Happy Sunday, Everyone!

I hope you’re squeezing the last bit of joy out of summer, whether that’s family time, travel, or just a cold drink in the backyard before back-to-school + the September chaos arrives.

If you didn’t read last week’s issue, I highly suggest starting there. The big takeaway is marketing budgets aren’t expenses; they’re investments. And the way most marketers treat them (monthly caps, neat allocations, spreadsheets that look tidy but kill growth) is the #1 reason why far too many brands fail to grow. That mindset shift, paired with the 6 rules for capital allocation, is what forms the foundation of how I (and we at Warschawski) think about investing marketing budgets.

The second challenge I’ve run into is that rules without a framework for implementing them are almost always ignored or forgotten. We need a way to connect the theory of allocation into the practical, tactical, day-to-day execution.

So, this week, we’re going to focus on where the rubber meets the road - how it looks when you actually apply the ideas from the last issue to your ad accounts (math & all is included!)

With that out of the way (and now that you’re an Optmyzr customer), let’s get to it!

Part III: Portfolio Construction for Ad Spend

As I shared last week, the single-most-common mistake I see in marketing strategies (writ large) isn’t a technical mistake or a setup error; it’s a fundamentally flawed allocation of resources. At its very core, marketing is a capital allocation challenge: our job as marketers is to allocate the resources (ad dollars, time, expertise, assets) we have to the channels/tactics most likely to maximize risk-adjusted return.

Everything we do must be in service of that overriding objective.

Unfortunately, the fact is that this is almost never how budgets are allocated.

Instead, the CEO/CFO tells the marketing team they have a budget of $2,400,000 this year, and the marketing team (CMO, agency, marketing director, whatever) dutifully begins dividing the budget across the fiscal year + advertising channels/initiatives. Over the past few weeks, we’ve already had several 2026 planning meetings - and they almost always (by default) start like this.

This is the first - and best - piece of advice I can give if you want to be successful in implementing this approach: when the conversation starts, push back. Resist the siren song of neatly allocating your budget across a bunch of channels in order to placate your client (or your CEO/CMO). Instead, shift the conversation to the desired results / end state. What is the outcome that this investment should produce, and over what time period? What are the other limiting or catalyzing factors (inventory lead times, new product/feature rollout dates, major moments, etc.)?

Once you have that information, your job is to develop an initial allocation that attains or exceeds that performance goal on a risk-adjusted basis, as quickly and efficiently as possible.

That allocation is almost never equal and it should never be rigid. Why? Because when you split dollars evenly, you starve your winners and subsidize your losers. Channels/campaigns that could scale profitably get capped, all while you shovel more money into the under-performers because that’s what the spreadsheet said to do. When it’s all said and done, the blended CPA might be on-target, but only because the outperformers covered for the laggards.

From a fundamentals standpoint, this isn’t media planning or budgeting or risk management; it’s averaging down. It’s lowering both the floor and the ceiling for your marketing investments, when you should be hell-bent on doing the exact opposite.

Investors know this. No one in their right mind allocates the same capital to Apple and to a company on the verge of bankruptcy just because both are in the S&P 500. Yet marketers do the advertising equivalent of this every single day.

Sticking to pre-planned, neat-and-tidy budgets feels good. Equal (or even quasi-equal) allocation feels fair. But when you put them together, you end up doing more harm than good.

Survivorship Concentration

The alternative to the neat-and-tidy, pre-planned budgets is survivorship concentration. Even the name sounds Spartan - but that’s not necessarily a bad thing. To be very blunt, this is exactly how I treat both my personal investments (aside: nothing in here is investment advice; do your own research, yadda yadda yadda) and client ad budgets.

Survivorship Concentration has two principles:

Principle #1: Feed your winners until they hit diminishing returns.

Principle #2: Starve your losers until they prove they deserve capital.

This is the equivalent of force-applying evolution to marketing budgets.

Note: this does not mean reckless bets or reactionary cuts. It means disciplined sizing and dispassionate assessment. As an example, for a $300k per month budget, maybe 60-70% should be allocated to your top-performing campaigns/channels. Another 20–30% goes to steady campaigns that reliably hit CAC. The remainder can then be deployed on asymmetric bets (tests/moonshots), or held in reserve should one (or more) of these channels/campaigns/tactics outperform.

