In this session we explore a technical example of how to profitably scale ad spend using the example of an ecommerce beauty brand.
Now that you have calculated the Incremental nMER, you have the key metric to unlocking how to grow profitability.
Calculate Incremental nMER
Get the clients Gross Margin
Input the data into the Investment Scenario Calculator
Investigate the results and pay particular attention to the Incremental nMER and Incremental Contribution Margin
Make a decision on whether to scale up or review other aspects of the campaign to improve performance
⚡ Insight 1: As a general rule, the real world rarely produces a linear decline in performance. Ie, some audiences and campaigns decline at different rates as you add more spend.
💡 Insight 2: Your Blended MER will always follow your Incremental nMER in the same direction. Put another way, your Incremental nMER will tell show you are becoming unprofitable before your Blended MER becomes unprofitable
🔥 Insight 3: You’ll never know exactly every Incremental nMER for every segment of spend. However, you can know the difference between two sample points and focus on the increase. Eg, If you increase spend from $1k per day to $1.5k, focus on the Incremental nMER of that $500 increase.