Sam Balsara backs 60:40 brand–performance split amid waning faith in brand-building

New Delhi: Advertising industry veteran and Madison World Chairman Sam Balsara has urged marketers to return to the basics of brand building and adopt a 60:40 ratio between branding and performance media spends, warning that the industry’s growing focus on short-term results is damaging long-term brand health and advertising returns.

Balsara said that while India’s economic future looks promising, marketers currently face serious trouble as consumption demand weakens, particularly in urban markets.

“Urban demand has been falling five quarters in a row, but clearly green shoots are visible in the rural economy,” Balsara said. “More and more marketers, either themselves or under pressure from their CEOs or investors, are allocating more and more of their advertising budgets to what we call performance media. Because of this, long-term ROI on advertising investment is sharply coming down,” he added. 

Branding versus performance

He stressed that marketers must strike a balance between long-term brand building and short-term sales objectives. Citing the work of marketing scientists Les Binet and Peter Field, Balsara said that 60% of ad budgets should go to branding, to recruit new users and expand markets, while 40% should be reserved for performance media, which helps close sales with those already in the funnel.

“We have seen that spending money on branding does drive performance KPIs. Search volumes increase with ads on TV, and more so during big shows like IPL. During IPL, sales on e-commerce platforms also increase substantially,” he said. 

He added that while performance media has a critical role to play in the early years of a D2C brand, its impact on ROI declines as brands grow. “As the brand scales up or has ambitions of becoming a large brand, performance will begin to seriously underdeliver on ROI. Branding is essential to scale the business,” he said.

Marketers drifting away from fundamentals

Balsara cautioned that many marketers have lost sight of the essence of branding, which is to create a unique identity, build trust, and establish an emotional connect with consumers.

“Branding involves shaping perceptions, building trust and differentiating from competitors to establish a lasting emotional connect with consumers,” he said. 

He added that the obsession with metrics and dashboards has led marketers to neglect storytelling, the most powerful tool of brand building. “Over the last 50 years, we have learned the hard way that stories build brands. In building brands, emotional appeal is twice as effective as rational appeal,” he noted.

Digital domination, emotional erosion

According to Balsara, the world will spend nearly a trillion dollars on advertising this year, and about 70% of that will be on digital media. However, he warned that the format of most digital advertising, short, skippable, and transient, is ill-suited for creating an emotional connection.

“Digital consumption habits seem to be characterised by what is called snacking or quick 

In-and-out. Because of this, advertisers schedule messages of just a few seconds. But the unfortunate truth is that longer emotional ads of at least 20 to 30 seconds, with a hint of a storyline, work better and build an emotional connect,” Blasara highlighted. 

Balsara urged digital publishers to alter their ad offerings to make digital platforms more conducive to brand building. “Digital publishers who rely on advertising revenue have to recognise this and seriously alter their offerings to ensure that digital can deliver TV-like impact on the consumer’s mind,” he said.

CTV: Bridging the gap between TV and digital

He highlighted Connected TV (CTV) as a promising bridge between digital precision and television-style brand impact. 

Citing a study by Comcast and Media Science in the US, Balsara said that TV ads produce 3.4 times better recall than mobile digital ads for first-time exposure, and around 30% higher purchase intent.

“The study also established that when a TV ad preceded a digital mobile ad, the results on unaided recall and purchase intent were better than if there were two digital exposures. It makes sense to launch a campaign first on TV before going to digital,” stated Balsara. 

He added that the study highlights how TV and CTV environments, with their large screens, lean-back viewing and co-viewing, help drive emotion and attention better than mobile devices. “To improve the creative impact of ads on digital, we must replicate some of the concepts that work on TV,” he said.

Back to the basics

Summing up, Balsara said the solution lies in returning to the fundamentals of branding. 

He commented, “Branding helps achieve long-term success and deliver sustainable profit. Branding works best in a TV-like environment, offered by linear TV and CTV, and is best achieved with an emotional message.” 

“To summarise, branding is essential to scale the business. Branding helps achieve long-term success and deliver sustainable profit. A 60:40 mix in favour of branding is found to be most optimal,” he concluded.