This structure is what allows your marketing investments to compound.

When I first started investing (many years ago), I had lunch with a fantastically successful investor (he was easily a centi-millionaire). Me - being the wide-eyed, eager-to-make-money kid, was all too eager to learn from him. I still remember the first question I asked: how do you do it? How do you make your investment decisions? His response was a gem of wisdom I still adhere to - religiously - to this day: “I don’t sell winners to fund losers. I let my winners run and I kill my losers. The mistake that destroys your portfolio isn’t having losers; it’s keeping them.”

Advertising works the same way.

When you allow your ad dollars to naturally concentrate in winning channels/tactics/platforms, the total return on your investment improves – not because you miraculously got better or found some new hack, but because you got out of the way. Similarly, when you cut off losers, your return improves, not because you figured out that channel/tactic, but because you cut it off and allowed the capital to flow to what’s already working.

The simplest way to make this actionable is the Core vs. Satellite approach:

• Core platforms/campaigns are your Apples and Microsofts. Durable, proven, scalable. Meta, Google non-branded search, maybe retargeting or YouTube for some brands. Together, these channels/tactics form the foundation of the portfolio and get the bulk of the budget.
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• Satellite platforms/campaigns are your biotech or hot-and-trendy AI startups. Speculative, asymmetric, unproven. New TikTok formats, Quora, podcasts. They get small allocations sized like options.

The discipline comes in how you manage the satellites: you want to ensure they have enough of an allocation to actually produce results (i.e. if your target cost per acquisition for a B2B SaaS brand is $2,000, you have to be willing to invest at least 5-10x that over a period of 4-6 weeks in order to make a determination on viability; if you just drop $500 into the channel each month, there’s a decent chance the channel could be viable but you don’t see it because of sizing issues), but not too much such that are siphoning dollars with superior risk-adjusted returns away from the Core.

Over time, you’ll see that some satellites will graduate into core, while most die. That’s expected. The goal is not for every satellite to succeed; it’s for the few that do succeed to deliver outsized returns without jeopardizing the stability of the core. This is where most marketers struggle: the definition of a successful satellite/core approach is a LOT of failed satellites.

This model gives you both resilience and upside. The core is the steady-as-she-goes compounding engine – it’s predictable and reliable (assuming you continue to feed it quality assets, maintain a solid product, etc.) The satellites create the possibility of breakout wins. Together, they give you a portfolio that is antifragile: resilient and predictable (thanks to the core), but still capable of significant upside and self-evolution.

The Art & Science of Position Sizing

In investing, you don’t sprinkle $1,000 into 500 companies. You size positions based on conviction and expected risk-adjusted return. That’s precisely the approach we should be taking to marketing budgets.

Position sizing should follow risk-adjusted expected value:

• If a campaign is out-performing established targets by 30%, scale it.
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• If it is performing at target, maintain it.
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• If it misses its performance target (on a reasonable investment), reduce or eliminate it.

The two mistakes most marketers make in position sizing are: (1) not factoring risk + volatility profiles into their allocation decisions and (2) ignoring marginal returns. Let’s take those in order.

Some marketing platforms/channels/tactics are more volatile than others - we all intuitively “get” this, but most marketers don’t connect that innate knowledge to day-to-day practice.

I saw an example of this in action this week: a potential client was on TikTok for over a year, and (finally) saw a substantial surge in sales from Shops about a month ago. Their response was to quadruple an already-high TikTok budget in response to the uptick in sales. At first glance, that might seem logical – after all, there was a surge in sales. The platform was “working”. But what that massive increase ignored was the history and long-term risk profile of the channel: this brand had been on TikTok for over a year, during which time they invested $50,000+, most of which produced a moderate (but not remarkable) return. There was ample data that suggested TikTok was a feast-or-famine platform that, over a longer sample size, lagged their core platform (Meta + Google) performance by 10%-25%.

The brand’s rationale when I asked about it was: “The ROAS on TikTok during the surge was 8x - which is nearly double what we average on Meta and Google…why not spend more on TikTok?”

