How I think about brand vs. demand spend (with some AI tips)

I get asked some version of this a lot: how much should we spend on brand versus demand? There's no universal split, but there is a way to reason toward the right one for your stage, and a few traps to watch out for.

1. Brand vs. demand is never an either-or question. It's a question of finding the right mix.

They work together. Short-term activations leverage brand value to drive sales. Long term brand building builds brand equity, and primes audiences for performance activation. Most brands start out with demand gen but at a certain point, want to become the top dog recalled/considered within their category.

To me this is tablestakes, which brings me to question 2...

2. Be honest about the stage of your business. Are you in the early years, middle years or mature years of building your brand?

Research from 6sense and studies by Benchmarkit and NielsenIQ indicate that most companies allocate 70% of their budget to demand gen and 25-30% to brand marketing. 6sense even goes so far to say they find this is true irrespective of whether an org is public, backed by private equity or venture funded.

I agree with their research, but I'd consider this a rule of thumb for early-ish stage businesses with established PMF (this ratio is not accurate for all stages of growth). I'd add to brand spend but subtract demand gen spend as I move through years of growth. For example, businesses in the middle years should consider spend closer to a 60-40 split and mature brands spend closer to a 50-50 split.

Important caveat: If you're pre-PMF but are interested in marketing, focus on organic channels. Invest in your video or website. Think about the things that you know you need to do that are free, like update your brand's LinkedIn. If your website is poorly written or has lackluster visual appeal — but you say you want to scale with advertising — you will almost certainly lose a lot of money. Monitor and report on direct/organic traffic and lead sources.

I know this sounds obvious, but it is SO tempting to advertise when you're just starting out. Of course there are exceptions (for example, there are new water brands every day that will need to ignore this) but bide your time.

3. Once you determine the breakdown that makes sense to you, do your (competitive) homework.

Look at other players in your space to understand what they're doing and how much they're spending. If your competitors are publicly traded companies — lucky you! Because you can look at public documents like 10-Ks to make some educated guesses on their total spend. This is also where having an agency partner can be a huge advantage because they'll have access to tools you'd likely never subscribe to in-house like Kantar, Nielsen etc. that can help with this.

You can (and should) use AI to do a version of this yourself. A rough method: identify the channels your competition invests in, estimate what those placements cost, and multiply. Sort the results into brand and demand-gen buckets to get a directional split.

I recommend this exercise not because I think you should copy what your competitors do, but because you need to understand what you're up against. Say you crunch the numbers and your competitors spend more on out-of-home and CTV than your entire annual budget. That is important to know! Now you can ask the better questions: which channels are they ignoring that you could own, or where could tighter targeting beat their reach? Or perhaps, is this the moment to go back to point 2 because you are simply too early for this level of brand spend?

One tip: After you have a year of data, run the analysis you did on your competitors on yourself (whatever process you used). Think of it as a quiz you already know the answers to. What did the analysis say about YOU? Did you receive an accurate number back for your total spend? For example, if your analysis gave you a much lower number as an estimate of your spend, assume your estimates for your competitors were much lower too and adjust.

These are just the first three considerations and points I'd make when thinking about brand vs demand spend. Up next: even more challenging questions, like how to even begin to think about measurement.