Ad Spend Allocator

Optimize budget distribution across advertising channels using efficiency metrics and diminishing returns analysis.

Process

1. Collect channel data - Spend, revenue, conversions by channel (minimum 30 days)
2. Calculate efficiency metrics - MER, aMER, channel ROAS, marginal ROAS
3. Identify diminishing returns - Detect channels approaching saturation
4. Apply allocation framework - 70-20-10 rule as baseline
5. Recommend shifts - 10-20% increments with monitoring periods

Key Formulas

MER (Marketing Efficiency Ratio) = Total Revenue / Total Marketing Spend
Target: 3.0-5.0x (varies by industry, margin structure)

aMER (Acquisition MER) = New Customer Revenue / Total Ad Spend
Purpose: Isolates new customer acquisition efficiency

Channel ROAS = Channel Revenue / Channel Spend
Use for: Channel comparison, baseline performance

Marginal ROAS = (Revenue at Spend B - Revenue at Spend A) / (Spend B - Spend A)
Purpose: Detect diminishing returns before blended ROAS shows issues

70-20-10 Budget Allocation Rule

Tier	Allocation	Criteria
Proven	70%	Consistent ROAS, predictable results, 3+ months track record
Scaling	20%	Emerging opportunities, positive early signals, testing scale
Testing	10%	New channels, creative experiments, unproven strategies

Diminishing Returns Indicators

• Higher CPC with same targeting (auction saturation)
• Frequency increasing on Meta (audience exhaustion)
• Conversion rate declining while impressions increase
• CPM inflation without response improvement
• Marginal ROAS dropping below blended ROAS

Reallocation Decision Framework

1. Calculate marginal ROAS by channel (compare week-over-week at different spend levels)
2. Identify channels approaching saturation (marginal ROAS < blended ROAS)
3. Shift 10-20% at a time to unsaturated channels
4. Monitor for 7-14 days before further changes
5. Document and track impact

Output Format

## Budget Allocation Analysis

**Total Monthly Spend**: $[X]
**Current MER**: [X]x
**Target MER**: [X]x

### Channel Efficiency Summary
| Channel | Spend | Revenue | ROAS | Marginal ROAS | Status |
|---------|-------|---------|------|---------------|--------|
| | | | | | [Scaling/Saturated/Testing] |

### Diminishing Returns Detection
- [Channel]: [Evidence of saturation]

### Recommended Reallocation
| From | To | Amount | Rationale |
|------|-----|--------|-----------|

### 70-20-10 Current vs Recommended
| Tier | Current | Recommended | Gap |
|------|---------|-------------|-----|
| Proven (70%) | | | |
| Scaling (20%) | | | |
| Testing (10%) | | | |

### Expected Impact
- Projected MER improvement: [X]%
- Confidence: [HIGH/MEDIUM/LOW]

### Monitoring Plan
- Review metrics in [X] days
- Key indicators to watch: [List]

Example

Input: "Google Ads: $50K, $200K revenue. Meta: $30K, $90K revenue. TikTok: $10K, $25K revenue. Seeing Meta CPMs up 35% last month."

Output:

## Budget Allocation Analysis

**Total Monthly Spend**: $90,000
**Current MER**: 3.5x ($315K / $90K)

### Channel Efficiency Summary
| Channel | Spend | Revenue | ROAS | Status |
|---------|-------|---------|------|--------|
| Google | $50K (56%) | $200K | 4.0x | Scaling |
| Meta | $30K (33%) | $90K | 3.0x | ⚠️ Saturated |
| TikTok | $10K (11%) | $25K | 2.5x | Testing |

### Diminishing Returns Detection
- **Meta**: 35% CPM increase signals auction saturation/creative fatigue

### Recommended Reallocation
| From | To | Amount | Rationale |
|------|-----|--------|-----------|
| Meta | Google | $6K (20%) | Higher efficiency, room to scale |
| Meta | TikTok | $3K (10%) | Test scaling opportunity |

### Expected Impact
- Projected MER improvement: 8-12%
- Confidence: MEDIUM (need marginal ROAS data for precision)

### Monitoring Plan
- Review in 14 days
- Watch: Google CPC trends, TikTok conv rate, Meta frequency

Guidelines

• Never recommend >20% shifts at once (too disruptive)
• If marginal ROAS data unavailable, note this and use blended metrics with lower confidence
• Account for seasonality - compare year-over-year if possible
• Flag if total spend seems misaligned with business size

Data access (Ryze MCP)

This skill works best with live account data. Connect the free Ryze MCP once and Claude reads your Google Ads, Meta Ads, GA4 and Search Console directly:

• claude.ai / Claude Desktop: Settings → Connectors → Add custom connector → https://connector.get-ryze.ai/mcp
• Claude Code: claude mcp add ryze --transport http https://connector.get-ryze.ai/mcp
• Cursor: Settings → MCP → add the same URL

Setup guide: https://www.get-ryze.ai/how-to-connect-claude-to-google-meta-ads-mcp