My response was: “Yes, but if you expand the timeframe to 90 days, TikTok’s ROAS is 4.5x, which is what you’ve consistently attained on both Meta + Google, without the volatility and variability. When TikTok is “hot”, it’s white-hot. When it’s cold, it’s the Arctic. The problem is you have no idea when it’s going to be hot or cold, which absolutely kills your business – you need to know when to order inventory, how to staff, etc. If you’re going to fund a platform this volatile, the risk-adjusted return needs to be substantially better than the risk-adjusted return from other, more stable channels.”

The easiest way to do this: calculate both an expected return (i.e. TikTok produces a 4.5x average return) and a volatility index.

The quick-and-dirty approach is a range-based approach to volatility: take the highest observed ROAS, the lowest-observed ROAS and the median, then do some quick math: (high-low)/average = volatility index

For this potential client, TikTok’s ROAS ranged (on a monthly basis) from 0.85x to 8.15x. Applying the formula from above yields:

(8.15−0.85)/4.5 =1.62

Then, divide the average ROAS by the volatility index to get a risk-adjusted expected return:

4.50/1.62 = 2.778.

So while TikTok’s AVERAGE return looked good, the bipolar distribution of returns makes it significantly less attractive as a core channel than say Meta, which had a volatility index of ~0.75.

If you want to get more scientific, and you have multiple observed ROAS datapoints (not just the high and low), you’d calculate:

Where:

Ri​ = observed ROAS values,

Rˉ = mean return,

N = number of periods.

That gives you a true standard deviation of returns, which you can then express as a coefficient of variation (CV):

Which makes it comparable across channels/platforms, since it’s normalized to the mean.

The one challenge with this method is that channels/tactics with exceptionally low volatility end up looking staggeringly good. The solution is to use the risk-adjusted expected return equation:

Where:

• E[R]] = expected return (mean ROAS or contribution margin multiple)
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• σ = volatility index (std. dev. of returns, or range ÷ mean if using simpler math)
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• σ(min)​ = volatility floor (e.g. 0.5) to prevent absurd blow-ups when σ is tiny
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• Scale Factor = 0–1 multiplier reflecting realistic budget headroom (e.g. if channel can only scale to 20% of your total spend, Scale Factor = 0.2)

This works because higher expected return boosts the score, while volatility penalizes instability. Flooring σ ensures stable channels like branded search don’t look artificially perfect. Scale keeps you honest, so even a high-return, low-volatility channel with limited growth potential can’t dominate the portfolio.

The second, and related, issue is marginal returns. We see this all the time in Google Ads - Google pops up a big, red notification next to campaigns that are performing at or above your performance target with “LIMITED BY BUDGET” in all caps – then (helpfully) shows you a new “recommended” budget, along with expected changes to both CPA and ROAS.

Take this example, from a current client account:

Currently the client is spending $1,000 per day and driving conversions at 10% below target ($50 tCPA, $45 actual L30 CPA). Google’s recommended budget is $1,500 per day, which they say will raise the overall campaign CPA to $51.36. That looks reasonable - and $1.36 over target doesn’t seem like much – until you calculate the INCREMENTAL return:

• Current: $1,000/day at $45 CPA ⇒ ~22.22 conversions/day.
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• After increase: $1,500/day at $51.36 blended CPA ⇒ ~29.21 conversions/day​
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• Incremental conversions: 29.21 − 22.22 = 6.98​
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• Incremental CPA: $500 / 6.98 = $71.60

So while the blended CPA only rises to $51.36, the incremental CPA on that $500 is $71.60, which is 43% over target and ~60% worse than the current $45 CPA. At target efficiency, the extra $500 should buy 10 conversions; it’s only delivering ~6.98. That’s terrible.

Obviously, if you’re scaling, you have to accept that some incremental CPAs will exceed your target; the science will tell you where the diminishing returns curve starts to bend and the art is reallocating before the curve flattens your performance.

And, above all else: position sizing must be fluid. A core campaign might deserve 60% of your portfolio today, but if marginal CAC creeps out of a safe zone, it should be trimmed. A satellite might be tiny today, but if it produces three months of outsized results, it deserves more capital.

Your job as a marketer is not to keep allocations stable or true-to-spreadsheet; it is to keep allocations aligned with risk-adjusted expected value.

