In brief: The 60/40 rule by Les Binet and Peter Field is not a universal dogma: 2026 data show the optimal brand-performance ratio ranges from 70:30 for new entrants to 40:60 for established brands. The real problem for most SMEs is investing nearly 100% in performance and ignoring brand building — a choice that pushes the customer acquisition cost out of control within 18-24 months.
- 996 IPA campaigns analysed by Binet & Field (1980-2016): 60:40 maximises combined short+long term profit gain
- +90% average ROI uplift when moving from performance-only to brand+performance; -40% ROI in the opposite direction (WARC Multiplier Effect, 2024)
- CAC -30/-50% for high-awareness brands; conversion rates 2.5× higher than unknown competitors
- +10 ESOV points = +0.5-0.7% market share/year in B2C, +0.6% in B2B (Danenberg, Kennedy, Beal & Sharp, Journal of Advertising, 2016)
Every time an entrepreneur tells us "this year we're putting the entire budget into Google Ads and Meta because we need revenue now," a Pavlovian reflex kicks in at Deep Marketing. A sort of intellectual cramp. A dull ache, like hearing someone confidently claim the Earth is flat despite NASA's photographs.
The problem is not the desire to generate revenue — of course, that is what we are all paid for. The problem is that decades of academic research demonstrate that putting 100% of the budget into performance marketing is the most effective way to destroy business value in the medium to long term. It is like eating nothing but protein while skipping every other nutrient: in the short term you may feel like a lion, but eventually your kidneys will make you pay.
And yet here we are in 2026, and the landscape has not improved. If anything, it has gotten worse. The proliferation of gurus, bargain-bin course sellers, and agencies that bill only on performance has drastically worsened the situation. Let us, as we always do at Deep Marketing, set the record straight with science.
The problem: SMEs and the obsession with performance
Let us be clear. The business fabric is largely composed of small and medium enterprises led by hands-on owners who, understandably, want to see every euro invested in marketing come back multiplied. Preferably by Friday. This desire is human and legitimate. But when it becomes the sole criterion for budget allocation, it turns into a slow and insidious poison.
Here is the typical scenario we encounter constantly:
- Marketing budget: 100% on direct-conversion Google Ads and Meta Ads campaigns
- Investment in branding, PR, content, positioning: zero point zero
- Expectation: ROAS growing year after year
- Reality: progressively declining ROAS, rising cost per acquisition, eroding margins
What these companies fail to understand — and what almost no agency explains to them, because selling performance is easier and more measurable — is that they are picking fruit from a tree they have stopped watering. When the tree dies, they are left with an empty basket and a bewildered expression.
Performance marketing without brand building is like fishing in a lake that nobody restocks. Sooner or later, the fish run out.
The research: Binet & Field and the IPA Databank
In 2013, Les Binet and Peter Field published "The Long and the Short of It" on behalf of the IPA (Institute of Practitioners in Advertising) in the UK. It is not a book of opinions: it is a monumental empirical analysis based on nearly 1,000 advertising effectiveness case studies collected in the IPA Databank from 1980 onward, covering over 15 years of real data on the most awarded and studied campaigns in the world.
Their central finding is devastating in its simplicity:
The most effective campaigns overall are those that allocate approximately 60% of the budget to brand building and 40% to sales activation.
Not the other way around. Not 50/50. Not "all in on performance." 60% brand, 40% activation.
Binet and Field demonstrate that these two activities operate through completely different mechanisms, with different timelines and different effects on the income statement:
- Brand building: creates memory structures in the minds of potential customers, builds mental salience, familiarity, and trust. Its effects are slow but cumulative and lasting. It reduces price sensitivity over time, enables premium pricing, and increases market penetration.
- Sales activation (performance): capitalises on the work of branding, driving immediate action from those already predisposed to purchase. Its effects are rapid but transient. It generates short-term sales spikes, but has little effect on long-term growth if not supported by branding.
