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Is there a ‘right’ way to balance brand and performance marketing?

The Brand vs. Performance Debate Marketing teams worldwide wrestle with a common question: how should we balance brand and performance marketing? Performance marketing—search, social ads, and digital targeting—yields quick wins and measurable ROI. Brand marketing—video, TV, and broader storytelling—builds awareness but takes longer to show direct returns. Dr. Grace Kite, a business economist and founder […]

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The Brand vs. Performance Debate

Marketing teams worldwide wrestle with a common question: how should we balance brand and performance marketing? Performance marketing—search, social ads, and digital targeting—yields quick wins and measurable ROI. Brand marketing—video, TV, and broader storytelling—builds awareness but takes longer to show direct returns.

Dr. Grace Kite, a business economist and founder of Magic Numbers, has extensively researched this challenge. Her work highlights a critical tipping point when businesses must shift from a pure performance-driven strategy to investing in brand building. But when exactly is the right time?

When to Switch on Brand Marketing?

For many businesses, especially eCommerce startups, performance marketing fuels early-stage growth. As Grace explains, demand-harvesting tactics like paid search and social ads work effectively when your market is small and you’re converting an existing pool of demand.

However, at a certain point, businesses hit the performance plateau—where simply spending more on performance ads stops driving meaningful growth. Here’s why:

  • Your existing demand pool is exhausted—you’ve reached most of the customers who are actively looking for your product.
  • Conversions become more expensive—as you push ads to harder-to-convert audiences.
  • External factors—like market changes or economic shifts—shrink demand pools, making performance marketing less efficient.

At this moment, brand building becomes essential. By investing in high-reach media (TV, online video, display, out-of-home), you can fill up the demand pool again, ensuring there are more potential customers for performance marketing to convert in the future.

Insights from Binet and Field: The Long and Short of It

Les Binet and Peter Field’s research in The Long and Short of It reinforces the importance of balancing brand and performance marketing. Their data-driven analysis shows that:

  • Brand building should account for roughly 60% of the marketing budget, while performance marketing takes 40%. This split ensures long-term growth while maintaining short-term conversions. A big note here: this split depends on industry, business stage, and way more.https://themarketingmeetup.com/events/when-should-marketers-start-investing-in-brand-as-well-as-performance-marketing/
  • Brand campaigns drive emotional engagement, which increases mental availability and preference when customers are ready to buy.
  • Performance marketing is great for immediate results but has diminishing returns over time. Over-reliance on it can lead to stagnation.

Grace Kite’s insights align with this: businesses initially rely on performance marketing, but once they hit the plateau, they must shift investment towards brand building to sustain growth.

Communicating the Need for Brand Investment

One of the biggest challenges in switching from a performance-led approach to incorporating brand marketing is internal resistance—especially from leadership accustomed to seeing instant returns. Grace outlines a crucial insight:

Brand building makes performance marketing work better.

Rather than being at odds, brand and performance work together. Strong brands see higher click-through rates (CTR) on paid search ads, better ad placements, and reduced costs per acquisition. The more familiar people are with your brand, the more likely they are to engage with your ads.

Proving It Works

So, how do you prove that investing in brand marketing is the right call? Grace suggests:

  • Look at past data: Use marketing mix modelling or econometrics to assess when past brand campaigns boosted long-term conversions.
  • Test incrementally: Start with small-scale brand-building experiments, measure shifts in brand awareness and demand, and assess their impact on performance metrics.
  • Use case studies: Companies like Airbnb successfully shifted from performance-heavy strategies to brand-driven growth. (Watch Grace’s case study at 21:30 in the webinar.)

Is Brand the Only Solution?

While brand marketing is a proven way to extend growth, Grace also notes an alternative: expanding product range. If your primary market is saturated, launching new products can tap into adjacent demand pools, keeping performance marketing effective for longer.

However, this strategy has its limits. Expanding too fast without clear brand positioning can lead to consumer confusion, as seen in ASOS’s struggles (discussed at 27:00 in the webinar).

Final Thoughts

There’s no one-size-fits-all approach, but the answer lies in timing and balance. Performance marketing delivers immediate growth, but brand building ensures that growth is sustainable. Smart marketers recognize when their demand pool is overfished and shift their investment accordingly.

If you’re wondering whether now is the time to invest in brand marketing, ask yourself:

  • Have our performance marketing results plateaued?
  • Are our acquisition costs rising?
  • Are we running out of new audiences to target?

If the answer is “yes,” then it’s time to start filling your demand pool—before it runs dry.

📺 Watch the full session with Dr. Grace Kite here

💡 Learn more about Grace and Magic Numbers: Magic Numbers Training