Strategic vs Operational Marketing Spend

Marketing has two big jobs, but we're usually judged on only one. Our job in marketing splits into two parts: Building mental availability: making sure people know who we are and remember us when they’re ready to buy. This is often called brand marketing. Activating demand: making sure that people who are ready to buy choose us. This is typically performance or demand marketing. Here’s the challenge — most of our metrics (MQLs, pipeline, revenue) are tied to demand activation. But brand and demand aren’t separate – they work together. Still, they behave differently and aren’t always easy to measure in the same way. Brand is like staying in shape. You go to the gym, eat healthy, and take care of yourself. You don’t always see instant results, but over time, your body gets stronger. → In marketing terms: We want more people to know us, remember us, and think of us when they’re ready to buy. This is a long-term game. Demand activation is like showing up on race day. You’ve trained for months, and now it’s time to perform. If you’re fit, you’ll likely do well. → In marketing terms: When someone’s ready to buy, our goal is to be easy to find and hard to ignore. Most of the time, our execs care about the race day numbers – leads, opps, deals. That’s fair, because those drive revenue. But if we don’t also take care of our brand (our fitness), performance eventually suffers. So what do we do? We need to measure both. Performance marketing already has clear metrics. But brand often feels fuzzy — hard to prove it’s working. That’s why Share of Search (SoS) is useful. It’s a quantifiable way to track how much people are searching for our brand compared to competitors. It acts like a “brand scoreboard”, so we can see how campaigns are moving the needle, even if the revenue impact comes later. So: Use performance metrics for activation (leads, opps, CAC, etc.) Use Share of Search as the north star for brand Run both in parallel, and know that each supports the other Two different motions. Two different metrics. One goal: revenue growth.

CFO: We can't invest in brand because we'll see a short term drop in revenue and ROAS. CMO: That's wrong. CFO: You're telling me we won't see a drop in revenue? CMO: Did I stutter? CFO: I'm listening, but every time someone mentions "brand" I envision dollars lighting on fire CMO: When we track revenue from organic search and direct traffic sources, they have 2x the profit margin of ad clicks. And their lifetime value? Even better CFO: That's great, but we can't just manifest more organic traffic. We need reliable revenue CMO: Here's what most people miss - a big chunk of our "high-performing" ad spend isn't actually driving new revenue CFO: What do you mean? Our ROAS numbers look great CMO: That's the trap. Quick test: cut 50% of our highest ROAS campaigns for a week. Most times, total revenue barely moves CFO: How is that possible? CMO: We're paying to tap people on the shoulder right before they buy. Taking credit for purchases that would have happened anyway. Remember that organic post from last month? CFO: The one with all the shares? That was impressive CMO: Right. We won't put ad spend behind it because it doesn't drive immediate purchases. But that engagement shows it's building emotional connection - which drives those high-margin organic sales CFO: But if we shift budget to that type of content... CMO: Yes, our reported ROAS will drop. But here's the key - revenue won't. Instead, we'll shift our traffic mix toward those 2x-margin organic channels. That's how we break free from this endless discount cycle CFO: I've noticed that. Every month we need bigger promotions just to hit numbers CMO: Exactly. We're stuck in this hamster wheel fighting over the same shrinking pool of in-market buyers instead of creating new demand CFO: How can you be sure this shift won't hurt us? CMO: Because we'll test everything first. We'll find the 20% of our "high ROAS" spend that isn't driving incremental sales. That's what we'll redirect to amplifying our best organic content CFO: And other brands have done this successfully? CMO: Every brand that's grown profit margins while reducing promotional dependency has made this shift. The alternative? Keep pushing harder on discounts until there's nothing left CFO: That's literally keeping me up at night. What's the first step? CMO: Run increment tests on our highest ROAS campaigns. I've built the measurement framework. We identify non-incremental spend, then gradually shift it to our best organic content CFO: You had me at "2x margin." When do we start? CMO: Already started CFO: You sly dog CMO: Nobody puts Baby in a corner

