How much more can we spend?
Your CEO asks you to double marketing spend, but you have no idea what that will do to CPA... how do you forecast realistic goals?
Based on Experience
Vetted industry professionals, that have experience working with these companies and others, consulted in an advisory capacity to ensure the content of this course was realistic.
This is a work of fiction. Unless otherwise indicated, all the names, characters, businesses, places, events and incidents in this course are either the product of the author's imagination or used in a fictitious manner. Any resemblance to actual persons, living or dead, or actual events is purely coincidental.
How do you answer the question "How much more can we spend?" – learn how Diminishing Returns can help you find the answer!
If you double your marketing budget, will you get double the customers? You won't, because of the law of diminishing returns, which states that as you scale your spend, you should expect worse efficiency. Read More
|1. Whatever we're spending now... let's double it.||It's goal-setting time, and you need to be realistic. If you double your ads budget you won't double your sales, but how much of an uplift would you expect? What would that do to your ROI?||5|
|2. Plotting spend and sales over time||Graphs are easier to read than numbers, so let's start with a chart. If we plot spend and sales by day, do we see any patterns in performance on high spend days versus low spend days?||6|
|3. Do spend and conversions have a relationship?||We're reached the point where a little statistics is unavoidable. Is there a correlation between spend and conversions? Can we establish a linear relationship between the two?||9|
|4. The path to progress is rarely a straight line||Fast forward to a few weeks in the future – turns out our prediction was wrong. How do we transform the data to account for a non-linear relationship in the data, i..e diminishing returns.||9|
|5. Setting realistic goals by making the future happen||You can't always predict tomorrow with yesterday's data. Luckily you can make the future happen today with a controlled experiment, and use that data for your forecasts.||5|
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