Rebalancing & Discipline

Let’s all be honest for a minute: even great portfolios drift. Winners balloon. Losers linger. We’ve seen it happen to Warren Buffett multiple times (though, to his credit, he does fix it) – and if it can happen to the Oracle of Omaha, it can (and will) happen to you.

Investors rebalance quarterly or annually, trimming positions back to target weights and redeploying into undervalued assets. Marketers should rebalance, too….but based on cohort-level performance:

Here are the questions we ask when we’re determining whether or not to adjust a client’s budget:

• Is this core campaign still producing at-or-below target, while maintaining scale?
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• Has this satellite platform demonstrated exceptional performance over a sufficient period of time to consider moving it to “core” status? If not, what else do we need to see?
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• Has this campaign hit diminishing returns? If not, where do we expect to see it?
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• Is capital still flowing toward the highest expected value opportunities?

Notice what’s missing: there’s no prescribed anything. Instead of looking for balance or neatness, we’re embracing unpredictability and asking questions that allow us to identify when we’re off-track.

Why Portfolio Thinking Wins

The difference between accountants and investors is simple: accountants spread dollars evenly to make the spreadsheet look clean. Investors concentrate capital into the channels/tactics/opportunities most likely to produce compounding growth..

One guarantees tidy reports. The other builds wealth.

Portfolio construction is where your rules meet reality. Without it, you’re left with averages. With it, you get outsized performance. Over time, the advertisers/brands who allocate using this approach will generate more growth + higher returns from the same marketing. And the beauty of compounding is that growth compounds: small advantages month-over-month, quarter-over-quarter are what produce the outsized winners over years and decades.

That’s the secret. That’s why marketers who learn to think like investors eventually leave everyone else in the dust. Compounding is often too small to notice until its impacts are too big to overcome.

Part IV: Management Rules for Advertising Portfolios

Portfolio construction gives you the framework, but portfolios don’t manage themselves. Left unchecked, even a perfect allocation will drift over time. People change. Platforms evolve. New channels emerge. The economy + macro environment shifts. Any of those things, on their own, are enough to warrant changes in your advertising portfolio allocation; all of them, all the time, demand it.

Investors solve this through management rules: hard, non-negotiable principles that dictate how portfolios are maintained, trimmed, and grown over time. These rules are what keep compounding on track when volatility, headlines and our own biases threaten to knock your portfolio off course.

Advertising demands the same discipline…and this section is all about how I manage allocations every day.

Rule #1: Don’t Sell Winners to Fund Losers

This is the cardinal sin. It’s the single-worst-thing you can do. If you take nothing from this issue, please remember this.

And unfortunately, this is exactly what I see every day.

The story usually goes like this: a campaign/channel is delivering excellent performance, with acquisition costs consistently below target. It’s the portfolio’s engine. But because performance elsewhere is weak, the client wants to take budget from the engine in order to “give the other channels a chance.”

It is pure insanity.

Winners deserve more capital. Losers deserve less (or none). When you rob your winners to prop up losers, you guarantee stagnation. At best, you move sideways. At worst, you sink.

Never sell consistent winners to subsidize hopium.

Rule #2: Never Average Down Without a Thesis

Investors know the trap of “averaging down” - code for throwing more capital at a loser because it looks cheap. Sometimes it works. Most of the time, it doesn’t.

Marketers do the same. Campaign at $140 CAC (target $100)? “Let’s add more budget, maybe we just need more data.” Campaign that hasn’t produced a conversion in 30 days? “Let’s give it another shot with more spend.”

This is how portfolios bleed.

Averaging down only makes sense if you have a clear thesis about why performance will improve. Maybe conversion lag explains the gap. Maybe seasonality suppressed demand. Maybe you just launched a revamped post-click experience based on your heatmap data (aside - that’s something more brands should do) or introduced a new creative or a new influencer partnership that is a picture-perfect fit for the platform. Those are all valid reasons to “average down” in moderation

But absent a thesis grounded in real, objective, quantifiable data, allocating more capital to a loser is a well-funded prayer.

Rule #3: Cut Quickly, Add Slowly

A common trait among the best investors I know is this: they eliminate “loser” positions quickly and scale good positions methodically.

Marketers often invert that.

