Optimization Mechanics: Seasonality & Financials
Plan investment allocations are driven by two major forces.
Seasonality
Consumer responsiveness fluctuates throughout the year. If you spent the same amount in marketing every week, consumers would respond differently based purely on the natural demand in the season.
Seasonality is observable in a full-year, unconstrained plan with all financials held flat.
Financials
Margins and/or Price Per Revenue
Any variations in operating margin impacts how marketing is allocated because our system is ultimately optimizing for bottom line profit.
Using simple numbers, if you spent the same amount in marketing every quarter, and channel efficiency were constant, it would generate different amount of operating profit purely because of the variation in margins. The model takes this into account when optimizing; marketing must deliver far more to justify spend in low-margin quarters. Conversely, high-margin quarters provide more “room” for efficient investment, making them attractive for marketing allocation.
Managing Competing Forces
If your business has variable financials across the year, this force will counterbalance any natural seasonal responsiveness. Ultimately plan optimizations balance both.
These practical timing drivers work alongside fundamental marketing principles, such as channel interaction effects, continuity, and the law of diminishing returns, to create the response curves that power Keen’s optimizations – learn more here.