Marketing leaders today face a paradox. On one hand, CMOs are under intense pressure to “do more with less.” In fact, 71% of marketing chiefs feel they lack sufficient budget to execute their strategy fully. On the other hand, recent surveys show budgets averaging around 9–10% of company revenue, up from pandemic lows (though still shy of pre-2020 levels). The challenge isn’t simply how much to spend, but how to spend it wisely, particularly on brand advertising, which many firms under-invest in.

Research indicates that companies allocating a higher share of their marketing to brand-building see significantly greater long-term ROI (nearly double over a five-year horizon, according to one survey). Yet most brands still devote the bulk of their budgets to short-term performance marketing, chasing immediate conversions. This disconnect, where budgets are over-optimized for instant returns at the expense of brand equity, often yields a quick sales uptick followed by stagnation. Getting the brand advertising budget right is crucial for enduring growth.

Why Brand Advertising Deserves a Bigger Share of the Budget

Leading organizations don’t view marketing expenses as costs to trim first, but as investments in long-term brand equity. For example, the Marketing Accountability Standards Board (MASB) has emphasized linking marketing spend to financial outcomes, such as shareholder value, encouraging firms to treat brand spend as an asset that drives enterprise value. In practice, strong brands yield tangible financial advantages, such as higher customer loyalty, price premiums, and greater resilience in volatile markets – all of which boost profitability.

On the flip side, organizations that neglect brand-building and focus only on short-term performance often experience diminishing returns. It’s common to see a spike in conversions from heavy promotion or discounts, only to hit a plateau because consumers haven’t formed any lasting affinity. This pattern erodes long-term profitability and can even increase costs (as customer acquisition gets pricier without brand pull). As one industry blog put it, performance marketing without brand support is like “ROI on a treadmill – moving fast, but not going anywhere long term.” 

The 60/40 Rule: Balancing Brand and Performance

What is the right balance? The IPA’s landmark studies recommend an optimal split of about 60% of your ad budget on brand-building (long-term, emotion-led campaigns) and 40% on activation (short-term, sales-driven campaigns). This 60/40 rule is a global benchmark because it maximizes both reach and resonance over time. Brand campaigns create awareness and affinity (feeding the top of the funnel), while activation campaigns convert that awareness into action at the bottom of the funnel. If you tip too far toward activation, you might see a near-term lift, but at the cost of brand health. 

Real-World Proof: Brands That Bet Big on Brand Advertising

What does this balance look like in practice? Two well-known examples illustrate how reallocating budget toward brand advertising can transform business outcomes.

Airbnb’s Brand Pivot

Airbnb famously decided to scale back its performance marketing (like search ads) and double down on brand advertising and storytelling. In 2021, during the pandemic, the company cut its paid search and other performance spend by hundreds of millions of dollars while investing in brand campaigns and PR. Traffic and bookings recovered to record levels, jumping 24% year over year, despite the spend reduction, and the “brand-first” strategy proved “incredibly effective” according to Airbnb’s CFO. The company saw a surge in direct and organic traffic, improved customer retention, and by 2022, achieved its most profitable year ever. 

Lidl’s “Surprises” Campaign

European grocer Lidl provided another case study showcasing the payoff of brand investment. Long perceived as a bargain-basement discount chain, Lidl wanted to change consumer perceptions about its quality and value. It launched the “#LidlSurprises” campaign, a creative, multi-year brand campaign that highlighted the surprisingly high quality of Lidl’s products. Over about 4 years, Lidl significantly increased its brand spend and executed bold stunts (such as pop-up gourmet restaurants featuring Lidl food). The campaign is credited with adding £2.7 billion in incremental sales for Lidl, along with £398 million in net profit over the period, and Lidl’s market share in the UK climbed to record levels.  

Both Airbnb and Lidl illustrate a crucial lesson: allocating a meaningful portion of your budget to brand advertising is not optional for sustainable growth. In each case, leadership committed funds for longer-term brand efforts, and those investments yielded outsized returns that performance spend alone could not achieve.

How Much to Budget for Brand Advertising: Benchmarks and Guidelines

Now to the big question: “How much should we spend on brand advertising?” The answer will vary based on your company’s size, industry, and growth goal, but we can anchor it in data-driven benchmarks and a strategic framework.

Across industries, companies allocate roughly 7% to 12% of revenue to total marketing. Recent CMO surveys put the overall average around 10% of revenue, but with wide variation. B2C companies (especially consumer products) often spend on the higher end. For instance, B2C product firms report marketing budgets averaging 15% of revenue, whereas B2B companies may spend less (as low as 5–8% for some). Company size matters too; smaller and emerging businesses typically invest a larger portion of their revenue to fuel growth, while larger enterprises gain economies of scale. One study found that very small and “emerging mid-market” companies (>$10M but <$25M in revenue) might reinvest 20% or more of revenue in marketing, whereas established mid-market firms ($25M–$500M) average closer to 9%. Furthermore, digital-first and e-commerce companies tend to budget marketing aggressively (often 15–25% of revenue) because online customer acquisition is competitive and marketing-driven. 

