A D2C company or an eCommerce brand need to focus on two important ways to drive growth, both in the short term and long term by focusing on performance marketing and brand building. In this article, we will cover the ideal performance and branding spit for a D2C (direct to consumer) or eCommerce business.
Performance and Branding Spends Split for New Businesses
Performance marketing is important for all businesses to drive sales. However, it is a must-have for a new business in order to survive. Brand Building, on the other hand, does not show any results immediately and would feel like a hole in the pocket as money would be spent without seeing any results. This is why new businesses which are bootstrapped or have limited funding, do not spend on brand marketing.
- Performance Spends: 90-100%
- Brand Building Spend: 0-10%
Read this article to understand various performance marketing channels and their ideal spends split.
When to Change the Split of Performance Marketing and Brands Spends for New Businesses
Once a business is launched and is focused on performance marketing, it will soon exhaust the number of people who would be interested to convert and buy its products. This way, the brand will never be able to grow and scaling these performance platforms will only increase the CAC (cost of acquiring a customer).
When a brand starts seeing a declining ROAS or an increased frequency (2+) on their existing campaigns, they must start investing in bringing more users into their ecosystem. This means that they should start investing in building the brand.
- Performance Spends: 50-60%
- Brand Building Spend: 40-50%
In case the business has funding and wants to do a brand blast, then the performance spends can be further reduced to 30-40%
Performance and Branding Spends Split for Established Brands
For brands which are established, their goodwill would directly bring them sales. Here it is important for them to remain on the top of the mind of the user and not get lost in the competitive market. Hence, most of their budget would be on Branding and little to none on performance.
- Performance Spends: 0-15%
- Branding Spends: 85-100%
To understand the ideal spends split between acquisition and retention, read this article
1 thought on “Ideal Performance vs Branding spends split for a D2C or eCommerce Brand ”