Marketing Science
MROI Optimizer
Optimize budget allocation across channels by equalizing marginal profit. Compare equal-split vs optimized strategies on realistic response curves.
Optimization Principle
Equalize marginal profit
Each next euro goes where it generates the highest incremental profit
Strategy
Allocation
Channel Parameters
Response Curves — Equal Split
200K
Budget
344K
Equal Split Profit
—
Profit Lift
Per-Channel Breakdown
| Channel | Curve | Spend | Revenue | Profit |
|---|---|---|---|---|
Search | C | 67K | 281K | 116K |
TV | S | 67K | 438K | 153K |
Social | C | 67K | 190K | 76K |
Interpretation
With equal split, every channel gets the same budget regardless of its saturation. TV — an S-curve channel — saturates early, so equal allocation wastes spend on a channel that has already hit its ceiling.
The optimizer reallocates: it pulls budget from saturated channels and shifts it to channels where the next euro still generates meaningful incremental profit. At the optimum, marginal profit per euro is equalized across all active channels.
Try moving the budget slider. At low budgets, the optimizer avoids S-curve channels entirely (they need a minimum threshold). As budget grows, it gradually allocates to TV once Search and Social start to saturate.
Scope
This optimizer uses Hill functions with fixed parameters to illustrate marginal profit equalization. In a production MMM, response curve parameters are estimated per channel through Bayesian inference, and the optimization accounts for constraints (minimum spends, contracts, lag effects, and cross-channel interactions). The allocation shown here is illustrative — actual optima depend on data, market conditions, and business constraints.
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