Your Ads Get More Expensive Every Year. You Keep Blaming the Algorithm.

Your cost per lead was $45 two years ago. Last year it crept to $62. This year you're staring at $78 and wondering what happened.

You've heard the explanations. More competition. Algorithm changes. Market maturity. Privacy regulations killing targeting. All of those are real. None of them explain why the same thing keeps happening regardless of platform, industry, or how much you optimise.

The actual explanation is simpler and more uncomfortable. You've built a marketing system that captures demand but never creates it. And every year, the pool of existing demand gets more expensive to fight over because everyone else is doing the same thing.

The Most Expensive Marketing Strategy Is the One That Never Compounds

Most Australian SMEs spend 100% of their marketing budget on activation. Google Ads. Facebook lead gen. Retargeting. Every dollar aimed at people who are already searching, already in-market, already ready to buy.

This works. It works really well, actually. Until it doesn't.

The problem isn't that performance marketing is broken. It's that performance marketing alone creates a ceiling you can't see until you hit it. WARC's Multiplier Effect research, published in partnership with Analytic Partners and System1, calls this the "doom loop": a cycle where brands optimise for short-term metrics, see rising costs, cut brand investment to fund more performance, which weakens brand equity, which makes performance more expensive, which triggers more cuts to brand.

Round and round. Costs up, returns down, and nobody can figure out why.

The data behind it is stark:

More than half of marketers (55%) now recognise short-termism as a major industry concern, up from 25% in 2022. The businesses blaming the algorithm are actually watching their own doom loop in action.

What 996 Marketing Campaigns Revealed About Growth

Les Binet and Peter Field didn't set out to prove anything controversial. They analysed 996 campaigns from the IPA Databank spanning several decades, and the data told a consistent story regardless of industry, budget, or channel.

Their framework, published as The Long and the Short of It, showed the optimal budget split sits at roughly 60% brand building, 40% activation. But "optimal" shifts depending on your situation. New brands entering a market need closer to 70% brand and 30% activation. Established businesses with strong recognition can run 50/50 or even 40/60.

Here's what most SMEs actually run: 0% brand, 100% activation.

That's not a rounding error. Most small businesses put every dollar into capturing demand that already exists: search ads for people already Googling, retargeting for people who already visited, lead gen forms for people already considering. None of it reaches the 95% of potential buyers who aren't in-market yet.

Mark Ritson calls the brand-versus-performance debate a false binary. His framework, "bothism," argues the question was never which one works. It's about understanding they do fundamentally different jobs:

• Brand building primes future buyers. It creates memory structures so when someone needs your service in six months, your name surfaces first.
• Activation converts current buyers. It captures the demand that brand building (yours or your competitors') already created.

The Science of Being Remembered

Byron Sharp's research at the Ehrenberg-Bass Institute puts hard numbers on why this matters. In a meta-analysis of over 100 brands, the correlation between Mental Market Share (how likely people are to think of your brand in buying situations) and actual sales market share was r = .83.

That's not a loose association. That's almost a direct relationship. The brands people think of first are the brands that win.

Sharp calls this mental availability, and his research across 130+ brands and 13 product categories shows it's the single biggest driver of brand growth. Not product quality. Not customer loyalty. Not even price. Whether people think of you when the need arises.

Here's the uncomfortable implication for SMEs spending exclusively on Google Ads: search ads are physical availability, not mental availability. They make you findable when someone already knows what they want. They do almost nothing to make someone think of you in the first place.

Rory Sutherland pushes this further. He argues that advertising works partly through what economists call costly signaling. By investing visibly in your brand, you communicate confidence and permanence. A business that shows up consistently across multiple channels sends a signal: we're established, we're here to stay, we're confident enough in our product to invest in telling you about it.

We've written before about why your marketing used to be expensive and that was the point. The same principle applies here. The cheapest, most forgettable marketing isn't the most efficient. It's the most wasteful, because it produces nothing that lasts beyond the click.

Why SMEs Are Most Vulnerable to the Doom Loop

Large brands stumble into the doom loop too, but they have accumulated decades of brand equity to burn through before the effects become visible. An SME has no such runway.

Consider a typical scenario. A tradesperson spends $3,000 per month on Google Ads. They're getting leads at $55 each. Life is good. But here's what's happening beneath the surface:

The instinct is to optimise harder. Tighter targeting. More negative keywords. Better ad copy. Lower bids on poor performers. All sensible tactics. All completely insufficient if the problem is that you're fishing in an overfished pond.

The businesses that seem to cruise past this ceiling aren't better at Google Ads. They're the ones who show up in the buyer's consideration set before the search ever happens. When a homeowner types "plumber Adelaide" into Google, two or three names are already in their head. If yours isn't one of them, you're paying a premium to compete against businesses that got there for free.

This connects to something we've explored about paying for customers who were already going to call. If you're only capturing demand others created, you're subsidising their brand building with your ad spend.

Your Performance Channels Are Already Brand Channels (You're Just Wasting Them)

Here's what makes this actionable rather than academic. You don't need a separate brand budget. Your Google Ads, Facebook Ads, and email marketing are already brand touchpoints. The question is whether they're building memory or burning through it.

Most SME ads are pure activation. "Call now. Get a quote. Limited spots." These convert the 5% who are ready. They leave zero impression on the 95% who aren't.

Making your performance channels also build brand means applying a few principles to what you're already running:

What This Means for Your Business

You don't need to halve your Google Ads budget and pour it into billboards. That's not what the research says.

What it does say is this: if 100% of your marketing is designed to produce a click today and none of it is designed to be remembered tomorrow, your costs will keep rising. The maths is relentless.

Start here:

• Audit your current split. Look at every dollar you spend. How much goes to capturing existing demand (search ads, retargeting, bottom-funnel lead gen)? How much goes to creating future demand (reach campaigns, content, brand awareness)? If the answer is 100/0, you've found the problem.

• Make one change to each campaign. Add a distinctive visual element to your ads. Use the same tagline across platforms. Write headlines that say something memorable rather than something merely optimisable. You're not adding budget. You're making the budget you already have do two jobs.

• Measure what your dashboard can't show you. Standard reporting shows clicks, leads, and CPL. None of that measures whether someone who saw your ad today will remember your name in six months. Start tracking branded search volume, direct traffic trends, and unprompted mentions. We've written before about why your marketing dashboard is lying to you. The metrics that matter most for long-term growth are the ones that don't fit neatly on a weekly report.

• Give it time. Brand building works on a different timescale than activation. The effects show up in 6-12 months, not 6-12 days. If you're only measuring weekly, you'll kill it before it starts working.

Everything else is just paying more each year for the same shrinking pool.

Further Reading

• The Multiplier Effect: A CMO's Guide to Brand Building in the Performance Era - WARC's landmark research on the +90% ROI lift from integrating brand and performance
• The Long and the Short of It: Binet & Field's Framework Explained - Comprehensive summary of the 996-campaign IPA study behind the 60/40 rule
• What is Bothism? Mark Ritson on the Power of "And" in Marketing - Ritson's framework for ending the brand vs performance false binary
• 60/40 Rule 2026: Brand vs Performance Budget Split - Updated analysis of Binet & Field's optimal allocation for different business stages
• Top 20 Customer Acquisition Cost Statistics 2026 - The data behind the 222% CAC increase over eight years