Budget Optimization Best Practices

Optimizing your marketing budget is key to maximizing return on investment (ROI). Cassandra’s Budget Allocator helps identify optimal spending levels while accounting for historical performance, saturation effects, and incremental returns.

Step 1: Understanding Budget Optimization in MMM

1. Avoid Over- or Under-Spending
   • Every marketing channel has a diminishing returns curve—spending beyond an optimal level results in lower efficiency.
   • Cassandra identifies saturation points to ensure spend is allocated efficiently.
2. Align Budgeting with Business Goals
   • Focus on ROI-driven optimization (maximizing revenue per dollar spent).
   • If brand awareness is a priority, consider balancing lower-funnel vs. upper-funnel investments.
3. Leverage Seasonality Insights
   • Allocate more budget to channels that historically perform best during peak seasons.
   • Reduce spend on channels that show inefficiency during off-peak periods.

Step 2: Using Cassandra’s Budget Allocator

1. Access the Budget Allocator
   • Navigate to Optimization > Budget Allocator in Cassandra.
   • Select a time period (e.g., next month or next quarter).
2. Define Optimization Parameters
   • Set your total available budget (e.g., $1M for next quarter).
   • Adjust constraints (e.g., minimum/maximum spend per channel).
   • Choose an optimization goal:
     • Maximize total revenue
     • Minimize cost per conversion (CPA)
     • Balance budget across brand and performance marketing
3. Run Optimization & Review Suggestions
   • Cassandra will provide optimal budget recommendations per channel.
   • Compare the suggested allocation vs. current spending patterns.
   • Adjust based on business priorities before finalizing.

Step 3: Adjusting for Saturation & Diminishing Returns

1. Identify Over-Invested Channels
   • Look for channels where ROI flattens despite increased spend.
   • Reduce investment in these channels and reallocate funds elsewhere.
2. Scale Under-Invested Channels
   • Some channels may have room for higher spend before reaching saturation.
   • Cassandra provides spend thresholds where ROI remains strong.
3. Incorporate Incrementality Testing Results
   • If previous experiments show strong incremental lift for a channel, prioritize investment there.
   • Adjust allocations based on validated conversion lift studies.

Step 4: Scenario Planning & Forecasting

1. Compare Multiple Budget Scenarios
   • Cassandra allows you to simulate different spend scenarios:
     • Increase spending on top-performing channels.
     • Shift budget from brand awareness to performance marketing.
     • Reduce investment in underperforming campaigns.
2. Forecast Expected Outcomes
   • The Budget Allocator provides estimated revenue, conversions, and ROAS under different budget strategies.
   • Use this data to validate decisions before implementation.
3. Iterate Monthly
   • Marketing dynamics change—review budget recommendations monthly.
   • Adjust based on new data, seasonality shifts, and experiment results.

Step 5: Continuous Optimization & Monitoring

1. Track Budget Performance
   • Compare planned vs. actual spend across campaigns.
   • Monitor if Cassandra’s predictions align with real-world outcomes.
2. Refine Allocations with Real-Time Data
   • Adjust budgets mid-quarter based on live campaign performance.
   • Keep an eye on rising CPMs and CPCs that may affect efficiency.
3. Re-Run the Budget Allocator Regularly
   • Optimize budget at least once per quarter.
   • Implement insights from incrementality experiments and calibration tests.

Summary & Next Steps

• Use Cassandra’s Budget Allocator to simulate spending scenarios.
• Identify diminishing returns and optimize spend across channels.
• Test multiple budget plans and forecast revenue impacts.
• Re-run optimization regularly to adjust for market dynamics.