Aligning marketing investment with business maturity

“The bigger a brand’s market share, the more efficiently advertising works.” These wise words from Les Binet and Peter Field present the chicken-and-egg scenario: how can marketers acquire more leads if people aren’t familiar with the brand?

Throw modern-day challenges into the mix, and we have perhaps the toughest landscape yet. In a 2023 study by LinkedIn and Ipsos, 2,000 B2B leaders shared their biggest struggles:

Finding and acquiring new customers: 46%
Boosting customer engagement: 35%
Budget cuts: 28%

Despite these findings, CMOs remain optimistic. With budgets constrained and more discerning buyers, we need to be creative in our spending – finding the tricky balance between branding and lead generation.

What is the difference between branding and lead generation?

Brand-building is a long-term effort, helping companies establish trust through sustained value-adding. As Ty Heath, Director of Market Engagement at LinkedIn’s B2B Institute puts it, “Most of your growth potential lies in reaching people who won’t buy from you today, but who will buy from you in the future.”

This could be anything from SEO to design assets and social media. While traditionally harder to measure, brand-building has become a top priority for six in 10 B2B marketers.

Lead generation, or “brand activation”, focuses on short-term efforts. These marketing campaigns target customers deeper in the funnel. LinkedIn’s survey revealed that 36% of budgets will be focused on lead generation, compared to 30% on brand-building.

How do you split a media budget between brand and lead generation?

Optimism for marketing spend may be up across the board, but there are some outliers. Tech has seen a 26% decrease in budgets. Marketers need to be stringent not just with what they spend, but how.

Aligning marketing spend with brand maturity is a sure-fire strategy for ROI. It balances early-years growth tactics with brand-building exercises as the brand matures. As a general guideline, we can follow Binet and Field’s “60:40” rule.

What is the 60:40 rule in branding?

The 60:40 rule is a strategy for long-term brand awareness, wherein marketing teams invest 60% in building a brand and 40% in short-term activation. But this ratio shifts over time, for example:

Year one: when growth is a priority, we focus more on lead generation, around 65%.
Early growth: as the brand becomes established, we invest more in it to foster relationships with potential prospects – around 57%.
Mature brands: at this stage, marketers should focus on driving demand – around 62% brand-building.
Leader brands: these have the heaviest brand-building weighting at 72%, staying front of mind for those in the decision-making process.

Source: IPA Databank, 1998-2018 cases

The more established the brand, the more laser-focused the targeting. According to Gartner Group, just seven people will be involved in decision-making for firms of 100-500 people. It pays to be fluid, using omni-channel methods at every stage of the funnel.

What other factors determine the marketing budget?

Though a strong starting point, brand maturity is just one facet of an effective marketing strategy. We also need to consider:

Industry

Competition and macro factors like the pandemic vastly impact marketing spend. For example, 85% of tech leaders will focus on new business, compared to just 59% of educators. In 2022, finance increased budgets by 10.4%, compared to 8.4% in travel – homing in on campaign creation, brand strategy and marketing operations.

Pricing

In an economic downturn, customers are looking for transparent pricing or even new models. One is dynamic pricing, powered by IoT. In turn, this facilitates data-driven hyper-personalisation, targeting consumers based on their point in the customer journey.

The products themselves may influence marketing spend. Les Binet cites “premium brands” as an example, stating that brand-building should account for 70%.

Consumer behaviour

Our market research needs to consider buying habits. Consumers are increasingly seeking long-term value. They need assurance from helpful content marketing rather than salespeople alone.

Digital-first buying continues to prevail, with “self-serve” customers taking centre stage. In particular, B2B buyers are less interested in speaking to the sales team, putting more pressure on marketing teams to find the right MQLs (marketing qualified leads).

Brand size and budgets

Marketing objectives are shaped by the business goals as a whole – which is why we should allocate spend as a percentage, not a specific value. Marketing Week’s Mark Ritson suggests 10% of turnover should be spent on marketing to drive business growth.

Marketers should use data on customer personas and buying behaviour to decide how to weight this between brand-building and lead gen.

How to measure marketing effectiveness

The metrics for measuring lead gen return on investment are relatively simple. We might consider key performance indicators like cost per customer acquisition or lifetime value. But what about our brand-building KPIs?

Revenue growth

Do we have a SMART goal to reach X sales by a certain achievable time?

Business growth

After implementing these strategies, have we achieved our wider business goals, like new market or product development?

Share of voice

Share of voice methodology is traditionally associated with paid media. Today, it also applies to search engine optimization, social media and brand mentions. To calculate it, we simply divide our metrics by our competitors’ – for example, number of brand mentions divided by our competitor numbers.

While it’s harder to measure our brand-building marketing efforts, it’s more than worth it. Studying long-term attribution helps marketing teams present a business case to the board. We can also use this data to refine our messaging and future marketing plans.

Brand-building versus lead generation: the takeaways

Marketing alignment with business maturity will help all stakeholders. By making a fluid investment in brand and lead generation, we can target customers at every stage of the funnel. In turn, marketers can measure their digital marketing efforts relative to their business growth.

Of course, we cannot ignore factors like industry, pricing and business strategy. But a multi-pronged brand-building and lead gen approach helps us attract empowered, ready-to-buy customers.

For more information on demand generation or brand awareness, get in touch today.

Author

Kiri Craig, Managing Partner

Kiri has been working in marketing agencies for almost 20 years, and in that time she has worked across a range of B2B and B2C sectors, from large enterprise clients to SMEs.

For the last decade, Kiri has been focused solely on B2B marketing, and as Managing Partner of onebite, Kiri draws on this experience to feed into B2B demand generation strategies for our clients and prospects, and to oversee onebite’s delivery.

At onebite, she’s curated a team of B2B demand generation specialists from the best talent on the market, helping our tech and telco clients launch, refine and amplify their brands to generate long-term revenue growth. Kiri’s passion and drive to deliver exceptional work for our clients is evident to everyone who meets her.

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