Determining a budget split between upper and lower-funnel is a recurring topic in paid media.
Upper-funnel campaigns (typically awareness and interest) create future demand, while lower-funnel campaigns capture existing demand and are built to drive action.
Knowing where the sweet spot is with budget allocation is a skill, and requires a sound knowledge of incrementality and how to balance immediate efficiency with long-term demand creation.
In this post, I’m going to explore the data, strategies, and channel considerations to help you find an optimal mix.
The Importance Of Upper Funnel Investment
Within paid media, it’s very tempting to pour the majority of budget into the quickest wins that yield the highest returns. It makes sense on many levels, especially when teams are budgeting (and working to) strict forecasts and targets.
However, neglecting upper-funnel spend can hurt your long-term growth, with research showing that cutting brand awareness campaigns to save money or simply avoiding this type of activity can backfire.
For example, a BCG analysis found companies that slashed brand marketing saw significantly worse outcomes, having to regain their lost market share later, requiring $1.85 in spend for every $1 saved from cutting back.
In a roundabout way, suggesting that saving a dollar today on branding can (in some cases) cost nearly two dollars tomorrow.
And it’s not just efficiency; the growth impact of neglecting brand building can be detrimental, too.
In the same study from BCG, bottom-quartile brand spenders had sales growth rates 13% lower than top-quartile brand spenders, indicating brands that underinvest in awareness suffer from lower sales growth in the long term.
They also converted aware consumers to buyers at a lower rate (a 6% weaker conversion from awareness to purchase than top-brand spenders).
Studies like this prove that upper-funnel activity isn’t just a nice-to-have, or a place to use budget left over from lower-funnel spending; it directly influences revenue trajectory, market share, and even shareholder returns.
At this point, you’re probably thinking, “What do you mean by upper-funnel activity?” So let’s have a top-level run-through.
Upper-funnel campaigns plant the seeds by reaching new audiences and generating interest in audiences who may not yet be familiar with your brand.
Think Meta or Pinterest campaigns serving ads to new users as part of broad audiences, interest-based cohorts, or lookalike lists, all excluding your current customer base and/or users who have interacted with your brand.
Think YouTube or GDN campaigns serving ads to in-market, affinity, or custom audiences, again, all while excluding your current customer base.
For this post, we’re focusing specifically on paid search and paid social, with a supporting role from display advertising served through Google and Microsoft.
While programmatic, out-of-home, TV, connected TV, PR, and other channels can all be effective for…
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