Budget Allocation Across Channels

Effective marketing budget allocation starts with the revenue target, then works backwards through the funnel: how many customers do we need, at what conversion rates, generating how many leads, requiring how many impressions — then costs each requirement by channel.

This top-down, goal-driven approach ensures budget is sized to achieve business objectives rather than set as a percentage of last year's budget or a fixed number with no connection to required outcomes.

CPA (Cost Per Acquisition) by channel is the foundational efficiency metric for budget allocation decisions — the total spend in a channel divided by the number of customers acquired through it in the same period.

Channels with the lowest CPA are not automatically the best investment; they must also be evaluated for scalability (can we spend 5x more at the same CPA?), customer quality (do they have the same LTV?), and incremental impact (would these customers have found us anyway?).