Acquisition modeling
Why the next dollar costs more
Every acquisition channel gets more expensive as spend rises. Budget plans that ignore this overspend on the channel that looks best today.
Ironstark1 min read
A channel's average cost per outcome describes the past. Budget decisions are about the next dollar, and the next dollar almost always costs more than the average.
Why costs rise with spend
At low spend, a campaign reaches the people most likely to respond. As spend grows, it has to reach people who are less likely to respond, and auctions get more competitive. The marginal cost of each additional outcome climbs even while the average still looks healthy.
How to plan for it
Estimate the marginal cost curve for each channel from past spend changes. When one channel's marginal cost passes another's, the next dollar belongs in the other channel, even if the first channel's average is still lower.
What to watch
Look for weeks where spend increased and compare the added outcomes to the added cost. That ratio is the closest thing to a marginal cost most teams have, and it is usually enough to make better budget calls.