May 18, 2023

Let's Just Spend More Across All Marketing Channels In June!

Ok, your social media manager took his/her lumps by recommending doubling spend in June.

That being said, there are cases where the Chief Marketing Officer takes lumps as well.

In this case, the CMO arbitrarily decides to spend 20% more across all channels in June. "We're capturing market share!" he gleefully proclaims. Meanwhile, somebody is running a Marketing Budget Experiment and knows what it costs to capture market share.

Click on the image for details ... they are interesting. Or read here for a summary.
  • Year 1 Profit = ($326,000).
  • Year 2 Profit = $81,000.
  • Year 3 Profit = $79,000.
  • Year 4 Profit = $70,000.
  • Year 5 Profit = $64,000.
  • Total Profit = ($33,000).

In other words, for this brand, capturing market share in June is a bad idea. This brand doesn't make up the investment over five years ... losing $326,000 and then coming up short in the years that follow.

It's important to have a tool like this, so that you can run scenarios and then test your way into the stuff that looks like it "could" work.

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