They’ll keep losers around for months and justify it using the sunk cost fallacy (“...we already spent $20k, maybe another $10k will turn it around…”) or they’ll scale into winners seemingly overnight, with the rationale that either the platform has “turned around” (like the TikTok example above) or because of FOMO (slash what they read on X/LinkedIn/heard at a conference).

Both are mistakes.

Bad campaigns should be cut ruthlessly. The dollars saved are not wasted; they’re freed up to fund higher-return opportunities. And winners should be scaled intentionally and methodically - increase budgets gradually while monitoring marginal performance, so you ensure the incremental returns are there before you keep adding. It sounds boring (and it is!), but leverage cuts both ways – when you go from spending $1,000/day on Meta to $10,000 a day, even a small deviation in performance can be significant.

Cutting quickly and adding slowly prevents both forms of capital destruction: wasting money on dead weight and suffocating winners by scaling them past the point of diminishing returns.

Rule #4: Manage to Fundamentals, Not Headlines

Anyone who watches the stock market regularly will tell you that markets move on headlines – but any successful investor will tell you that people who chase headlines rarely come out ahead in the long run.

Advertising is no different.

It seems like every day, there’s a new shiny object in ad world – whether it’s a new platform (looking at you, AppLovin), a new ad format, a new bidding strategy, a new optimization option, a new creative trend…there’s always something that you “should” be doing/trying. Pair that with the rumors of demise (“Google search is dead!” “Everyone has left IG for TikTok!” “Gen Z doesn’t use email!”) and you have a recipe for absolutely terrible capital allocation.

Every one of those “headlines” is a siren song, pulling you toward disaster.

Great management ignores the noise and focuses on fundamentals. What’s the expected value of the channel/campaign/tactic? How does marginal CAC scale? What is this channel’s actual contribution margin?

I get the temptation to want to be “ahead of the curve” (and surplus value does decline with adoption). It’s cool and fun to feel that you’re ahead of the curve. But most times, for most brands, the smart play is to stick to the fundamentals and let someone else chase the shiny objects.

Rule #5: Stay Emotionally Neutral

I covered this in Part II, but it’s worth reinforcing here: management requires emotional detachment.

Campaigns have good days and bad days. CPAs swing. ROAS will be stellar one day and dreadful the next. If you let yourself, you’ll wonder how the same campaign that delivered massive wins yesterday can fail so spectacularly today.

The secret I’ve found is that campaigns are noisy in the short-run and signal-rich in the long-run; if you chase/react to every spike and dip, you’ll drive yourself crazy (and broke) before you figure out the rhyme or reason behind those swings.

That makes the discipline staying neutral. Don’t reduce the budget on a winning platform because it had a bad Tuesday. Don’t increase budgets on an otherwise-loser campaign because it posted an outsized number of sales on Friday. Look at the bigger-picture trends and manage to the signal - not the noise.

That’s easy to write. It’s far more difficult to do when a client is calling and screaming about how Meta is broken or Google sucks now and demanding changes (real things that happen to me on a regular basis!).

When that happens, and when the temptation to change seems overwhelming, I go back to Warren Buffett. Berkshire’s stock dropped more than 50% on three separate times. At no point did he sell or change his approach, because the underlying fundamentals had not changed. The price swing had nothing to do with the underlying assets, and everything to do with noisy headlines.

Zoom out. Ask yourself if the change is a symptom of a fundamental shift OR a symptom of short-term noise. You’ll often find that it’s just noise. And noise can (and should) be tuned out.

Rule #6: Respect Diminishing Returns

Every campaign, every platform, every tactic follows a diminishing returns curve. For every single one, there’s a point where doing more or spending more will not yield a marginal increase in results. The size, scale and shape of that curve will vary by brand, audience, platform, tactic, channel – but the curve always exists.

For example, the first $10k you deploy into YouTube might yield new customers at a cost that’s 30% below target. The next $50k might creep toward your target. And the $100k after that will blow through it.

For Meta, the first $200k might be below target, and the $500k after that at target. It’s entirely possible that you might not see declining marginal performance until you’re spending well over $1MM per month. But just because diminishing returns don’t hit until your spend is 20x higher does not mean diminishing returns don’t exist on Meta.

