget discussions will always end in one direction. Activation wins because it has numbers. Branding loses because it lacks any convincing numbers in the short term.

Starting point in reality

If you have never separated these two allocations in your budget, the first step is not to immediately achieve the correct 60/40 ratio. The first step is to look directly at your current marketing expenditure structure and ask: what percentage is aimed at those who are not ready to buy today? If that number is close to zero, it is a signal that adjustments are needed, not necessarily to the 60/40 ratio right away, but in that direction.

Branding is the infrastructure that supports operational performance in the long run. When that infrastructure is neglected for long enough, operational costs increase because the brand can no longer effectively support activation.