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

Les Binet and Peter Field's 60/40 rule is not a theory from the classroom. It is the result of analyzing over 1,400 marketing campaigns in the IPA Databank database in the UK, accumulated over decades. The conclusion: 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, but it highlights a discrepancy that most businesses are currently experiencing 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 a call-to-action, promotions, retargeting (marketing to those who have visited before). The effectiveness appears quickly and can be measured immediately, but it also fades quickly when spending stops. Brand building, on the other hand, targets the majority who do not have an immediate need to buy: creating emotional connections, reinforcing identity, and ensuring that your brand is the first name people think of when a need arises. The cumulative effect is slow, difficult to directly translate into sales this week, but 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 activation eats itself

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 even though there are no changes in tactics. This is not a changing algorithm but the consequence of starving the brand.

A strong brand reduces activation costs

This is a point that many marketing materials overlook. Binet and Field point out that a well-built brand makes every activation dollar more effective because people convert more easily with brands they recognize and feel positively about. In other words, the two parts do not compete for budget but complement each other: 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 by 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.
• Saturated market brands: may shift towards more activation during the short-term harvest phase, but not indefinitely.

The important thing is not to hit the exact numbers of 60 or 40, but to have two separate metrics, measured by different standards, with different goals, and not to use the short-term performance of one to justify cutting the other.

Measurement traps and quarterly pressure

The real 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. When every meeting starts with ROAS, CPA (cost per action), or this week's conversion rate compared to last week, brand-building activities have no way to defend themselves in that room.

Binet and Field propose measuring brand performance using cumulative metrics: unaided awareness (the percentage of people who remember the brand when asked about the category without prompts), preference levels, and relative price compared to competitors over time. These metrics do not change in a week and should not be measured weekly. The appropriate measurement cycle is typically quarterly or annually.

If these two measurement systems cannot be separated, the budget debate will always end up one-sided: activation wins because it has numbers, while branding loses because it lacks convincing numbers in the short term.

A realistic starting point

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.

A brand is not a cost competing with performance. It is the infrastructure that enables long-term operational performance. When that infrastructure is starved for long enough, operational costs rise, not because the market changes but because the brand can no longer support activation.