Elasticity
How sales react (in %) to a percentage change in ad spend. A higher value means the channel is more sensitive and responsive to budget changes.
Marketing Mix Optimizer (Beta)
Optimize your marketing budget across multiple channels to maximize your Return on Investment (ROI) with our advanced modeling tool.
1. Define Your Budget & Channels
| Channel | Current Spend | Metric | Value | AOV (for CPA) | Elasticity ? | Half-Life The time it takes for the impact of an advertisement to decay to half its original level. Models the carryover effect. |
Max Δ% Maximum budget change allowed (e.g., 200% means spend can double). Prevents unrealistic allocations. |
Actions |
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How to Use the Marketing Mix Optimizer
This strategic tool helps you reallocate your existing marketing budget to maximize overall revenue. It uses an economic model based on diminishing returns to find the optimal spend for each channel.
Step 1: Enter Your Current Mix
Start by entering your **Total Marketing Budget**. Then, in the table, list each of your marketing channels. For each one, provide the **Current Spend** and its performance, either as **ROAS** (Return On Ad Spend) or **CPA** (Cost Per Acquisition). If you use CPA, you must also provide the **AOV** (Average Order Value).
Step 2: Define Channel Characteristics
For a more accurate model, you can adjust the **Elasticity** and **Adstock Half-Life**. Elasticity measures how responsive a channel is to budget changes, while Half-Life models how long the effect of an ad lasts. If you're unsure, the default values are a great starting point.
Response Curve: Revenue = α * (Spend / (1 - λ))^β
Step 3: Optimize and Analyze
Click the **"Optimize Budget"** button. The algorithm will calculate the ideal budget distribution to maximize your total revenue without increasing your total spend. The results table and charts will show a side-by-side comparison of your current versus the optimized scenario.
FAQs
This coefficient reflects how sensitive your sales are to changes in ad spend. A value of 0.2 means a 1% increase in spend leads to a 0.2% increase in sales. Channels with higher elasticity are more responsive to budget changes.
It's a model for the decaying effect of advertising. A half-life of 2 weeks means that after 2 weeks, your ad spend from today will have half of its original impact on sales. It models the carryover effect of marketing.
Key Terms for this Calculator
Adstock Half-Life
The time (e.g., in weeks) it takes for the impact of an advertisement to decay to half of its original level. Models the long-term, carryover effect of marketing.
Response Curve
A mathematical function that models the relationship between ad spend and the resulting revenue, accounting for the law of diminishing returns.
Diminishing Returns
The economic principle stating that as you invest more in a channel, each additional dollar spent will generate progressively less additional revenue.
Optimized Budget
The recommended redistribution of your total budget across channels to achieve the maximum possible total revenue and ROI.
Marginal Revenue
The additional revenue generated by spending one more dollar in a specific channel. The optimizer works by moving budget from channels with low marginal revenue to those with high marginal revenue.