Balancing brand and performance budgets: the 60/40 rule explained

August 25, 2026 · 5 min · Free, with full transcript

Most marketing budgets get pulled toward performance spend because the results are measurable and the feedback is fast. This article breaks down the 60/40 framework, what it actually means in practice, and when following it would be a mistake.

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Welcome to the Leaders Insights Podcast.

Today's episode, Balancing Brand and Performance Budgets, the 6040th rule explained.

Every marketer I know says they believe in brand building, and every one of them spends

80% of their money on performance ads.

Why the gap?

Because performance is a slot machine that pays out visibly.

You put a dollar into Google.

You see the click, the sale, the number.

Brand is a savings account that pays out in three years, and no CFO ever got promoted

for patience.

So the 6040th rule, 60% brand, 40% performance, is that just a comforting fiction for people

who like TV ads?

No, it's from actual work.

Leibnay and Peter Field studied hundreds of campaigns entered into UK Effectiveness Awards,

and the split that maximized long-term profit landed around 60% on brand, 40% on activation,

activation being the stuff that makes someone buy this week.

That's the durable principle.

The exact number moves, the direction doesn't.

Fine, but long-term profit is what everyone says right before they waste a fortune.

What's the mechanism?

Two jobs.

Performance harvests demand that already exists.

People ready to buy.

It creates demand that doesn't exist yet, so that when someone's finally in the market,

you're the name they already trust.

Roughly 95% of your potential buyers aren't shopping today.

If you only spend on the 5% who are, you're fighting everyone else in an auction and your

costs climb every quarter.

That 95% figure, where's it from?

Sounds like a vendor slide.

It's the 95-terrory five rule from the Ehrenberg-Bass Institute, an academic marketing

outfit not a software company selling you dashboards.

And it holds for most business categories.

Most of the market is out of the market at any given moment.

Give me a company that actually lived this.

Not a theory.

Airbnb.

Around 2019 they were pouring money into search and performance channels.

Then their CFO, Dave Stevenson, did something rare.

He pulled back performance spend and shifted heavily toward brand.

Then travel collapsed in 2020 and they cut marketing dramatically.

Their traffic mostly came back on its own because people typed Airbnb directly.

By 2021, they said something like 90% of traffic was direct or unpaid.

That's brand doing the work, performance can't.

Convenient story though.

Maybe they'd have recovered anyway because they're famous.

They're famous because of exactly that spending.

That's the point.

The fame is the asset.

But I'll give you the other side because 60 40ths as a commandment gets people killed.

Go on, when is following at a mistake?

When you're a startup with no revenue.

If you've got 18 months of runway and no proof anyone wants the thing, spending 60%

on brand is vanity.

You need sales now to prove the model, so flip it.

Go heavy on performance until you've got product market fit.

The 60 40ths is for established businesses with a base to defend.

So who else should ignore it?

Anyone in a category people buy rarely and research heavily.

Enterprise software, mortgages, and anyone whose whole business is one channel, say a brand

living entirely on Amazon.

There, brand and performance blur.

Because winning the search result is the brand.

Context beats the ratio every time.

Here's the uncomfortable one.

If brand pays off in three years, how does a CMO keep her job in year one when the

numbers look flat?

You measure the leading signals.

Track branded search volume, see how many people type your name into Google.

Because that rises before revenue does.

Track share of voice, your slice of category advertising versus rivals.

And track your direct traffic.

If those climb while your paid costs hold steady, you're building the account even

if the quarterly sales chart is boring.

You give the CFO a scoreboard that isn't just this month's return on ad spend.

Something people can do Monday morning?

Pull your last 90 days of spend and calculate the real split.

Brand versus direct response.

Not what you think it is, the actual number.

Almost everyone's at 80 20ths or worse toward performance and genuinely surprised.

You can't fix a ratio you've never measured.

Measure it before you defend it.

Good place to stop.

That's a wrap.

Fresh CMO briefings drop daily at MBA-training.com.

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