Your CMO is fighting for the marketing budget. Here is why they are right. In your terms, not theirs. The logic looks clean: marketing is discretionary, revenue is under pressure, find the margin somewhere. So you cut 30%. Or 50%. Or all of it. What you just bought: a cleaner P&L this quarter. What you just sold: your presence in every buyer evaluation happening right now. Most of next year's pipeline is being decided this quarter — without you in it. Here is how B2B buying works. Research puts evaluation at roughly 60% complete before first vendor contact. By the time a prospect reaches out, they have already shortlisted two or three options. The vendors who were visible during the lean months made that list. The vendors who went dark did not. Budgets come back. The call goes to whoever stayed visible. 𝗠𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴 𝗶𝘀 𝗻𝗼𝘁 𝗮𝗻 𝗲𝘅𝗽𝗲𝗻𝘀𝗲 𝗶𝗻 𝘁𝗵𝗲 𝗶𝗻𝗰𝗼𝗺𝗲-𝘀𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 𝘀𝗲𝗻𝘀𝗲. It is an option premium on next year's growth. When you cut it entirely, you keep this quarter's margin. You also lose your seat at the table when buyers come back with budget. Maintain it at 70%: pay a small premium, keep the option open. A practical test: split your marketing spend into two buckets. 𝗕𝘂𝗰𝗸𝗲𝘁 𝗼𝗻𝗲: spend generating qualified pipeline at your target CPL. In a downturn, protect this — it is your most defensible line. 𝗕𝘂𝗰𝗸𝗲𝘁 𝘁𝘄𝗼: brand awareness spend. Do not eliminate it. New buyers still need to find you, and the ones you do not reach now become cold starts next year. Reduce Bucket two; shift the ratio toward Bucket one. But keep both running. 𝗧𝗵𝗲 𝗰𝗵𝗲𝗮𝗽𝗲𝘀𝘁 𝗴𝗿𝗼𝘄𝘁𝗵 𝗶𝘀 𝘁𝗵𝗲 𝗽𝗶𝗽𝗲𝗹𝗶𝗻𝗲 𝘆𝗼𝘂𝗿 𝗰𝗼𝗺𝗽𝗲𝘁𝗶𝘁𝗼𝗿𝘀 𝘀𝘁𝗼𝗽𝗽𝗲𝗱 𝗽𝗮𝘆𝗶𝗻𝗴 𝗳𝗼𝗿. That pipeline exists right now. Someone is going to capture it. What is on your cut list that would most benefit a competitor if you dropped it? #MarketingStrategy #B2BMarketing #CFO

Is marketing broken — or are we funding it incorrectly? From a board seat, marketing can start to look like a black hole. Trade shows produce conversations, not pipeline. Ad spend generates clicks, not customers. A redesigned website looks great — and changes nothing. Eventually, the question becomes unavoidable: Where should we actually allocate marketing capital in 2026? Here’s the uncomfortable truth: It’s very easy to spend money on marketing and get nothing durable in return. But marketing itself isn’t the problem. Misallocation is. Most marketing budgets are deployed at the tactical layer before the strategic layer is resolved. Tactics feel like progress: • Ads • Events • Websites • Campaigns They are visible, measurable, and easy to approve. But without clear positioning and messaging, those investments don’t compound. They simply convert budget into activity. From the founder or board perspective, this creates confusion: • Is the offer wrong? • Is the team underperforming? • Should we replace the agency, the tools, or the leader? From an operator’s perspective, the pattern is usually clear. Marketing doesn’t fail because teams aren’t working hard enough. It fails because capital is deployed before clarity exists. Positioning, messaging, and go-to-market clarity aren’t exciting line items. They don’t look like momentum. But they are what determine whether every downstream dollar produces return — or quietly disappears. As you plan 2026 investments, the risk isn’t under-spending on marketing. It’s funding execution before the system is sound. Clarity is one of the highest-return investments a company can make — even if it doesn’t look like one at first glance. That’s why, in my own work, I don’t start with tactics. Every engagement begins with a 30-day diagnostic — not to create a strategy deck, but to answer a few hard questions before capital is deployed: • What is actually breaking demand and GTM? • Where is budget being spent without leverage? • Which investments should be scaled — and which should stop? Only after those answers are clear do tactics make sense. Because execution without clarity doesn’t create growth. It just accelerates waste.

Real life conversation between the CFO and the marketing team, happening in every company today…💬 CFO: “We need to be more efficient with our marketing spend. Times are tough. Show me what’s working, what’s not, and what we can cut.” Head of Marketing: “Define working. Are we talking last-click attribution, pipeline acceleration, brand lift, or the time our CEO wanted to copy everything our competitor did?” CFO: “Enough with your smoke & mirrors. I’m talking cash. Dollars in. Dollars out. Revenue, like the good ol’ days.” Head of Marketing: “Ah yes, the mythical straight-line ROI. Right next to unicorns, ‘the nurture sequence’, and the frictionless funnel.” CFO: “Cute. But seriously. There’s a reason why marketers are the first to feel the squeeze when times are tough. If we’re spending $50K on paid social and $50K on trade shows, I want to know what performs better. Is that too much to ask?” Head of Marketing: “Then let’s build a comparison table. Apples to apples. Each marketing activity, its expected ROI, ramp time, risk level, and how fast we can pull the plug if it flops.” CFO: “I like tables. And apples. And plugs that can be pulled.” Head of Marketing: “Perfect. Let’s treat marketing like what it actually is, a portfolio of investments. Some are low-risk bonds (hello, branded search). Others are high-risk, high-reward bets (looking at you, Liquid Death wanna-be B2B companies).” CFO: “So you’re saying... we diversify? We optimize? And we monitor the portfolio like grown-ups?” Head of Marketing: “Jokes aside. I can’t believe we didn’t have this conversation sooner. Appreciate you reaching out.” Marketing shouldn’t be treated as one big, uniform function where every tactic or channel is expected to perform the same way, be measured the same way, or deliver the same results. It’s a diversified portfolio of bets, each with its own return profile, ramp time, and risk. Before it’s too late, get aligned with your finance team. Build the comparison chart and make smarter, sharper investments that everyone has more confidence in 🤘🏻

