Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / Why CMOs Are Pulling Budgets from Brand Awareness
Transcript
- Lucas: So here's a number I keep hearing in marketing leadership circles this quarter: nearly half of CMOs at mid-market companies say they plan to reduce brand awareness spending by at least 20 percent before the end of the year. Luna: That's a big swing. Brand awareness has been the sacred cow of marketing for decades. What's driving it? Lucas: Two things. First, CEO pressure for measurable ROI — brand awareness is notoriously hard to tie to revenue. Second, the rise of performance channels that can prove their worth, like retail media networks and search. So CMOs are asking: why spend on a billboard when I can show you exactly how many conversions a Google Ads campaign drove? Luna: Right, but isn't that a false choice? You need brand awareness to fill the top of the funnel. Lucas: That's the classic argument, and it's not wrong — in theory. But let's look at a real example. I spoke with the CMO of a B2B SaaS company we'll call CloudBridge — about 200 employees, selling project management software to mid-market firms. In 2024, they spent about 40 percent of their roughly $8 million marketing budget on brand awareness: TV spots on business news channels, some outdoor in tech hubs, a podcast sponsorship. Luna: Sounds like a pretty standard mix. Lucas: Standard, yes. But they couldn't attribute more than about 5 percent of their leads to those channels. So in early 2025, the CEO told the CMO: either prove the ROI or we redirect the money. By the end of last year, the CMO had cut brand awareness to 15 percent of the budget and poured the rest into search, LinkedIn, and retail media networks — including Amazon Business ads. Luna: And the result? Lucas: According to the CMO, qualified leads increased 40 percent year-over-year, and cost per lead dropped about 30 percent. Now, caveat: some of that is just better targeting. But the CEO is happy, and the CMO told me she doesn't see herself going back. Luna: Forty percent is hard to argue with. But I wonder: in two years, if they starve the brand, will they start seeing a decline in inbound interest from people who never clicked an ad? Lucas: That's the fear, and it's a legitimate one. There's research from the Ehrenberg-Bass Institute — I'm citing from memory — suggesting that brands that cut awareness spending see sales erosion after about 18 months. But here's the twist: CloudBridge didn't cut awareness entirely. They just shifted to more targeted forms. Instead of a TV spot that reaches millions, they're sponsoring niche industry newsletters and running ads in trade publications their buyers actually read. So it's not zero brand — it's precision brand. Luna: Precision brand — I like that. So the trend isn't 'brand is dead,' it's 'imprecise brand is dead.' Lucas: Exactly. And this is playing out across industries. I've seen data from Gartner's CMO spend survey — from late 2025 — showing that the average share of budget allocated to brand building dropped from 31 percent in 2023 to 24 percent in 2025. Meanwhile, performance marketing went from 45 percent to 52 percent. The gap is widening. Luna: Those numbers line up with what I'm hearing from agency friends. But is there a risk that CMOs are overcorrecting? I mean, the pendulum swings both ways. Lucas: Absolutely. And some of the smartest CMOs I know are trying to have it both ways. They're using performance channels to fund brand. Take a consumer brand — say, a direct to consumer skincare company. They might run a heavy Meta ads campaign to drive a launch, but they also invest in a small, high-quality content series on YouTube that builds long-term equity. The performance money pays for the brand play. Luna: So the brand budget becomes almost like an R&D expense for future demand. Lucas: That's one way to frame it. And the measurement is getting better. There are now tools that use econometric modeling — basically, multi-touch attribution on steroids — to estimate the halo effect of brand ads on performance campaigns. CloudBridge actually started using one, and they found that their remaining brand spend was driving about 12 percent of their search clicks indirectly — people who saw a podcast ad and later Googled the company name. Luna: So they could quantify the halo. That changes the conversation with the CEO. Lucas: It does. But here's the thing: those models are only as good as the data you feed them. And many companies still don't have clean enough data to trust them. So the CMO who can show a credible halo number is going to have an easier time defending brand spend. The one who can't is going to keep getting squeezed. Luna: I think that's the real story here. It's not that brand awareness doesn't work — it's that CMOs need to prove it works, and many can't. Lucas: Right. And the ones who can are the ones who started investing in attribution infrastructure two or three years ago. If you're still relying on last-click attribution in 2026, you're going to see your budget slashed because last-click always favors the bottom of the funnel. Luna: So what's your advice for a CMO who wants to shift toward this precision brand model but doesn't have the data chops? Lucas: Start small. Pick one brand channel — say, a podcast sponsorship or a trade publication — and run a controlled test. Use a unique promo code, a dedicated landing page, and survey new customers on how they heard about you. Even a basic approach like that can give you a directional sense. Then build from there. Luna: And be honest with the CEO about the uncertainty. Better to say 'we think this drove about 15 percent more search traffic, but we're still refining the model' than to pretend you know exactly. Lucas: Exactly. The worst thing a CMO can do is claim certainty they don't have. If a CEO smells BS, the trust is gone. And then the budget really does get cut. Luna: Yeah, and I think that's actually a broader leadership lesson. Marketing is part art, part science, and the science part is getting more demanding. Lucas: If this conversation has given you a new way to think about your own marketing budget — or a framework to bring to your next meeting — that's exactly what we're here for. And the way we keep these conversations ad-free and independent is through listener support. If you found value, you can buy us a coffee — just go to buy me a coffee dot com slash fexingo. It's a simple way to keep the show going without any sponsor influence. Luna: Yeah, it honestly makes a difference. Even a small contribution helps us stay focused on what matters: giving you actionable insights, not pitches. Lucas: Back to the trend — I mentioned that Gartner data showing the shift. One thing that surprised me was that the biggest cuts weren't in TV or outdoor, but in digital display. That's the channel that got hammered the most, because it's often the hardest to attribute and the most prone to ad fraud. Luna: That makes sense. Digital display has been the 'spray and pray' of the online world for a while. Lucas: Right. And in its place, we're seeing more investment in what I'd call 'owned brand channels' — email newsletters, content series, community events. Things where you control the audience and the measurement. The CloudBridge CMO, for example, launched a weekly newsletter that now has 15,000 subscribers — and they can track exactly how many of those subscribers convert to trials. That's brand building with a direct line to revenue. Luna: So the future of brand might be less about reach and more about relationship. Lucas: I think that's exactly right. And that's a much more sustainable model, because you're not renting attention from a platform — you're earning it. Which, in a world where digital detox is a growing trend, might be the smartest long-term bet. Luna: Great point. So as we wrap — what's the one takeaway you want listeners to hold onto? Lucas: Don't kill brand awareness. Just make it measurable. Find the channels where you can prove a link to business outcomes, even if it's indirect. And if you can't prove it, test until you can — or be ready to explain why you're spending on faith. Luna: Faith-based budgeting is a tough sell to any CFO in 2026. Lucas: It is. And the CMOs who treat brand like a science — while still respecting the art — are the ones who will keep their budgets intact.