What is the perfect spend level for your brand?

Its Black Friday, I know you are online, might as well learn

“I am grinding. I am leaving the matrix. I am ELON Incarnate”- every ecom guru on black friday after twisting the spend knob up

Idea

How do you determine daily marketing budgets?

Most brands just move in increments, they see sales come in, they inch facebook up a bit, maybe they have a bad month, they cut budget and blame an agency.

For better or worse, brands use their gut, LY results, and whatever topline goals they have to back into marketing dollars.

This is trying to solve for an outcome, without considering the true goal or variables that go into it.

Lets explore “Perfect Spend”

Action

Step 1- establish a goal.
Maximizing revenue while maintaining a certain level of profit is different than maximizing total profit

There are paths to more true profit by doing less revenue.
And there are paths to more total profit by scaling revenue at a worse efficiency.

Find an actual goal.
Since Ridge is privately held, with no investors, we dont NEED to hit topline numbers.
We care about TRUE dollars in our bank profit.

ROAS, MER, ETC are useless metrics without the context of your final goal.

Ridge’s goal is true profit.

With that in mind, how do we determine a perfect spend level?

Step 2- understanding demand factors.
As special as your brand is, it exists inside of infinite overlapping systems.
You control 30% of your total success, the rest is industry and global currents.

What makes up demand?

• Macro economic conditions (30% of success)

• Category demand (20% of success)

• Time of purchase (20% of success)

• Brand awareness (10% of success)

• Product excellence (10% of success)

• Offer (10% of success)

Why is today an amazing sales day for Ridge?
Time of purchase is at MAX. It is literally the best time to buy.
We add fuel to that with a great offer.
We spend all year generating brand awareness and trying to make excellent product.

But if you are selling sunglasses, today isnt all that great.
People dont want sunglasses in winter. Bad time to buy.
Less demand for that good right now, even if everything else is pumping.

Understand how your category demand changes at different times of the year.

Step 3- Spend by channel

Next you need to understand that every channel will have a perfect spend level per day.
Meta has more data, more reach, better ad untis than say tik tok.

But-
You can still generate some amount of goal achieving spend on every channel.
Maybe on pinterest its $3 a day vs Meta’s $30,000, but every channel does have some perfect spend level.

Instead of just spending more on Meta at worse results, diversify to find the perfect spend level there.

Goal always comes first.

Step 4- Put in practice

The concept is easy.

• Establish goal

• Understand how macro environment can affect goal

• Spend until you hit goal

The spending piece does require practice.

You need to understand what makes you hit your goal.
This is done on an individual brand and product level.

For Ridge, we focus on channel specific new customer acquisition targets.
We use northbeam to look at 1 day click roas and then we look at the business as a blended MER.

We adjust targets based on macro factors, so that we can spend into higher conversion periods.

You have enough data between facebook business manager and GA to see what last click results were.

Then you can model it out to see how new CAC goes up or down seasonally and at different spend levels.

A media buyers role is:

• Understand when spend is hurting the brand

• Optimize your account to increase profitable spend

• Work with creative team to get assets that let you increase profitable spend

A CMO’s role is:

• Understand every channels profitable new CAC number

• Set schedule and timing so you can catch demand waves

• Plan offer and creative

• Find a blended spend that achieves perfection of goal

My CMO Connor does more than this, but he is the worlds best marketer.
The above is enough for a normal CMO.

Ridge’s POV

What does a CEO do?

Left to its own, hitting perfect spend will move you in the right direction.
But Ridge wants to do more.

Connor and the marketing teams role is to hit perfect spend and maximize our goal.
They work inside of the marketing world, with marketing tools.

But my role is to find ways to RAISE what perfect spend is.

They are finding the ceiling, I am trying to build the next floor.
Together we get to the top of the world.

New products, new events, new partnerships.
How do I increase the 30% of demand we control?

I look for new verticals to spend on- like new products.
I look for new partnerships to appeal to a new audience- like collabs.
I look for new ways to generate more peak demand.

Your marketing team isnt your product team.
They arent your licensing team.

They hit the goals you lay out with the tools they are given.
If you arent hitting goal, or want to do more, give them more tools.

Thats how you build best in class.

Recommendation of the week

We had our team get into a google hangouts and just do work while listening to lofi study beats.

It made remote work feel like a real office lol

Here is a cool lofi remix of some drake hits, enjoyable even for the drake haters.