The Magic Split Between Brand & Performance Spending Needs To End
Binet’s and Field’s The Long and the Short of it (2013) has become one of the most referred-to books in marketing nowadays, as it first urged brands to recognise the importance of investing in both short-term and long-term performance. In marketing science, this is referred to as Physical Availability, capturing existing buyers and measured by instant sales, and Mental Availability, building memories among potential category buyers, which cannot be measured instantly – but is still crucial for long-term growth and can be assessed by Mental Availability metrics, writes Neil Krikul marketing scientist, Ehrenberg-Bass Institute.
The book also provided an optimum balance between the two spends, famously known as the 60:40 split, however, the authors also acknowledged that this may vary by category and potentially other uncontrollable factors. In fact, the split was derived from the IPA (Institute of Practitioner in Advertising) database, containing case studies submitted for awards competition, therefore, it might not be representative.
Since then, there have been more publications circulated, especially on LinkedIn, about the magic split, which I will not name, but all of them were self-published and possibly did not go through an academic peer-review process.
Previously, I wrote an article comparing brand to athlete performance. In this instance, prescribing a magic budget split to every brand is like prescribing a new athlete an Olympic training program and expecting them to achieve the same elite performance.
Evidence-based Budgeting Approach to Prove Your Accountability
Advertisers have always leaned towards a simple budgeting approach, such as this magic split or advertising-sales ratio, rather than more evidence-based and sophisticated approaches, which they may find overwhelming or may lack access to data or training. But as often stated and repeatedly shown in science, a little information is better than none, and a knowledgeable guess is better than intuition.
Each budgeting approach has limitations, which is why the Ehrenberg-Bass Institute recommends combining multiple approaches for best outcomes. One of the approaches that has stood across time and remains common today among large and advanced advertisers is the objective and task approach (also referred to as zero-based budgeting), whereby advertisers first set objectives that they would like to achieve and determine activities and costs to achieve them.
Read the full article in B&T.