### Hillstrom's Optimizer: How Search Impacts The Business

In my optimizer spreadsheet, I get to see how channels impact the business, both short-term and long-term. Here is my five-year forecast.

Pay attention to the Earnings Before Taxes Row:
• Year 0 = \$8.0 million.
• Year 1 = \$9.2 million.
• Year 2 = \$9.9 million.
• Year 3 = \$10.5 million.
• Year 4 = \$10.9 million.
• Year 5 = \$11.2 million.
• Year 1-5 Cumm = \$51.6 million.
• Year 5 Sales = \$124.6 million.
Let's try something fun. Let's double our Search budget for just year one ... for one year only. What happens to the business? Look at the simulated run below.

Pay attention to the Earnings Before Taxes Row:
• Year 0 = \$8.0 million.
• Year 1 = \$8.7 million.
• Year 2 = \$10.5 million.
• Year 3 = \$10.8 million.
• Year 4 = \$11.1 million.
• Year 5 = \$11.4 million.
• Year 1-5 Cumm = \$52.5 million.
• Year 5 Sales = \$125.4 million.
Did you see what happened there?

You give up a half-million dollars of profit next year, but you make an additional \$1.4 million in profit in years two through five.

What is the end result?

You make an investment in the short-term, you pay the price, and then you get a healthier business long-term.

There are all sorts of interesting tidbits here. Here's one:
• Year 1 Increase in Retained Buyers = About 5,000.
• Year 1 Increase in Reactivated Buyers = About 3,000.
• Year 1 Increase in New-To-File Buyers = About 13,000.
About 60% of Search benefit comes from New-To-File Buyers. Those customers pay the business back over time.

So here's the fun lesson you should take away from this post:
• You optimize the long-term health of your business by sub-optimizing the short-term health of your business.
• You optimize the short-term health of your business by sub-optimizing the long-term health of your business.
In other words, you can pick the kind of business you want to manage ... all you have to do is run your dynamics through Hillstrom's Optimizer (or create your own).

But you're running the simulations / scenarios so that you know what the right answer is for your business, right?

Right?

P.P.S.:  Or what about this gag ... Carl's Jr. using Twitter & attempted humor to be acquired by Amazon (click here). Try something!!!