Great advertisers understand + respect the existence of this curve. They know that scaling isn’t about throwing more dollars until everything breaks; it’s about increasing budgets responsibly, then monitoring marginal returns.

Bad / inexperienced advertisers ignore the curve and blame “creative fatigue” or “bad audiences” when performance falls apart.

The very best advertisers I know - the ones who are remarkably good at what they do - have mastered the art of pushing campaigns to the precipice of diminishing returns, but resisting the urge to push them over the edge.

Rule #7: Think in Systems, Not Silos

One of the more curious - and more nefarious - tendencies I’ve noticed is marketers who manage channels/campaigns/platforms in silos, not as part of an integrated system.

Meta performance is attributed to Meta.

Google performance is attributed to Google

Programmatic is attributed to Programmatic.

But, in reality, everything is interconnected. These platforms don’t exist in isolation, and they certainly don’t perform in isolation. Paid search drives retargeting. Meta drives branded search. YouTube drives lift across the board. Linear TV + out-of-home drive improved performance on Meta and Google (yup, that lift is real). Direct mail results in massive increases in branded search.

It’s all connected.

It’s easy + tempting to evaluate each channel in isolation, but the real magic is in the synergy between different channels/tactics.

Part V: Contrarian Plays That Produce Outsized Returns

Most marketers never break out of the spreadsheet mindset. They optimize inside the rails, never questioning the rules of the game itself. But if you study the best investors, you’ll notice something: outsized returns often come from contrarian behavior. Doing what the herd can’t, won’t, or refuses to do.

Advertising has its own set of contrarian plays. These are strategies that feel wrong at the moment (and often produce visceral reactions), but can produce outsized returns.

Play #1: Scale Into Weakness

Most brands scale when CPMs are expensive and cut when they’re cheap. That’s backwards.

Think April 2020. While most of the world paused campaigns, a handful of brands doubled down. CPMs cratered 20–40%, which means CPA dropped. The brands that leaned in and took advantage acquired customers at rock-bottom prices.

At the time, it seemed reckless – but nothing could be further from the truth. If anything, scaling when everyone else was pulling out of auctions was rational.The two possible outcomes were: either the world stabilized and you’d acquired customers at the cheapest rates in a decade, or it didn’t, in which case, the extra $100k you spent on Meta was the least of your concerns.

The same logic applies to seasonal soft spots (late summer doldrums, Q5) and competitive cycles (i.e., when competitors run out of budget at the end of the month).

Weakness is opportunity.

The next time you see CPMs drop or Auction insights go blank, that’s your signal to push more chips onto the proverbial table.

Play #2: Double Down on “Boring”

Marketing is in a never-ending love affair with trendy + sexy.

We all chase it in some way or another - AppLovin, TikTok Shops, influencer partnerships, shiny betas from Google or Meta - you name it. We all see the posts on X (or a few weeks later, on LI) from marketers who claim to have unlocked untold growth from the new hotness.

But all the hype often masks a different fundamental reality: most growth happens in the “boring” stuff. Google non-branded search, evergreen Meta campaigns, email. None of them are sexy. Talking about them will not get you the conference keynote or an interview on whoever’s podcast is currently in vogue (since it’s not Collin & mine, at least not yet). But they will deliver steady, repeatable returns with high scalability.

Those boring, core channels are the advertising equivalent of dividends. They don’t make you look like a genius, but they produce positive returns, over and over again. There’s value in that, especially when your competition can’t help but chase.

Play #3: Exploit Volatility With Flexible Budgets

Rigid monthly budgets create wonderful opportunities for the marketers willing to exploit them. I’ve worked with more than a few brands who had competitors that routinely ran out of budget by the ~25th of the month. It didn’t matter if the other brand was having a great (or terrible) month, they’d pause (most) everything the minute they reached the set monthly allocation.

It took a month or two to figure out the pattern, but once we did, it became a wonderful recipe for efficient acquisition: lower targets + spend moderately until the competition exited the auction, then lever in for the last 5-10 days when CPCs declined 20%-30% (amazing what happens when a couple major advertisers bid up KWs)

This requires courage because it looks “messy” on reports (and often leads to “we’re pacing under!” …but it’s precisely what separates smart marketers from the mediocre ones. All markets (including ad markets) are dynamic. Budgets should be too.

