Brady's Marketing Tutorials and Advice

Note the top 3 graphs are in a world of limitless budget. The left most graph shows diminishing margin of returns as spend increases. The middle graph shows how incremental revenue hits zero over time (this is the first derivative of the left most graph). Finally, the right most graph shows the profit of marginal spend. With unlimited budget you want spend until your marginal profit hits zero. Note: all marketing channels and campaigns should be treated independently in this environment.

Note the bottom 3 graphs are in a world of a fixed budget, as such all marketing channels and campaigns are competing for the same budget. The left most graph shows to campaigns with different diminishing margin of return curves. The middle graph again shows how incremental hits zero over time, although at different points for each campaign. ... Read MoreLastly the right most graph compares the marginal profit curves. The width of this graph is my budget, and each marginal profit curve extends from it's respective access. The intersection of the curves shows the optimal budget allocation, ensuring the last dollar spend is getting the highest profit. In this instance the budget is used in full. However, if the intersection of the curves is below the x-axis, the distance between the two x-intercepts represents budget that should go unused. This concept can be extended to n-dimensions to properly allocate budget for a marketing portfolio that desires to be profit maximizing.