Once you know your overall marketing budget (as a percentage of revenue), the next step is deciding how much of that goes to advertising, and within advertising, how much to brand vs. direct response. A useful rule-of-thumb framework is as follows:

• Assume roughly 60% of your marketing budget is spent on advertising (with the rest on headcount, marketing tech, content production, etc.). Industry data often shows that paid media accounts for 20-25% of total marketing resources, which, in turn, translates into around 5-6% of revenue in many cases. For example, if you spend 10% of revenue on marketing, that’s about 6% on actual advertising placements.

• Apply the 60/40 principle to that advertising spend. Allocate about 60% to brand-building campaigns and 40% to direct activation campaigns. This aligns with the IPA-endorsed mix for long-term effectiveness. 60% of ~6% of revenue means ~3-4% of revenue is going into brand advertising, though it may be higher depending on your business case.

A healthy target for brand advertising investment is 3–5% of your company’s annual revenue, following evidence-based guidelines for long-term growth. In fact, at Agility, we use 3% of annual revenue as the baseline minimum for precision brand advertising for mid-market clients. This number can be up to 10%+ of revenue for companies in high-growth modes or in digital-centric markets where brand is a key differentiator. Consider a few examples:

• A company doing $25 million in annual sales might allocate about $750,000 to brand advertising. That’s roughly $62k per month, which aligns with the 3% baseline.

• A larger mid-market firm with $100 million in sales might invest about $3 million/year (roughly $250k/month) in brand advertising. Notably, crossing the $100k-per-month threshold unlocks scale efficiencies and creative opportunities across channels.

• An enterprise with $500 million in revenue should be looking at annual brand advertising costs of $15 million or more. 

These figures illustrate a strategic approach: start with a percentage-of-revenue budgeting model anchored in industry benchmarks, then apportion that budget following the 60:40 brand:performance split. By doing so, you ensure that your brand gets a meaningful, predetermined share of resources rather than whatever is “left over” after sales campaigns. If you’re a smaller business with significant growth ambitions, aim for the higher end of the range (investing a larger chunk of revenue), as many startups and emerging brands have to spend 15–20% of revenue on marketing early on to establish a greater share of voice. The key is to view that spend as building an asset (brand equity) that makes growth more efficient.

Note that marketing budgets are not static. In fact, surveys indicate that marketing spend is expected to increase in the next year. CMOs project an 8.9% boost in overall marketing spending and a 11.9% increase in digital marketing spend over the next 12 months. 

Planning, Measuring, and Optimizing Your Brand Spend

Determining the dollar amount is only step one. Maximizing the impact of that brand advertising budget requires a smart plan and continuous optimization. Leading CMOs today use a combination of data-driven planning and agile measurement to ensure every brand dollar works hard.

The 60/40 + 10 Approach

A modern twist on the 60/40 rule is to reserve about 10% of your marketing budget, either carved from existing campaigns or added to your budget, for experimentation. This “experimental budget” is used to test emerging channels, new creative approaches, or innovative tactics that involve greater uncertainty. Think of it as R&D for marketing. By earmarking this experimentation budget, you ensure that fresh insights continually inform your core 60/40 allocation to brand and activation.

Tracking both leading and lagging metrics

One reason brand spending makes some CFOs uneasy is that its payoff isn’t immediately visible in sales. To bridge this, you should track leading indicators of brand impact alongside traditional performance metrics. These include measures like brand lift surveys, share of voice or share of search, social sentiment, direct traffic growth, and engagement rates. Share of search, in particular, is gaining traction as a proxy for brand health, since higher branded search volume correlates with market share.

Measuring incrementality

Whenever possible, use controlled experiments or analytics to measure the incremental impact of brand campaigns. Techniques like PSA studies or holdout geo tests can isolate the portion of sales uplift attributable to a brand vs. what would have happened anyway. This incremental lens provides hard evidence that your brand spend is driving growth beyond the status quo. The Marketing Accountability Standards Board specifically advocates tying brand metrics to financial outcomes, proving that marketing spend directly correlates with enterprise value when properly attributed to brand equity.

Agile reallocation

A benefit of closely monitoring performance is that you can reallocate budget in real time to maximize returns. Modern marketing teams use dashboards and machine learning-driven optimization tools to manage this shift dynamically.

By planning rigorously and measuring what matters, you turn your brand advertising spend into a strategic lever rather than a cost center. This also helps in conversations with the C-suite. When CMOs can demonstrate how brand investments are improving sentiment, consideration, and value (not just vanity metrics), they can secure the budget needed for sustained growth.

Turning Spend into Strategy: Precision in Brand Investment

At Agility, every marketing dollar should serve two goals: driving measurable and predictable results and building an enduring brand. That’s why our precision brand advertising approach blends data-driven, persona-centric targeting with emotionally resonant storytelling and creative excellence.

Precision brand advertising requires a committed investment over time. Brands that adopt a precision strategy see 250% more high-intent traffic in 4 months, 2.2x higher conversion rates in 6 months, and 60% more new buyers within 12 months. But that success requires continuous investment, as outlined previously.

Interested in learning what precision brand advertising can do for your business? Test precision brand advertising today.