In other words: performance harvests what the brand has sown. Without sowing, there is no harvest. Or at least, the harvest gets leaner every year.
Why 60/40 and not another ratio: the numbers
Someone might object: "But why exactly 60/40? Could it not be 70/30 or 50/50?"
The answer is in the data. Binet and Field systematically tested different allocation proportions and observed that the 60/40 ratio maximises overall "profit gain", that is, the total gain combining short- and long-term effects. Here is why:
- At 100% brand / 0% activation: very strong long-term effect, but zero ability to capitalise in the short term. The company builds a splendid brand but does not sell enough to survive.
- At 0% brand / 100% activation: strong short-term effect, but the brand erodes year after year. Acquisition costs rise, margins collapse, competitors can replicate any tactic.
- At 50/50: good, but not optimal. Brand building requires more resources because it operates on a broader audience through more expensive mechanisms (mass media, content, PR).
- At 60/40: the optimal equilibrium point, the one that in IPA analyses produces the maximum combined short- and long-term effect.
It is worth noting that 60/40 is an average. Binet and Field themselves subsequently refined the model in "Effectiveness in Context" (2018), showing that the optimal ratio varies by sector: in online markets it may shift toward 50/50, in B2B toward 54/46, in markets with high brand loyalty the brand weighs more. But in no sector analyzed does performance surpass brand building as the optimal allocation. Never.
How to apply the 60/40 rule in SMEs in 2026
At this point, the savvy reader is wondering: "Great, but I have a 30,000 euro annual budget and I am not Coca-Cola. How do I apply this?"
Fair question. And this is where most articles on the topic stop, leaving the entrepreneur with an abstract principle and zero actionable guidance. Not us.
Step 1: Recalculate your real budget
The first mistake is thinking that "marketing budget" = "what I spend on Google Ads." The marketing budget includes: media investment (Google, Meta, LinkedIn, print, events), agency fees, internal marketing staff costs, content production, PR, software and tools. Add it all up. That is your real budget.
Step 2: Classify your activities
Divide each spending item into two categories:
- Brand building: everything that builds awareness, trust, reputation, and brand memory among a broad audience (including those not ready to buy today). Examples: awareness video campaigns, PR and press office, educational content marketing, informational SEO, sponsorships, organic social, industry events.
- Sales activation: everything that drives immediate purchase from an audience already in-market. Examples: conversion-focused Google Search campaigns, retargeting, promotions and discounts, offer emails, product landing pages, Meta catalog campaigns.
Step 3: Check the ratio
If you are like most SMEs, you will discover that the ratio is inverted: 20/80 or 10/90 in favor of performance. This is the moment to rebalance, even gradually. You do not need to go from 10/90 to 60/40 overnight. But move toward 40/60 within six months, then toward 50/50, and finally toward 60/40 within 18-24 months.
Step 4: Measure with the right metrics
Brand building metrics are not ROAS. They are: brand awareness (spontaneous and prompted), Share of Voice, direct traffic to the website, branded searches on Google, MER (Marketing Efficiency Ratio, see our article on ROAS, MER, LTV, and CAC). If these metrics are growing, brand building is working — even if the ROAS of individual campaigns is not skyrocketing.
The most common budget allocation mistakes
In over ten years of strategic consulting, at Deep Marketing we have identified a series of recurring mistakes that companies make in budget allocation. We have summarised them in the following table.
How to calculate the right marketing budget: Wright's formula
Before deciding how to split the budget between brand and performance, you need to understand how much to invest in total. Here too, science offers an elegant and practical formula.
In 2009, Malcolm Wright published in the Journal of Advertising Research a theorem that represents a significant advancement over the classic Dorfman-Steiner model that had dominated the field for over 50 years:
Optimal advertising budget = Gross profit × Advertising elasticity
The average advertising elasticity, according to available meta-analyses, stands at approximately 0.10 (Sethuraman, Tellis & Briesch, 2011). This means that, on average, the optimal advertising budget is about 10% of gross profit.
