Is the ‘60/40 brand-sales formula’ still relevant for B2B growth?

With concerns over recessionary pressures and economic uncertainty squeezing budgets, it’s tempting for B2B marketers to focus on pipeline and short-term sales at the expense of brand investment. And the dominance of digital media across sales cycles makes this imbalance seemingly easy to justify.

It’s far simpler and quicker to measure and demonstrate lead generation and sales metrics – rather than brand awareness and impact – in a digital world. So when it’s time to allocate marketing budgets, the ability to hit short-term KPIs can be a persuasive argument for focusing on sales-driven digital marketing.

This is reflected in LinkedIn’s 2023 B2B Technology Buyer and Marketer Survey – Brand to Buyer. The research revealed that, while brand marketing is ranked as one of the most impactful investments for achieving long-term growth, it’s only the tenth in the budget hierarchy. Number one is social media advertising.

And 33% of the research’s B2B marketer respondents cited budget holders’ scepticism about the ability of brand marketing to drive growth as a barrier to securing budget.

Why it’s short-sighted to focus too much on short-term sales

There’s clearly some confusion here. On the one hand, B2B marketers believe in the power of brand marketing to drive growth. On the other hand, they’re prioritising spend on short-term sales.

At CBC, we believe such short termism opens the door to potentially terminal decline. Especially when recession looms.

As we’ve highlighted in our Why turn up your brand activation during a downturn blog, the B2B Institute considers that the most fruitful balance over time is remarkably similar to the age-old 60/40 split – a budget allocation of 62% on brand-building and 38% on sales activation for most businesses.

The logic is clear. While sales activation generates short-term spikes, these quickly collapse once the campaign has ended. Brand activation builds longer-term associations and beliefs that increase the overall likelihood of customers preferring your brand over another. You strengthen your position to capitalise on the general return to growth once the market recovers.

And as the LinkedIn report says: “Marketing leaders need to be evangelists during this period, educating other senior colleagues on the long-term value of brand investments. Marketers need to resist the pressure to slash spending on activities that don’t have an immediate impact on pipeline.”

Building growth, not just sales

Another survey, conducted by Boston Consultancy Group (BCG) and Google, found that companies that are more mature in terms of brand marketing generate a higher Return on Marketing Investment on those efforts. It also revealed that strong brand marketing capabilities actually reinforce performance marketing, leading to better engagement overall.

Among respondents, 97% said that brand marketing plays an important role in creating awareness and consideration, and 95% said that brand marketing can help a company differentiate itself from competitors.

In fact, a lack of brand marketing actually makes short-term sales harder to achieve. With every new product or service offering, you’re having to start from ground zero.

As the digital marketing director of a large industrial company said in the BCG and Google research: “We have very minimal corporate investment in brand. This makes it hard for us to ramp up a campaign when we launch a new product, because we don’t have a brand to build on.”

Back to basics for building growth

For us at CBC, the approximate 60/40 brand-sales split is still relevant in today’s digital world. Our work with our global B2B clients continues to demonstrate that strong branding strengthens the effectiveness of demand-generation activities, lowers the cost of sales, commands a price premium and drives global growth.

If you’d like to discuss your situation and options in detail, call our Managing Partner Ralph Krøyer on +45 35 25 01 75 or drop him a line at rk@cbc.dk.