James Hurman on the Optimal Brand vs. Performance Marketing Spend

In a recent LinkedIn post, James Hurman delves into the crucial balance between brand marketing and performance marketing, asserting that a near 50/50 split is optimal for overall marketing ROI.

Hurman highlights foundational research that supports this view, noting that while the media landscape has transformed, the core principles of how markets and human decision-making operate remain constant.

“On average, brands should spend about half on performance marketing and half on brand marketing.”

The Foundation of the 50/50 Split

James Hurman points to extensive research, including the well-known work by Les Binet and Peter Field, as the bedrock for his argument. Their findings, derived from IPA data, initially suggested a 60% brand and 40% performance split, acknowledging variations based on category and other factors. However, Hurman emphasizes that this principle is not a standalone observation.

He reveals that two other significant studies corroborate the Binet and Field findings. A 1992 study by Peter Kim and a more recent 2024 analysis by Analytic Partners both indicate that brands allocating more than 50% of their budget to performance marketing experience substantially lower overall marketing ROI compared to those prioritizing brand building.

Enduring Principles in a Changing Landscape

A key theme in Hurman’s post is the resilience of fundamental marketing principles despite technological advancements. He argues that the digital revolution, encompassing the internet, social media, mobile technology, and artificial intelligence, has not altered the underlying dynamics of consumer behavior and market function.

“It doesn’t matter that the media landscape is unrecognisable from what it was in 1992. Marketing is about how markets work and how humans make decisions. Those things don’t change even when seismic new tech like the internet, social, mobile and AI come along.”

As Hurman explains, the market has a finite amount of current demand that can be converted. Over-investing in performance marketing, which focuses on capturing this immediate demand, leads to diminishing returns.

The Perils of Over-Capitalizing on Performance Marketing

Hurman’s analysis suggests a direct correlation between an overemphasis on performance marketing and reduced efficiency and profitability. When marketing efforts are disproportionately geared towards immediate conversions, brands risk exhausting existing demand without adequately building long-term brand equity.

“There is always only so much current demand to be converted in a market, and when you overcapitalise on it, you become less efficient and less profitable.”

This perspective challenges the common inclination for some marketers to prioritize direct response and short-term measurable results, often driven by the apparent tractability of performance channels. Hurman, drawing on empirical data, advocates for a more balanced approach that recognizes the synergistic relationship between brand building and performance, where brand investment fuels future performance.

Hurman shared a link to his full talk from the International Advertising Association’s Creativity Dimensions event in Bucharest for those seeking a deeper dive into the subject.