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

The concept is deceptively simple: allocate roughly 60% of your marketing budget to brand building and 40% to performance activation. That split, popularized by the work of Les Binet and Peter Field for the IPA (Institute of Practitioners in Advertising), has become a reference point in marketing strategy. It is also one of the most misapplied ideas in the field.

The confusion is not about the numbers themselves. It comes from what CMOs actually do when they face a quarterly shortfall, a new CFO asking for ROIROIReturn on Investment: the ratio of net profit to the cost of an investment. A 300% ROI means each dollar invested returns $3.View full definition → clarity, or a board that has discovered performance dashboards. Brand budget gets cut. It is always brand budget. And the justification is always rational-sounding: "We need to protect revenue this quarter." That logic, repeated enough times, is how companies quietly hollow out their market position while their performance metrics stay green.

Why this matters for CMOs specifically

The CMO sits at the intersection of two timelines. Performance marketing operates on a short cycle: spend today, see results this week, optimize next week. Brand investment operates on a cycle measured in years. The problem is that most CFOs, boards, and even CEOs think in quarters. That structural mismatch puts the CMO in a position of defending investments whose payoff cannot be shown in a slide deck this month.

This is not a small professional risk. According to IPA research published in their ongoing Databank analysis, campaigns that combine brand and activation consistently outperform those focused on activation alone, and the longer the brand investment horizon, the larger the share gain. Binet and Field estimate the optimal split sits at 60% brand, 40% activation for most mature consumer categories, though this shifts for B2B and categories with shorter purchase cycles.

The CMO who cannot articulate this distinction to a CFO will lose the argument every time. And losing it repeatedly produces a well-documented pattern: short-term metrics improve, market sharemarket shareThe percentage of total industry sales your company captures in a given period. It measures competitive position relative to rivals in a defined market.View full definition → erodes, and the brand becomes increasingly dependent on promotions and paid acquisitionpaid acquisitionVisitors arriving via paid ads or sponsored placements, where you pay a platform to display your message rather than earning visits organically.View full definition → to drive volume. Repairing that position costs far more than maintaining it would have.

How the 60/40 split actually works

The mechanics matter here because the framework is often cited without being understood.

Brand spend (the 60) targets broad audiences, including people who will not be in the market for months or years. Its job is to build memory structures: familiarity, positive associations, and the kind of mental availability that Byron Sharp at the Ehrenberg-Bass Institute describes as the primary driver of market share growth. This spend does not produce immediate sales. It produces a lower cost of acquisition and higher conversion rates later, because customers arrive with a prior relationship to the brand.

Performance spend (the 40) targets people who are in the market now. Search ads, retargetingretargetingShowing ads to users who have previously visited your site or interacted with your brand, to bring them back and drive conversion.View full definition →, promotional offers, product-level social ads. This spend produces attributable results quickly, which is why it dominates dashboards.

A concrete example: Airbnb's 2021 decision to cut performance marketing significantly during the pandemic recovery and redirect budget toward brand advertising. The company reported in its earnings calls that it saw acquisition costs fall and direct traffic rise as brand awarenessbrand awarenessThe degree to which your target audience recognises or recalls your brand, either prompted or unprompted. It measures how present your brand is in people's minds.View full definition → strengthened. By 2022, Airbnb's marketing efficiency had improved relative to pre-pandemic benchmarks, and the company cited brand investment as a material driver. That is not a proof of universal principle, but it is a real-world test of the thesis at scale.

The 60/40 split is a starting point, not a formula. Binet and Field's own analysis shows the ratio shifts across contexts: B2B markets tend toward 46/54 in favor of activation, given longer sales cycles and narrower target audiences. Fast-moving consumer goods in high-penetration categories can hold closer to 70/30 in favor of brand. The underlying logic is consistent even when the numbers shift: you need enough brand spend to sustain mental availability, and enough activation spend to convert the demand that creates.

One practical mechanism CMOs often underuse is share of voiceshare of voiceYour brand's share of total advertising or conversation volume in your category, measured against competitors over a defined period.View full definition → (SOVSOVYour brand's share of total advertising or conversation volume in your category, measured against competitors over a defined period.View full definition →) relative to share of marketshare of marketServiceable Obtainable Market: the share of your SAM you can realistically capture given current resources, channels, and competitive position.View full definition → (SOMSOMServiceable Obtainable Market: the share of your SAM you can realistically capture given current resources, channels, and competitive position.View full definition →). If your SOV exceeds your SOM, your market share tends to grow over time. Cutting brand budget typically drops your SOV below your SOM, and the erosion follows, usually 12 to 24 months later, which is why the decision to cut rarely looks catastrophic at the time it is made.

When to use it and when not to, and the honest tradeoffs

The 60/40 framework applies best when your brand is playing a long-term market share game in a competitive, relatively stable category with a broad addressable audience. Fast-moving consumer goods, insurance, financial services, automotive, telecom. Categories where being the first brand that comes to mind in a purchase moment is genuinely worth something.

There are real situations where it should be adjusted or set aside. Early-stage companies that need revenue to survive the next six months should weight toward activation. It makes no strategic sense to build brand awareness for a company that may not exist in two years. Equally, a product launch with a narrow, clearly identified buyer population does not need 60% of its budget reaching people who will never be customers.

The trickier tradeoff involves measurement. Brand spend is harder to measure, which creates an organizational vulnerability. Performance spend generates data that justifies itself in budget conversations. This asymmetry systematically biases internal decisions toward activation, regardless of what the strategy says. CMOs who want to protect brand investment need to invest in brand-tracking infrastructure: awareness, consideration, brand preference, and net promoternet promoterNet Promoter Score: a loyalty metric asking how likely customers are to recommend you (0 to 10). NPS = % Promoters minus % Detractors.View full definition → scores tracked regularly and connected to long-term revenue modeling. Without that, the 60% is always the first target when pressure builds.

There is also a timing trap. Many CMOs try to rebalance toward brand during a growth phase and cut back to performance during downturns. Binet and Field's data suggests this is precisely backwards. Maintaining brand investment during downturns, when competitors are cutting, produces disproportionate share gains as conditions improve.

The 60/40 rule is a diagnostic starting point, not a universal prescription. Its real value is in forcing a structured conversation about time horizons and the difference between building demand and harvesting it. CMOs who can hold that distinction clearly, and communicate it in financial terms, are the ones who protect their budgets and their market positions when the pressure comes.