A critical time for marketers

In today’s competitive landscape, marketers face a critical challenge: how to allocate their budgets effectively to drive both immediate sales and long-term brand equity. While it’s tempting to focus solely on performance marketing—tactics like search ads, social media campaigns, and retargeting that deliver quick, measurable results—neglecting brand building can undermine sustainable growth. Brand building, which includes activities like storytelling, emotional advertising, and creating cultural relevance, lays the foundation for customer loyalty and differentiation, ensuring your business stands out in a crowded market.

The key lies in finding the right balance. Pouring too much into performance marketing without investing in brand equity can lead to a “doom loop”—where short-term gains erode over time due to a lack of distinctiveness or trust. Conversely, overemphasising brand building without performance tactics risks missing out on capturing in-market buyers ready to convert. Research and industry insights suggest that most businesses thrive when they allocate a significant portion of their budget—often around 60% or more—to equity-led initiatives, depending on their starting point and category. For newer brands or those in highly competitive spaces, this figure might even climb to 70% or higher to establish a strong presence, whilst still maintaining enough performance investment to drive immediate action.

Take, for example, a growing e-commerce platform. By combining visually compelling brand campaigns that tell its unique story with targeted performance ads driving traffic to its site, the platform can attract new customers and retain them over time. This dual approach not only boosts short-term sales but also builds a recognisable identity that fosters long-term customer relationships. The synergy between these strategies creates what some call a “multiplier effect,” amplifying overall marketing ROI by ensuring both immediate and future success.

A Real-Life Success Story: Gousto’s Transformation

A compelling example of this balance in action comes from Gousto, a UK-based recipe box service. In 2017, Gousto found itself heavily reliant on performance marketing, with 100% of its ad spend focused on paid ads and 0% on brand building. At the time, 80% of its customer acquisition came from paid channels, while only 20% was organic, leaving the business vulnerable—if the ads stopped, sales would largely halt. Recognising signs like low brand awareness, limited share of voice, and a saturated performance budget in a competitive market, Gousto’s leadership, led by CMO Tom Wallis, saw the need for a shift.

The company developed a strategy to build a “demand pool” of future customers through brand investment, ultimately optimising its budget to a mix of 60% brand and 40% performance. This wasn’t about following a generic rule but was driven by their own data and insights. By 2020, the results were striking: 75% of Gousto’s customer acquisition became organic, with only 25% from paid ads. This shift demonstrated how brand building can create a robust reservoir of future customers and a more reliable revenue stream, proving that a strong brand isn’t a luxury—it’s a foundation for sustained cash flow.

So, how do you apply this to your business? Start by assessing your current market position and goals. If your brand is struggling for visibility, consider shifting more resources towards building awareness through creative, equity-focused campaigns. If you’re already well-known but need to boost conversions, fine-tune your performance marketing to target high-intent audiences effectively. Regularly review your spending to ensure it aligns with your brand’s needs, avoiding over-reliance on any single channel, like search, which can limit long-term growth if overused.

Ultimately, a balanced marketing budget isn’t just a strategy—it’s a necessity for thriving in today’s dynamic market. By investing thoughtfully in both brand building and performance marketing, you can create a powerful, sustainable growth engine that delivers results today and secures your brand’s future tomorrow.