Lower funnel, performance marketing tactics are compelling because they are measurable. It is much easier for a business unit leader to set a goal for marketing qualified leads (MQLs) than it is to set one for brand affinity. Channels like branded paid search, LinkedIn ads, and retargeting offer predictable, slow streams of leads, and these leads are easily traced back to their sources using last-touch attribution.

However, the inherent measurability of these channels has led to overallocation towards performance marketing for B2C and B2B brands alike. Most of our clients—even in the B2C space—are hovering around an 80% performance / 20% brand mix in late 2024. In most cases, this is incorrect, and most CMOs know this deep down—but they can’t prove it.

This over-rotation towards lower-funnel marketing goes beyond just channel choice. Emotional messaging (sometimes called “System One”-type messaging, first described in Daniel Kahneman’s Thinking, Fast and Slow) drives brand equity—that ephemeral store of goodwill in consumers’ brains that takes years to build—and can last for decades. Functional messaging (System Two) acts quickly, typically reminding customers of a product with rational price-value proposition and a buying opportunity.

Most performance marketing is low on emotional content and high on functional content (think price discounts and features). This marketing is forgettable if not acted upon immediately, and acts very much like a sugar high for a brand, in many cases even pulling demand that would have been captured anyway forward, resulting in sales lags in future periods.

Even consumer brands struggle to spend enough on emotional, upper-funnel marketing. Both econometric modeling methods (marketing mix models) and testing (geographic or time-based holdouts) routinely understate its impact, leading to a frustrating scenario of knowing that the mix is too down-funnel focused, but being unable to prove it.

Research shows that focusing too much on lower-funnel, “System Two”-type tactics and messaging will lead to long-run market share declines, all things being equal. Les Binet and Peter Field’s seminal paper The Long and Short of It (2013, Institute of Practitioners in Advertising) showed extra share-of-voice (share-of-voice minus market share) is the driver of long-run share gains for consumer brands—but only when that advertising is emotional and not focused on price or functional benefits.

B2B companies have an even tougher challenge. Because of large transaction sizes, long sales cycles, and complex buyer-influencer ecosystems, proving the impact of more emotional, brand-centric marketing is daunting. Econometric approaches can work, but typically require five years of historical data (versus two years for consumer-focused brands): By the time brand’s impact can be quantified, everything has changed.

Tests are difficult to run, particularly for B2B companies focused on large enterprises. Creating A/B account segments is not only difficult, it is usually unacceptable to sales teams, who rely on commission for most of their compensation. The same goes for partners and retailers.

B2B CMOs aren’t off the hook, though. They still must develop and defend rational strategic approaches to funnel mix. Over a quarter century of work, we have developed a framework to organize funnel mix decisions. The framework has been validated with over 50 B2B brands—in other words, over many years, with different brands acting as natural experiments, B2B brands that tend to spend at the appropriate ratio of upper (emotional) / lower (rational) paid media tend to grow faster than those at the wrong level (usually too much lower-funnel spend.)

This heuristic relies on five simple factors: A B2B product / solution / brand’s complexity; competitive situation; distribution strategy; product need state; and product lifecycle. One B2B company might deploy ten or more of these heuristic plans for different products in the portfolio. Each element is a binary; you either assign one point, or zero, and then sum the points (a product / solution / brand can be anywhere from 0 to 5) to get to a score.

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The Rubric

For each bullet, add up the number of points accrued. The maximum is five, and the minimum is zero.

1. Transaction Complexity:

How many forms, sign-offs, and configuration steps are required to purchase the product? In other words, how much “buying friction” is involved? Add one point for complex transactions.

2. Competitive Landscape:

How many competitors are there, what is their market share, and what are they spending on marketing? A highly competitive market tends to be well-defined and attractive, whereas less competitive markets are more niche, or have high barriers to entry. New entrants to competitive markets generally have a very steep hill to climb when it comes to marketing investment. Add one point for a competitive market.

3. Distribution Strategy:

Is the product being sold directly, through third parties, or both? Companies selling their products directly have an information advantage: They know their customers, and can see them progress through the shopping process—whether via ecommerce or via sales reps entering information in a CRM system. Selling via partners trades distribution scale for information and margin. Add one point if any product is being sold via third parties.

4. Wanted vs. Needed:

Is the product a nice-to-have or a need-to-have? Chat software, AI tools, and many services are usually optional; ERP and CRM systems are not. Quality, price, and circumstances tend to trump emotional pleas for needed products and services. Add one point for wanted products.

5. Product Lifecycle Stage:

Is this a new category, or established? New categories require education and evangelism. There’s evidence that “First Mover Advantage” is a myth; the first movers soften up the market for later entrants who don’t need to spend as much on go-to-market. Add one point for a new category.

A five-point B2B product or service is one that requires the most upper-funnel investment; a zero-point product is one that requires the least. Even 0-point solutions still require upper-funnel investment, and 5-point solutions still need demand capture spend, but the mix between the two differs. While this is not a scientific prescription, the general rule-of-thumb on upper- vs. lower-funnel spend is as follows:

Of course, there are large variances around the correct level of spend; these are not meant to be precise numbers. A solution that is optimally at a 50 / 50 upper- vs. lower- split is still going to be OK at 40/60 or 60/40, most of the time—but will not be OK at 20 / 80 (or 80/20).

Implementation

At the end of 2022, a SaaS (software as a service) client implemented the above rubric for a fairly mature product doing around $500M of recurring revenue sold mainly through systems integrators. Their rubric ended up as:

Suggesting a 50 / 50 upper / lower funnel mix. Their 2022 mix was around 20 / 80 upper-funnel / performance marketing. To rebalance their mix, they reallocated branded paid search and LinkedIn spend to digital video and non-LinkedIn paid social media, moving around $10M of marketing budget. This was a big bet, but still left around $15M in performance media categories.

Measuring Success

B2B CMOs must be patient to allow major funnel shifts to fully take hold, due to long sales cycles and chunky deals. Even so, waiting years to measure change in annual market share is not feasible even for the most stoic executive. Instead, leading indicators can be combined into a composite brand health dashboard.

In this case, a dashboard tracking three-month moving averages in pre-registration web traffic, number of MQLs, and number of RFPs was created. In the six months after the shift was implemented, a composite “long-run health” metric made up of these three KPIs was tracking at 15% on a year-over-year basis. Eventually, as market share data becomes available, this ultimate indicator of success will be added to the dashboard. These results are typical for B2B CMOs right-mixing their funnels.

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