But beware: elasticity is not the same for everyone. Here are the key variables identified by research:
- In Europe, elasticity is higher than in the United States, likely due to more fragmented markets and cultural differences in advertising response
- Durable goods have higher elasticity than fast-moving consumer goods: it makes sense to invest more relative to margin if you sell machinery, automobiles, or furniture
- Offline has higher elasticity than online: a finding that makes many raise an eyebrow, but one that research confirms. Traditional media (TV, print, out-of-home) often generate a greater impact per euro invested, especially in branding
Practical example
A manufacturing company based in Verona with 5 million euros in revenue and a 30% gross margin has a gross profit of 1.5 million euros. Applying Wright's formula with an elasticity of 0.10:
Optimal budget = 1,500,000 × 0.10 = 150,000 euros/year
Of this 150,000 euros, the 60/40 rule suggests:
- 90,000 euros in brand building (PR, content, SEO, awareness video, events)
- 60,000 euros in sales activation (Google Ads, retargeting, promotions, email marketing)
If that company is currently investing 80,000 euros entirely in Google Ads, it is simultaneously under-investing (it should be spending nearly twice as much) and mis-allocating (it should diversify across more channels and types).
Brand building vs performance marketing: a complete comparison
To make the differences even clearer, here is a systematic comparison table between the two approaches.
The Share of Voice principle: SOV > SOM = growth
A concept closely tied to the 60/40, and equally ignored, is that of Share of Voice (SOV) and its relationship with Share of Market (SOM).
The pioneering research of John Philip Jones (1990) and then that of Danenberg, Kennedy, Beal, and Sharp (2016) at the Ehrenberg-Bass Institute established a powerful empirical law:
When a brand's Share of Voice exceeds its Share of Market, that brand tends to grow. When it is lower, it tends to decline.
The mechanism is intuitive: if you "speak" louder than your market share would justify, you are investing in growth. If you speak more quietly, you are extracting profit at the expense of future share.
Danenberg et al. (2016) quantified the effect: for every 10 percentage points of Excess Share of Voice (ESOV = SOV - SOM), a brand gains on average 0.5% of market share per year. It may sound small, but over 5 years it can mean a radical transformation of competitive positioning.
For SMEs, this has a direct implication: if you are a small brand with 1% SOM in your target market and your SOV is 0.3%, you are actively declining. Not because your product is poor, but because you are not present enough in the minds of potential buyers.
Double Jeopardy in digital: why the big brands win even more
Those who follow us know that at Deep Marketing we often talk about the Double Jeopardy law, discovered by McPhee in 1963 and then extensively validated by Byron Sharp and the Ehrenberg-Bass Institute. The law is ruthless: smaller brands not only have fewer customers, but those customers are also less loyal. A double penalty.
In digital performance marketing, this law is exacerbated. Large brands have an exponential advantage on advertising platforms like Meta and Google because:
- Their ads have higher CTRs (people click more on brands they recognize)
- This improves their Quality Score / Relevance Score, lowering cost per click
- Conversion rates are higher (brand trust facilitates purchase)
- Organic word of mouth amplifies every euro invested in paid
Result: at equal performance budgets, a recognized brand achieves results 3-5 times superior compared to an unknown brand. This is why brand building is not a luxury for multinationals, but a strategic necessity for anyone who wants to make their performance investment efficient as well.
How long do advertising effects last?
An argument that "all in on performance" advocates often use is: "At least with ads I see results immediately." True. But what happens when the ads are turned off?
Research from the Ehrenberg-Bass Institute and various split-cable studies have measured the phenomenon precisely:
- The initial effects of an advertising campaign manifest within 1-4 weeks
- When advertising stops, the effects on awareness decay significantly within 3 months
- On sales, approximately 50% of tested brands show declines within a year of stopping
- Smaller and newer brands are the most vulnerable: decay is faster compared to established brands
This is exactly why continuity of brand investment is crucial. It is not a discretionary cost to cut when the quarter goes badly. It is the oxygen that keeps brand memory alive. Removing it is like holding your breath hoping to feel better: it works for 30 seconds, then you collapse.
