Matt Paulson reviews the last three months of return on ad spend by channel to find which ones are maxed out. For channels with room to grow, he increases budget or cuts underperformers. He sets total monthly ad spend at 30% of average monthly revenue, so $6M in monthly revenue becomes a $1.8M ad budget.
So how do you decide how to allocate the budget per channel? Is it based on who's performing better in that 30-day period or?
Yeah, so typically I look at like a trailing 3-month period of like, so if it's the end of August, I'm looking at my September budgets. I'll look at June, July, August and say, okay, who's got the best ROAS for the last 90 days? And then who also like, most of my channels are maxed out, so like, I couldn't give my buddy Charles more money if I wanted to 'cause he's selling me all the leads he's got. Right. So then it's like, okay, of my channels that aren't maxed out, what's doing well? Can I put more budget there? And then if something's not doing well, can I cut the budget or just get rid of it entirely? But then also like to set my ad budget, like I'll take the average of our last 90 days revenue. So let's say we did like, $18 million in the last 3 months, I think was the number or something like that. I average that out, so we're at $6 million a month. 30% of that monthly number, that's my advertising budget the next month. So my September budget would be like $1.8 million based off $6 million in revenue. And that's okay. Where do I think that $1.8 million is going to go?