CMOs have been fighting for decades to get marketing recognized as an investment, not a cost center. And stories like the one Jeremy Bullmore shared below may be the best proof we have that we’re right. “Many years ago, the late Len Heath, then in his mid-forties, sold his interest in an advertising agency and took me out to lunch. Afterwards, he offered to drive me back to my office. I protested (it was only a 10-minute walk) but Len insisted. And when we got to his car, I understood why. It was a shining, stunning, elegant, arrogant, latest-model Aston Martin. ‘You may be interested to know why I bought this car,’ said Len. ‘I bought it because I saw an ad for it. But that’s not the interesting bit,’ said Len. ‘What’s interesting is that I saw that advertisement when I was 14.’” Thirty. Years. Earlier. Bullmore never tracked down that ad. But he didn’t need to. Because even without seeing it, we can imagine exactly what it was, and maybe more importantly, what it wasn’t. It wasn’t a price promotion. It wasn’t a limited-time offer. It wasn’t shouting “SALE ENDS SUNDAY!” Whatever it was, it built desire. The kind that lasts decades. That’s the difference between marketing as a cost and marketing as an investment. Tactical campaigns deliver results, then disappear. Sometimes, they even devalue your brand. But strategic brand building compounds. It protects you from competitors. It preserves desirability. It allows you to command a premium. And yes, sometimes it delivers returns 30 years later. Of course, the pressure for short-term results is real. (Quarterly earnings matter, I know!). But the truth is, you don’t have to choose between short-term sales and long-term brand value. Every campaign, every ad, email, social post or billboard, should do both, or at least contribute to both. It should drive immediate action AND add to your brand equity. David Ogilvy said it 60 years ago: “Every advertisement should be thought of as a contribution to the complex symbol which is the brand image.” Every. Single. One. Every other department budgets religiously for capital expenditure to protect tangible assets like machinery or buildings. For marketing, our most valuable asset is intangible: our brand. And that intangible asset deserves the same disciplined investment. The wild part? It doesn’t cost more to build brand value than to just push a product. It just takes consistency, conviction and a little artistry. 🎨 So next time someone questions your brand budget, tell them the Aston Martin story. And remind them: every dollar spent building your brand isn’t disappearing into thin air. It’s capital. And it’s compounding. 😎

Is your brand in a budget war between Brand marketing and Performance marketing? John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is I don't know which half”. What he was referring to has been the holy grail of marketing – marketing spends efficiency !! The chase for marketing spends efficiency continues to the day. And it also explains the rise of performance marketing as a tool in marketers’ arsenal. Performance marketing with its focus on running highly targeted marketing campaigns that deliver measurable ROI has drawn attention of brands inclined towards garnering better bang for the advertising buck. However, there is also a growing view that performance marketing and its focus on short-term sales is reducing focus on brand-building activities aimed at enhancing customer perceptions of the brand. The result – There is a constant budget war between ‘performance marketing’ & brand marketing’. Marketers often find themselves on a sticky wicket trying to strike a balance between the two approaches. It’s easier said than done. Common perception is that brand-building activities are long term and typically measured using metrics that cannot to be co-related to tangible financial outcomes. And performance marketing typically lacks measures that account for its impact on brand building, focusing only on short term results like sales, leads, and clicks. Can both the approaches work in tandem? In a thought-provoking piece in HBR, authors Jim Stengel, Cait Lamberton, and Ken Favaro talk about performance- accountable brand building and brand-accountable performance marketing. They make a point that both brand building and performance marketing should ideally be guided by a single North Star metric for brand equity that can be linked to both current and long-term financial metrics. Some food for thought which authors offer in this article: 1) Treating performance marketing and brand building as a short-term/long-term trade-off is dangerously wrong. Both performance marketing and brand building impact current revenue and long-term value. 2) Brand building is as financially measurable as performance marketing. Like any other business process, brand building can have its own KPIs that can be closely linked to financial performance with high periodicity. 3) Most common metrics uniformly understate the return on performance marketing that supports brand-equity growth, while overestimating the return on performance-marketing campaigns that, however unintentionally, erode brand equity. Both brand marketing & performance marketing approaches are ways for brands to reach out to their target audience. With right metrics, brands can increase return on spends on both. The bottom line though is that any marketing approach should work towards one common goal – building brand equity. What do you think? Link to the article in comments section. #Marketing #BrandMarketing #PerformanceMarketing