What Portion of Your Paid Media Spend Should Go to Awareness?

What Portion of Your Paid Media Spend Should Go to Awareness?

Marketers frequently struggle with how to divide their paid media budget across upper- and lower-funnel initiatives. Upper-funnel marketing focuses on raising awareness and interest among potential customers, whereas lower-funnel initiatives aim to capture existing demand and urge users to take action, such as purchasing or signing up.

To achieve the correct balance between these stages, marketers must comprehend concepts such as incrementality and long-term brand growth. It is critical to create a balance between initiatives that yield immediate results and those that generate demand in the future.

The Importance of Upper Funnel Investment

In paid advertising, marketers are frequently tempted to devote the majority of their investment to initiatives that yield immediate and measurable results. This method appears rational, particularly when marketing teams are operating under tight deadlines and forecasts that favor short-term revenue. According to research, lowering brand awareness efforts in order to save money can have a negative long-term impact. According to a Boston Consulting Group study, companies that cut back on brand promotion had to spend much more to regain market dominance. In reality, businesses frequently had to pay approximately $1.85 more for every $1 saved by reducing branding efforts.

This highlights how short-term marketing savings can lead to higher costs in the future. Beyond financial efficiency, neglecting brand-building efforts can also slow overall growth. The same BCG study revealed that companies that spent the least on brand marketing experienced sales growth rates that were about 13% lower than those that invested heavily in branding. Additionally, these companies struggled to convert awareness into purchases as effectively as stronger brand investors.

These data demonstrate that upper-funnel efforts are more than just optional marketing activities. Instead, they directly influence revenue growth, market share, and long-term corporate success. Upper-funnel marketing focuses on introducing new customers to your brand and products or services. For example, social networks like Meta and Pinterest frequently reach entirely new audiences via broad targeting, interest-based groupings, or lookalike audiences, while ignoring current consumers. Similarly, platforms such as YouTube or display networks can target affinity audiences or in-market individuals who have expressed interest but have not yet interacted with the brand.

The primary focus of this topic is on sponsored search and paid social advertising, which are supported by display advertising on platforms such as Google and Microsoft. Other channels, such as programmatic advertising, television, connected TV, and public relations, can also help with upper-funnel marketing, but they are beyond the focus of this article.

The goal here is to gain a better understanding of how organizations may successfully allocate resources to upper-funnel activities through search and social advertising platforms.

Balancing Short-Term Performance and Long-Term Brand Building

The appropriate budget distribution for upper and lower funnel promotions varies for every organization, but various research-based models provide useful guidance. Les Binet and Peter Field, marketing researchers, pioneered one of the most well-known methodologies. Their research suggests that businesses often benefit from a roughly 60/40 balance between brand building and activation marketing. According to this model, 60% of the advertising budget should focus on long-term brand awareness, while the remaining 40% should focus on direct performance marketing. Although the 60/40 rule is not a hard and fast rule, it underlines that if businesses wish to expand sustainably, a significant portion of their marketing budget should be spent on increasing brand awareness.

The 70-20-10 model is another popular paradigm among marketers. In this structure, 70% of the marketing budget is distributed to proven channels that consistently produce results, 20% to emerging or new channels, and 10% to experimentation. Upper-funnel marketing usually falls within the 20% and 10% categories when firms experiment with new consumers and novel campaign techniques. The 60-30-10 funnel allocation model is a campaign-focused method that is commonly employed in paid social advertising. In this example, typically 60% of the budget is allocated to prospecting and awareness marketing, 30% to retargeting or mid-funnel engagement, and the remaining 10% to conversion-focused campaigns that target users who are near to making a purchase. This structure helps to keep a steady flow of new potential clients entering the marketing funnel.

What Does Upper-Funnel in Paid Search and Paid Social Look Like?

Understanding how upper-funnel marketing operates across channels aids in the translation of budget allocation decisions into effective tactics. Each paid media channel contributes significantly to the marketing funnel, from awareness to conversions.

Paid Search (Google & Microsoft Ads)

Paid search is usually classified as a mid- or lower-funnel channel because it targets consumers who are actively looking for items or services. When someone enters a search query, it usually indicates an intent to buy or learn more about a specific solution. Advertisers frequently structure campaigns on brand and non-brand keywords. Brand campaigns target searches that include the company's name, which helps to safeguard brand visibility and messaging control. Non-brand marketing targets product-related searches, where customers may be unfamiliar with the brand but are looking for solutions.

Display (Google & Microsoft Ads)

Display advertising networks can be useful in upper-funnel tactics since they allow marketers to reach big audiences across millions of websites and mobile apps. The Google Display Network alone includes over 35 million websites, apps, and platforms, including Gmail and YouTube.

This extensive reach allows advertisers to deliver visually engaging ads through contextual targeting, affinity audiences, or in-market segments. Upper-funnel display campaigns often use image banners, lifestyle visuals, or short video formats to introduce a brand and spark interest among new users.

Responsive display advertising can automatically combine different headlines, images, and descriptions to test creative variations and target viewers more effectively. Although display advertisements may not often receive the majority of the budget, they are an important supporting channel for prospecting and brand awareness. Consumer products, travel, and SaaS companies frequently employ display advertising to reach new consumers and enhance website traffic.

Key Takeaways

Deciding how much of a paid media budget should be allocated to upper-funnel campaigns is an important strategic decision. Research consistently shows that brand awareness and prospecting deserve a meaningful share of marketing investment, even though many companies currently spend less on these activities than recommended.

The actual percentage will vary depending on corporate goals, industry conditions, and the stage of brand development. Companies should, however, ensure that they invest enough in awareness efforts to introduce new audiences to their brand continuously. While focusing significantly on short-term performance, marketing may enhance immediate efficiency, but it can eventually limit growth and make attracting clients more expensive in the long run.

Successful marketing plans often include efforts aimed at increasing brand awareness, engaging new audiences, and creating demand, even if those initiatives may not result in immediate conversions. Whether it involves a YouTube video campaign reaching millions of viewers, TikTok advertisements leveraging popular trends, or display campaigns that educate potential customers about a problem your product solves, these efforts help fill the marketing funnel with interested prospects