From the field
The 95:5 rule
John Dawes's estimate, published with the Ehrenberg-Bass Institute and the LinkedIn B2B Institute, that only about 5% of B2B buyers are in the market in any given quarter, which makes advertising's main job building memory with the 95% who will buy later, not converting the few buying now; in any category the share follows from how often it is bought.
The intuitive strategy is to advertise only to people ready to buy, since everyone else is waste. Professor John Dawes of the Ehrenberg-Bass Institute published the correction in 2021 with the LinkedIn B2B Institute. Companies change suppliers such as their bank or law firm about once every five years, so roughly 20% of business buyers are in the market over a year and something like 5% in a quarter. The other 95% are not buying now. The "waste" is the market; the in-market 5% is the rounding error everyone fights over.
The rule was built for B2B, and Dawes says the 95% figure is not meant to be precise. The logic carries to any category with a long purchase cycle, and the share moves with the cycle: a service bought every two years has about 13% of its buyers in the market in a quarter, a kitchen renovated every twenty years closer to 1%.
The 95:5 rule
Buying cycle
In-market share
Search
Reach
Measure memory
Use it when
- A client wants to pause all advertising because "nobody converted this month"
- Explaining why reach campaigns exist to a conversion-minded owner
- Sizing the real audience for a service bought every few years
Do not use it when
- High-frequency purchase categories where the in-market share is large
- Emergency services, where memory matters less than being findable in the moment
The steps
- Estimate the buying cycle. A boiler lasts about 15 years; a haircut, 6 weeks. The in-market share for a quarter is roughly 3 months divided by the cycle in months: 5 years gives 5%, 15 years under 2%, and in anything bought more often than quarterly most buyers are already in the market.
- Split the strategy in two. Search captures the in-market 5%; reach channels build memory with the 95% for the day they enter the market.
- Advertise to the 95% with brand-linked memory, not offers. A discount means nothing to someone whose boiler works; a memorable name means everything the day it doesn't.
- Measure the 95% side by memory proxies. Branded search volume, direct traffic, and "how did you hear about us". Never this month's cost per lead.
Worked example
A kitchen renovation company in a city of 250,000 households, assuming a kitchen is renovated about once every 20 years. Illustrative numbers:
| Audience slice | Size | Status | Right message |
|---|---|---|---|
| Renovating in the next 90 days | ~3,000 | In-market | Offers, search ads |
| Renovating after that, within 5 years | ~60,000 | Out-of-market | Name + one memorable idea |
| Not renovating within 5 years | the other ~187,000 | Not buyers this cycle | None |
Share of buyers in the market in a given quarter
The numbers
| Group | % |
|---|---|
| Bought every year | 25% |
| Bought every 2 years | 12.5% |
| Bought every 5 yearsthe B2B case behind the 95:5 rule | 5% |
| Bought every 15 yearsa boiler | 1.7% |
| Bought every 20 yearsa kitchen, as in the example | 1.25% |
The search campaign fights perhaps a dozen competitors for 3,000 households. The memory campaign talks to 60,000 households that few competitors are addressing, on channels bought by the thousand impressions instead of by the click.
Why it works
Category entry happens on the buyer's schedule, not the advertiser's. Dawes's point follows from that: since most people an ad reaches will not buy for months or years, advertising has to work mainly by building and refreshing memory links to the brand, ready for the day the buyer enters the market. Romaniuk and Sharp's 2004 definition of brand salience, a brand's propensity to be noticed or come to mind in buying situations, is the idea Ehrenberg-Bass researchers now call mental availability. Dawes also notes that buyers rely largely on memory when they buy, and that when they do search they strongly prefer brands they already know. That is how the brand built with the 95% collects its return later: as cheap branded clicks and skipped comparison shopping.
See-Think-Do-Care gives the 95% and the 5% their own message and metric, and the holdout test checks whether the conversions on the search side were caused by the ads at all.
Sources
- Dawes, J. (2021). Advertising effectiveness and the 95-5 rule: most B2B buyers are not in the market right now. Ehrenberg-Bass Institute for Marketing Science and LinkedIn B2B Institute.
- LinkedIn B2B Institute. The 95-5 rule.
- Romaniuk, J., & Sharp, B. (2004). Conceptualizing and measuring brand salience. Marketing Theory, 4(4), 327-342.
Who this is for
The same method, read three ways.
01
Running it
Work out the in-market share from the purchase cycle before judging any campaign. Search gets the few in the market now; reach gets the rest, measured by branded search and "how did you hear about us", never by this month's cost per lead.
02
Teaching it
Dawes's arithmetic is the lesson: a five-year cycle means about 5% of buyers in a quarter. It comes from B2B, and it shows why advertising works mainly through memory, since most people who see an ad will not buy for years.
03
Deciding whether to pause
A month with no conversions from reach campaigns is what the arithmetic predicts, not evidence they failed. Before switching them off, look at branded search volume over the past year.