- Brands don’t shift budget because they don’t trust their numbers: Google Analytics and the ad platforms report very different ROAS for the same channel. Nobody knows which is closer to the truth, so teams make small changes that change nothing.
- One attribution model as the single source of truth: A marketing mix attribution model like Klar’s measures a channel’s total impact, including the awareness it creates, not just its clicks. That gives the team one number to decide on.
- The whole team has to understand the model: Media buying only follows the model once everyone knows how it works and agrees to use it. That takes time, but without it nothing moves.
- Verify a channel before you scale it, then scale in big steps: Check the model’s ROAS, the share of new customers behind it and the lifetime value of those customers. If all three hold up, increase budget in big steps, not 5% at a time, and keep measuring as you scale.
- Set budget per product, not per channel: The same channel can work well for one product and badly for another (product/channel fit). Moving each product’s budget to its best channel lifts efficiency even when channel totals look balanced, often by 20-30%.
Most ecommerce brands know their marketing mix should change but hesitate because the data gives conflicting answers. This post covers how to build the confidence to make large budget shifts and how to find the product and channel combinations that carry the most efficiency.
Why do ecommerce brands fail to allocate their marketing budget effectively?
Brands fail to shift budget effectively because they are afraid of making the wrong decision. The conflicting numbers they work with make that fear understandable.
It's tough to blame them when you see the data that they have to work with.
Let's look at the example below.
Google Analytics is reporting a 0.64 ROAS for TikTok whereas the ads manager reports a 4.81 ROAS.
One is horrible, the other potentially great.
The truth is probably somewhere in the middle.
But whether or not it's closer to one or the other is critical to deciding if you want to double down on the channel.
So what are you supposed to do with that?
What usually happens is that small changes are being made like allocating 5% more budget to a channel for the next month.
This is bad for two reasons:
- It's slow.
- It's not enough to result in a meaningful change.
So essentially you are starting next month in the same place.
When it comes to attribution you must have confidence in the model that you are working with.
Only then you can make big changes and see big results.
How do you build the confidence to shift budget in big steps?
Establish one attribution model as the single source of truth, make sure the whole team understands it, verify a channel's results before scaling it, and then increase the budget in large steps.
Let me in detail talk you through how we tackled this situation with one of our customers, an 8-figure brand:
Step 1: Establishing a single source of truth for attribution
We onboarded the customers on our Klar marketing mix attribution model that measures the total impact of each marketing channel.
Not just based on clicks but also the awareness it creates that leads to conversion at a later stage.
Sounds great, but that's just the beginning.
Step 2: Building confidence in the model
We then explained the model in detail to the entire marketing team and how it works so that everybody can get behind it and agree to make media buying decisions based on it.
This part is crucial, it can take a bit of time but is necessary if you want to make progress.
Step 3: Measure impact and verify results
The Klar MMM attribution model said TikTok had a ROAS of just above 3x.
We then verified the share of new customers (60%) which gave them a new customer ROAS of around 2x meaning that they are breaking even on the first purchase (which is their optimization goal).
Finally, we verified that the LTV of customers acquired via TikTok is not worse (it wasn't).
Step 4: Scaling/shifting budgets to TikTok
This gave the brand the confidence to increase its budget in the channel.
Not by 5%.
But 100% month on month.
We kept on measuring performance to ensure that performance wouldn't fall off a cliff with scale (it didn't).
And now TikTok accounts for >10% of their marketing spend (and growing).
So the foundation to diversify your marketing mix is an attribution that measures the total impact of a channel (not just based on clicks) and that everybody in the team understands so that you can build confidence and take bigger swings.
More on how to shift your budgets based on each product's channel performance in the next section below.
How do you increase marketing efficiency by shifting budget per product?
Compare the efficiency of each channel for each product you advertise, then move each product's budget to the channel where it performs best.
This is one of the biggest wins that I often find (especially for brands doing >20m in revenue) that can easily increase marketing efficiency by 20-30%.
If you advertise multiple products for your eCom brand, it's something you just have to do.
Here is what I mean.
I recently did a data audit with one of our customers. By using our attribution they shifted spend to what appears to be a pretty ideal allocation:
| Channel | Spend | ROAS |
|---|---|---|
| Meta | €491,766 | 2.91 |
| €440,124 | 3.19 |
Both channels at roughly the same scale as well as return. Sounds great, right?
However, when going a level deeper, things started to look a lot different.
| Product | Meta ROAS | Google ROAS |
|---|---|---|
| Product A | 4.31 | 1.97 |
| Product B | 1.92 | 5.21 |
Completely different performance for these products across the two channels.
That's because there is also something called product/channel fit.
Some products are just easier to advertise in a push channel whereas other are better served in a pull channel.
Just shifting budgets per product to the channel with the highest performance is going to unlock a massive increase in performance.
They are still in the process of doing that to find the sweet spot and understand marginal returns.
But just so far, MER and CAC have decreased 20%.
Quick Disclaimer: The campaigns obviously weren't named the way I am showing in the table, so that information was a bit more hidden in the data. That is why naming conventions are so important.
FAQ
Why do ecommerce brands struggle to shift marketing budgets between channels?
They don’t trust their numbers. Google Analytics and the ad platforms often report very different ROAS for the same channel (0.64 vs. 4.81 for TikTok in the example above). So teams only make small changes, like 5% more budget for a month, which is too slow and too small to change anything.
What is a single source of truth for marketing attribution?
One attribution model that the whole marketing team agrees to base media buying decisions on. Klar’s marketing mix attribution model is an example: it measures each channel’s total impact, including the awareness that leads to conversions later, not just clicks.
How do you verify a channel's results before you scale its budget?
Check three things: the ROAS from your attribution model, the share of new customers behind it, and the lifetime value of the customers the channel brings. In the example above, TikTok showed a ROAS of just above 3x with 60% new customers. That is a new customer ROAS of around 2x, break-even on the first purchase, and the lifetime value of those customers was no worse.
What is product/channel fit?
A product can perform very differently depending on the channel. Some are easier to sell in a push channel like Meta, where you show ads to people who weren’t looking. Others do better in a pull channel like Google, where people are already searching.
Related reading
- Finding the ideal CLV/CAC ratio for your ecommerce business
- The advanced UTM naming convention guide for DTC brands
About the author
Max Rast is Co-Founder and CEO of Klar. He has built one 8-figure and one 9-figure eCom brand and works with 2,000+ eCom brands at Klar. LinkedIn
