Allocation · Explain
Where should the next dollar go?
How should scarce marketing resources be allocated? Marginal rather than average returns, channel interaction, marketing mix modeling, and budget decisions made under real uncertainty.
The decision this discipline makes
Not how much to spend, but where the next dollar goes. This is what a model calibrated to an experiment would change about one weekly budget, holding the total fixed.
Worked examples
Full analyses in this discipline, carried from the business decision through to a recommendation and an explicit account of what the result does not establish.
Lessons
Marginal Return, Not Average Return
The channel with the best cost per acquisition is often the worst place to put the next dollar. Averages describe money already spent. Budgets are decisions about money that has not been spent yet.
Paid Search and SEO Are Not Independent
Pause branded paid search and most of those conversions come back through organic. The paid channel's cost per acquisition describes a transfer between two of your own channels, not a purchase of new demand.
What a Marketing Mix Model Can and Cannot Do
A mix model is a good allocation tool and a weak causal one. Where its identification would have to come from, why a Bayesian version does not create any, and what makes one worth acting on.
Calibrating an MMM to Experiments
Which experiment to run, how to carry its estimate into the model, and how hard to lean on it. Anchoring a channel's level drags its slope down with it, and the slope is what the media plan runs on.
Adstock, Saturation, and Honest Response Curves
Lagged effects and diminishing returns are where most mix models smuggle in their conclusions. How to tell a fitted curve from an identified one, and what variation would identify it.
The machinery behind this
Lessons say how to answer the question once. These are the standing systems that answer it on a schedule, each built around the unit it is allowed to withhold.