GlossaryBudget Optimization

Portfolio Optimization (Marketing)

Q: Is this overkill for small brands?

Yes. If you spend <$50k/mo, focus on 1-2 channels. Portfolio theory applies when you have capital to protect.

Also known as: Media Mix

Portfolio Optimization applies Modern Portfolio Theory (MPT) to marketing. Instead of stocks and bonds, you have Brand Search (Low Risk, Low Growth) and TikTok Ads (High Risk, High Growth). The goal is to construct a mix that maximizes return for a given level of risk/volatility.

The Short Version

Don't put all your eggs in the 'Facebook' basket.

Prerequisites

Budget Reallocation Strategy

The Single Point of Failure

90% of your spend is on Meta. Meta shuts down your ad account.

Your revenue drops 90% overnight. You failed to optimize for risk.

How it works

Categorize channels by Risk (Volatility) and Return (ROAS)

Ensure correlation diversity (Don't just buy 5 different social networks)

Allocate 'Insurance Spend' (channels that work when others fail, e.g., Email/SEO)

Common Misconceptions

Optimizing purely for maximum return (ignoring risk)

Thinking 'Diversification' means spending $50 on 20 channels (You need enough spend to get signal)

Ignoring platform correlation (FB and IG are the same risk)

In SpendSignal

SpendSignal visualizes your 'Efficient Frontier'. We show you how adding a new channel changes your portfolio's risk/reward profile.

Frequently Asked Questions

QIs this overkill for small brands?