How Much Should You Spend on Brand Versus Demand?

How much should you spend on brand versus demand?

The most cited answer for B2B is 46% brand and 54% activation, from Les Binet and Peter Field's work with the IPA and the B2B Institute. It is a reasonable starting point. It is also built on fewer than 50 B2B case studies, a limit the authors state plainly, and almost nobody who quotes the number mentions it.

So the honest framework is not a ratio. It is a way of deciding your own ratio, using the same logic the research uses, with your own buying cycle in place of an industry average.

We build the websites and content engines that sit on both sides of this split, so we watch teams argue about it constantly. The argument is usually won by whoever has a number, which is exactly why the provenance of the number matters.

Where does the 60/40 rule actually come from?

From the IPA Databank. It holds effectiveness data submitted alongside entries to the IPA effectiveness awards over nearly 40 years, and currently contains data from almost 1,500 marketing and advertising campaigns, including budgets, media and business results.

Binet and Field have been mining that database since 2006 for patterns in what works. The famous finding for consumer marketing is the 60:40 split, meaning roughly 60% of budget on long term brand building and 40% on short term activation.

That is a serious body of evidence. It is worth knowing that it is evidence about award entering campaigns, which is a particular kind of sample, and that it was built mostly on consumer cases.

Why is the B2B number different, and how confident should you be in it?

The B2B report puts the optimum at 46% brand and 54% activation. In the authors' own words, the ratio "suggests that rational activation messages come a bit more to the fore, although emotions still have a much more significant role than many would believe."

Now the caveat that rarely travels with the number. The report states directly that until then they had not had sufficient numbers of B2B case studies to reliably explore them, that this was their first foray into B2B effectiveness, and that "by necessity, our findings are tentative." It adds that sample sizes are small, at less than 50 cases.

Fewer than 50 cases is not nothing, and it is not a law of physics either. Treat 46/54 as a considered prior from serious researchers, not as a benchmark you are failing to hit.

What is the 95:5 rule, and why does it change the argument?

Professor John Dawes of the Ehrenberg-Bass Institute put it simply: up to 95% of people or firms are not in the market for many goods and services at any one time. His reasoning is arithmetic. If a company changes a major service provider roughly once every five years, then about 20% enter the market in a given year, and about 5% in a given quarter.

This is the strongest argument for brand spend that exists, because it is not about creativity or emotion. It is about arithmetic. Conversion focused media can only convert the small share of your market currently shopping.

Dawes is as careful as Binet and Field. He writes that "the 95% figure is not meant to be a precise rule. We're using it as a heuristic to get the idea across that the vast majority of businesses, for a large proportion of products, are not in the market in particular time periods."

So how do you calculate your own split?

Use Dawes' own method rather than his headline number. Find your average time between purchases in your category, then work out what share of your market is in play in a quarter. A five year cycle gives you roughly 5%. A one year cycle gives you roughly 25%, and a completely different budget.

The rule of thumb we use: the longer your repurchase cycle, the more your budget should lean toward brand, because your addressable in market share at any moment is smaller. A tool people re evaluate annually can justify far more activation than a platform people replace once a decade.

Write the number down with the assumption next to it. "We believe our cycle is about three years, so roughly 8% of our market is in play this quarter." That single sentence will improve your planning meeting more than any benchmark.

What actually counts as brand spend for a B2B software company?

Anything that builds memory in people who cannot buy today. That is broader than advertising. Original research, a genuinely good podcast, conference presence, a category defining point of view, and the parts of your website that explain who you are rather than capture a form fill all qualify.

Activation is anything designed to catch someone already looking. Paid search on bottom of funnel terms, comparison pages, pricing pages, retargeting, review site presence, outbound to a shortlist.

The classification matters because most teams misfile their content. A blog post targeting a high intent keyword is activation wearing a content costume. Filing it as brand makes your split look healthier than it is, and the line between the two is worth being strict about, as we argued in demand generation versus lead generation.

What do the other four principles say?

The report names five, and the budget split is only the second. The first is to invest in share of voice, because there is a strong relationship between market share growth and advertising investment measured as share of voice, similar to what is observed in consumer marketing.

The other three are to expand your customer base rather than focus on loyalty, to maximise mental availability, and to harness the power of emotion. The report's broader conclusion is that there is much greater commonality in best practice across B2C and B2B than is usually believed.

That last point is the one most B2B marketers resist, usually on the grounds that their buyers are rational. Rational buyers still have memories, and memory is what brand spend buys.

How do you defend brand spend to a finance team?

Not with the 46/54 number, which will be read as an opinion from an agency. Use the arithmetic instead. If your buying cycle is four years, roughly 6% of your market is in play this quarter, and every pound of pure conversion media is competing for that 6% against everyone else.

Then agree in advance how you will judge it, because this is where brand budgets die. Pick two or three lagging measures such as branded search volume, share of inbound that arrives already knowing who you are, and win rate on deals where you were the first vendor contacted.

Measurement is the real fight, not allocation, which is why we spend so much time on what B2B attribution can and cannot tell you.

When should you ignore the split entirely?

Before product market fit, and when you have under roughly twelve months of runway. Both research programmes measure established companies growing market share. Neither measures a company trying to find out whether anyone wants the product, and applying their conclusions there is a category error.

Early on, almost everything should be activation, because you need conversations more than you need memory. The brand argument becomes real once you have a repeatable motion and the constraint moves from learning to reaching people.

The other case to ignore it is a genuinely tiny market. If your total addressable market is 400 companies, you do not need mental availability at scale. You need a list and a reason to call.

What does a sensible plan look like in practice?

Start from your cycle length rather than a benchmark. Classify every line of current spend as brand or activation honestly. Compare the actual split to what your cycle implies. Move budget in one direction by no more than 10 points in a quarter, and agree the lagging measures before you move anything.

Then hold the line for at least four quarters. Brand effects show up slowly by definition, and a programme cancelled after two quarters has produced no evidence about anything except impatience.

Most teams we work with discover they are at roughly 20% brand and calling it 40%, because half of what they classified as brand was high intent content. Fixing the classification is often the entire intervention.

What is the honest summary?

The direction of the research is solid and consistent across two independent groups: most of your market is not buying right now, and marketing that only speaks to buyers reaches a small slice of the opportunity. The precision is not solid, and both sets of authors say so in writing.

Use 46/54 as a sanity check, not a target. Use your own repurchase cycle to set the actual number. And be suspicious of anyone quoting either figure without the caveats attached, including us.

We help B2B teams build the site, content and automation layer that brand investment actually runs through, which means we care whether the split is right before anyone starts producing. If you want to talk through yours, we are happy to. You can find us at phoenix.studio, and our related thinking on positioning before spending is the natural place to start.