You cannot base your marketing budget on one universal percentage of revenue, but you can split it sensibly between brand and performance marketing. Research by Les Binet and Peter Field for the UK's Institute of Practitioners in Advertising (IPA) shows an average 60/40 rule pays off—a 60:40 split toward brand. Still, that is an average a small business must adapt to its own situation.

Here we explain why performance marketing alone gets pricier, what the 95/5 rule says, how to set a budget by business stage, and how to build a brand on a budget. We also show share of search, which measures brand strength free in 20 minutes a month.

Why performance advertising gets more expensive

Performance ads (in search, price comparison sites, or shopping campaigns) reach people already buying. They bring fast, measurable orders, so small businesses often put their whole budget there.

Yet only a limited number of people are searching for your service right now. When more companies bid for them in an auction, cost per click and per customer rises. Think of a pond with more and more anglers: there are no extra fish, they are just harder to catch.

An unknown brand also pays more. People prefer buying from a company they have heard of, while an unfamiliar name needs more clicks per order. Performance ads only harvest demand created by referrals, past experience, or a known brand.

Watch the numbers in your reports too. Ad platforms also claim credit for orders from people who searched your company name directly and would have bought anyway. We explain why reports overstate results in our article on ad conversion attribution. When performance ads stop growing, it helps more if people know you before they start searching.

Three signs warn you are hitting the performance ad ceiling:

• cost per order or lead rises even though you changed nothing in your campaigns,
• raising the budget brings very few extra orders,
• your ads already show on most relevant searches, leaving extra spend no one new to reach.

The 95/5 rule: most customers are not buying today

Professor John Dawes of the Ehrenberg-Bass Institute formulated the 95/5 rule in 2021 for LinkedIn. On his website, he writes that up to 95% of people or businesses are not currently in the market. Companies switch key suppliers every five years on average: about 20% are in the market in a year and roughly 5% in a quarter. The remaining 95% will buy months or years later. Dawes himself stresses this is a simplification, not an exact law.

Ads aimed at immediate purchase reach only that 5%. The other 95% need to remember you beforehand: a company may contact a well-known local accounting firm directly, before even searching for a new accountant.

According to Dawes, advertising builds memory links to your brand that fire when a buyer enters the market. Stay visible regularly and spread your budget across the whole year. We cover this in detail in our article on how emotions and the subconscious mind drive decisions.

What the 60/40 rule says

Under Binet and Field's 60/40 rule (IPA), putting 60% of your budget into brand and 40% into immediate sales activation pays off on average. Activation brings a quick sales spike that fades after the campaign. Brand building works slower through memory and emotion, lifting baseline sales and making future activation cheaper. Both approaches complement each other:

• Brand building: broad-reach video, market-wide social media, outdoor ads, radio, sponsorship, PR, and helpful content.
• Sales activation: search ads, shopping campaigns, product comparison sites, retargeting, discount promos, and emails to existing customers.

The line is blurry: video can sell right away, and search reminds people of your name. When planning, though, clarify whether you expect orders this week or recall next year.

In an October 2023 interview with MediaGuru, Binet himself noted that the 60:40 ratio is not dogma and varies by category, price tier, and brand maturity.

"The 60:40 rule is not a strictly exact iron rule that applies to all brands." — Les Binet, MediaGuru, 2023

For a small business, this sets a direction: putting everything into performance misses the value of a known brand. You need not shift 60% of your budget overnight. Start with a smaller, regular brand spend and watch branded searches and customer cost.

How to set your marketing budget

No universal percentage of revenue exists. Base your marketing budget on your goal and customer economics:

1. Set a goal. Decide how many new customers or jobs you need per year.
2. Calculate your cap per customer. Work from margin and repeat purchases—see our guide to customer acquisition cost.
3. Multiply. Target customers times acceptable cost gives your acquisition cap.
4. Add brand spend. Measure it by branded search growth and customer cost in later months, not instant sales.
5. Adjust quarterly. Compare plan with reality and move money where it returns the most.

Example: an accounting firm wants twenty new clients a year. A client stays four years and brings CZK 15,000 a year after costs, or CZK 60,000 total. Paying at most CZK 10,000 per client caps acquisition spend at CZK 200,000 a year, plus a smaller sum for local brand awareness.

Your business stage shifts the split too: a new firm needs customers, an established one leans more on brand. Rough guide:

Brand matters more for services bought every few years than for frequent price-driven purchases. Work from your own numbers. If you have none yet, set a first-quarter test budget you can afford to lose and track cost per lead and per order. In three months, you will have your own data.

Share of search: measuring your brand for free

Share of search is your brand's share of total brand searches in your category. Les Binet presented the metric for the IPA in October 2020: across three studied categories (cars, energy, and mobile phones), it tracked market share and led it—by up to a year for cars. It is fast, cheap, and needs no pricey survey.

A twenty-minute monthly routine:

1. Pick competitors. List your brand and three to five competitors.
2. Open Google Trends. In Google Trends, compare the names in Czechia over the past twelve months.
3. Add search volume. Check monthly search volumes for the names in Google Ads Keyword Planner (and Sklik's keyword tool).
4. Check Search Console. Track your site's impressions for queries containing your brand.
5. Calculate and log your share. Divide your brand's searches by the total for all brands. Watch the long-term trend.

A rising share signals future market share growth; a drop warns that competitors are catching up. In seasonal industries, compare the same months year over year.

How to build a brand on a budget

For a small business, regularity, distinctiveness, and trust work best. Staying visible all year on a small spend beats one big spring campaign. Do not change colors, fonts, photo style, or taglines on a whim—the longer you keep them, the easier people remember you.

Other low-cost tactics:

• Reviews. People check ratings first. Read more in our guide to Google reviews.
• Local PR and sponsorship. Back a local club, event, or regional newsletter.
• Reach video. A short work clip or tip on YouTube and social media reaches people not searching yet.
• Existing customer care. A follow-up email or service reminder keeps your name top of mind.
• Partner referrals. Cross-refer with businesses serving the same clients (carpenter and kitchen studio, accountant and lawyer).
• Helpful content. Answering common questions builds trust early. See our guide to content marketing.

For first steps, see key brand-building tasks, and for how buyers choose, read the purchase consideration process.

How to tell your brand is working

Your brand is working when people search you by name and you sell more easily without discounts. Within several months, you should see these signs:

• Branded search grows. Queries for your company rise in Search Console and Google Trends (plus Sklik), and your share of search climbs.
• Direct traffic rises. Visitors come straight to your site, not only via ads.
• Branded conversions cost less. Ads on your own name get cheaper.
• Discount pressure drops. Customers accept your price.
• Referrals increase. Leads arrive through word of mouth.

If you do not see these signs after six months, the culprit is usually low reach, inconsistent visuals, or an unclear message. We can help you split your marketing budget between brand and performance and set up tracking in our marketing campaigns from CZK 40,000 per month. For a no-obligation consultation, contact us.

Frequently asked questions