Frequently Asked Questions
What is the 60/40 rule in marketing?
The 60/40 rule is the budget allocation principle formulated by Les Binet and Peter Field in 2013, based on 996 IPA campaigns: allocate 60% of the marketing budget to brand building (awareness, content, PR, mass-reach communication) and 40% to sales activation (performance marketing, conversion, retargeting). It is the statistical average that maximises combined short- and long-term profit gain.
Who invented the 60/40 rule?
The 60/40 rule was formulated by Les Binet and Peter Field in The Long and the Short of It (2013), published for the IPA (Institute of Practitioners in Advertising, UK). The analysis is based on 996 case studies from the IPA Databank and has inspired more than 70 follow-up academic publications, becoming the global benchmark for advertising effectiveness.
Does the 60/40 rule work for SMEs with small budgets?
Yes, and it is even more relevant. The Excess Share of Voice (ESOV) principle does not require huge absolute budgets: it requires investing in communication more than your market share would suggest. In a local niche, a few thousand euros per month are enough to obtain positive ESOV. Even with a 30,000 euro/year budget, 60% (18,000 euros) can fund pragmatic brand building: SEO, content, local PR, sponsorships.
Does the 60/40 also apply to startups or newly born brands?
Yes, but with an important nuance. In the very early stages (product launch, validation), the activation percentage can temporarily rise to 50-60% to generate the first cash flows. However, even a startup must invest in the brand from the very beginning: name, visual identity, tone of voice, positioning. As soon as the product is validated, the ratio must converge toward 60/40. Startups stuck at 100% performance often hit an insurmountable growth plateau within 18-24 months.
How do I measure the return on brand building if it does not generate direct sales?
Brand building does generate sales, but indirectly and with a delay. Track: growth in branded searches on Google (free in Search Console), changes in brand awareness (spontaneous and prompted, via periodic surveys), increases in direct traffic, improvement in MER over time, and above all the trend of Share of Voice relative to Share of Market.
Is the 60/40 rule still valid in 2026 with AI and new channels?
The rule is more valid than ever. Artificial intelligence has made performance marketing accessible and commoditised: today anyone with a budget and an AI tool can launch decent conversion campaigns. The competitive advantage has shifted toward the brand: it is the only thing AI cannot replicate for your competitors. If everyone optimises performance the same way, the winner is the one with the strongest brand in the consumer's mind.
Does the 60/40 work in B2B?
The proportions change, not the principle. Binet and Field in their B2B study with the LinkedIn B2B Institute (2019) found the optimal ratio in B2B shifts toward 46/54 (46% brand, 54% activation) because purchase cycles are longer and decisions involve more people. But B2B companies that invest zero in brand building still pay a heavy price: every negotiation starts from scratch, every proposal competes solely on price, and acquisition costs stay chronically high.
Need help rebalancing your brand vs performance budget?
Deep Marketing supports companies that want to escape the 100%-performance doom loop and build a brand that lowers their CAC over time. We can start with an audit of your current media mix (ESOV, channels, KPIs) and define a sustainable path toward a 60/40 split. Get in touch via our contact page or explore how we work with our digital advertising consulting.
Sources and References
- IPA — Les Binet & Peter Field: Effectiveness Research & Analysis
- Binet & Field — Effectiveness in Context (2018, PDF)
- WARC — The Multiplier Effect (2024)
- Campaign — Binet and Field Reveal Key Formulas for Brand-Building
- Marketing Week — Brand-Building Ads Boost Short-Term Sales
- The Drum — Binet and Field's B2B Marketing Research (2019)
- Krasnikov & Jayachandran — The Relative Impact of Marketing Capabilities on Firm Performance, Journal of Marketing (2008)
