Finding the Optimal Balance Between Top-of-Funnel and Bottom-of-Funnel Tactics
By Bradley Keefer, CRO at Keen Decision Systems
If you’ve been to any industry event in the last year, you’ve probably heard the word outcomes in relation to ad investment and measurement. And it makes sense: in the current advertising landscape, the pressure to deliver on every dollar has never been higher. With so many channels and tactics available, it can be hard for advertisers to determine the most effective strategy to reach their revenue goals and maximize their budgets. This is especially true when it comes to balancing top and bottom of the funnel investments. Marketers need to determine whether they should focus more on awareness or conversions, and how this fits within their current business objectives.
It may seem counterintuitive for an industry focused on outcomes but while many marketers might think a balanced approach works most effectively, we’ve found that a strategy focused on the top-of-the-funnel actually makes sense for brands of all sizes. Below, we’ll look at the trends taking place among different sizes of brands and show what marketing mix makes the most sense to drive brand performance.
The Current Landscape
Analyzing advertising spending trends for 2024, we found that enterprise companies, brands that spend at least $500 million, are heavily investing in top-of-funnel tactics, with 61-79% of budgets allocated here. On the other hand, mid-market companies, which spend between $100 and $500 million in advertising, are more evenly split on their strategies, with 47% going to the top of the funnel and 53% going to the bottom of the funnel.
The data shows that the enterprise brands’ approach is most effective, as they achieve a higher marketing efficiency ratio compared to smaller and mid-size companies. Marketing efficiency ratios look at revenue compared to total spend, where enterprise brands saw ratios above 10, while smaller companies’ ratios were between 2.4 and 5.1. This shows that as companies grow in revenue, they generally achieve better marketing efficiency ratios. Additionally, this suggests the presence of economies of scale in marketing effectiveness.
As such, mid-market and smaller brands should consider taking a page out of the enterprise brand playbook and reallocate where they’re spending their dollars along the funnel so that they can better balance spending and revenue, allowing them to optimize their resources.
Ideally, they should target a marketing spend of 16% of revenue, but concentrate on reaching a media efficiency of 16.4 or higher, as this is the optimal balance point where companies begin to see significant scale efficiencies without overextending resources.
Building a Better Future
In 2025, we recommend mid-market and smaller brands gradually increasing their top-of-funnel allocations to realize a higher marketing efficiency ratio. They can achieve this by identifying their current split and then mapping out a quarterly plan to shift 3-5% more budget towards top-of-funnel activities while closely monitoring performance metrics. This ensures they can start optimizing their budgets gradually instead of doing it all at once, which risks backfiring and resulting in more losses.
For example, a CPG brand that has been heavily focused on trade media tactics like coupons can slowly shift budget to a social media campaign on Meta platforms. This would allow them to test the social media platform to see what works for them and adjust the campaign as needed. Additionally, it can help them determine whether they need to target different audiences or choose a different social platform altogether. Testing and retesting incrementally helps them identify the right mix without taking too many risks at the start.
Ultimately, they should adopt a media investment strategy that has 70% of their budget going towards top–of-funnel tactics and 30% towards bottom-funnel tactics.
Brands seem to be catching on, as our platform has seen a shift towards top-of-funnel tactics among mid-market brands. As more companies realize the value of this approach, we expect this shift to continue– and for brands to ultimately realize outcomes. It’s just not the way they thought they would.