Play #4: Starve Vanity Channels

Something I’ve noticed - a lot of brands fund channels for optics, not returns. The CEO wants to see billboards. A major investor asks about TikTok, so it miraculously finds itself added to the media plan. The CMO is angling for a speaking gig or an advisory position, so s/he over-funds emerging channels in order to increase the “sexiness” of the pitch (another low-key theme of this newsletter: betting against sexiness is usually a winning strategy).

The smart marketer’s job is to cull the sacred cows. If a channel doesn’t produce returns that justify continued investment, it gets cut, no matter how prestigious, political or pretty it looks.

This feels contrarian because you’ll face pressure internally to “stay visible” or “be everywhere” or “get ahead of the trend” – but unless doing that produces a tangible return, you’re (almost always) better off investing in the tried-and-true, boring-as-all-getout channels.

Play #5: Bet Small on Optionality

Investors buy options because they offer asymmetric payoff: capped downside, unlimited upside. Satellites in your ad portfolio work the same way.

We (typically) start with a 70/20/10 allocation for clients – 70% goes to the core, 20% to tests and the remaining 10% to moonshot (read: speculative channels, new formats, etc.). Going in, we accept that most of the speculative investments will fail, but the few that hit will deliver 10x returns.

Optionality is a contrarian discipline. Most brands either avoid bets entirely (too conservative) or swing wildly (too reckless). The middle path - small, continuous, disciplined bets - is what produces breakout wins without jeopardizing your entire portfolio (or getting your agency or CMO fired).

It’s important to note that these don’t guarantee success – sometimes, you’ll just incinerate 10% of the budget. That’s the risk you take when you invest in unproven channels/tactics. That being said, this strategy creates the conditions for outsized returns - not just because the strategy works, but because (in most cases), your competition refuses to play the game.

Part VI: The Flywheel

Everything up to now has been about discipline - building, managing and protecting a portfolio that maximizes expected return relative to risk (so sexy!)

That’s 80% of the battle. The remaining 20% is leaning into the compounding flywheel. Put simply, compounding is the reason investors become wealthy. And it’s the reason a small set of marketers leave the rest of the industry in the dust.

Here’s how it works:

1. Efficient capital allocation → More customers at or below target CAC
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2. More customers → Larger base for LTV expansion (retention, upsells, referrals)
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3. Expanded LTV → Higher tolerance for CAC, which lets you profitably scale, even when platform economics or macro conditions seem non-viable
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4. Higher scale → More data, which improves creative, targeting and post-click experiences
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5. Better performance → More efficient capital allocation next cycle

Each cycle scales with decreasing friction. This is the secret behind the brands that seem to find a way to grow, no matter what the market or economy or tech landscape is doing. Everything in this framework is geared toward unlocking and accelerating that flywheel.

Why Most Brands Never Get There

Most organizations (unknowingly) structurally sabotage growth:

• CFOs demand neat, predictable monthly spend - the only thing this (usually) achieves is capping upside via arbitrary limits and restricting spend at the very moments when those brands should be spending more (i.e. at the end of the month or in otherwise slow periods).
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• Management craves short-term wins - which forces day-trading behavior that kills long-term returns.
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• CMOs fear volatility - this prevents brands from leaning into weakness or concentrating capital.
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• Agencies protect revenue streams - which incentivizes allocation to the channels they manage and inflated reports, vs. obsessive focus on growth + efficiency.

Put it all together and you have a recipe for stagnation: accounts that look fine in a spreadsheet, all while failing to realize their true potential.

The gap between marketers who understand how to build + scale this flywheel and those who don’t isn’t small. It’s not 10% or 20%. It’s 10x or 100x or 1,000x. Just as there are 10x engineers, there are 10x marketers.

Put another way: an investor who compounds at 15% instead of 10% ends up with 4x the wealth over 30 years, a marketer who compounds efficiently ends up with multiples of the customer base, revenue, and market share compared to one who just “optimizes” campaigns.

The best part? You don’t need to be a genius to do it. You just need discipline, rules that protect you from bias, structures that allocate intelligently and the courage to be contrarian when the market panics.

That’s the entire ballgame. Master those things, and you’ll find yourself leagues ahead of your competition.

That’s all for this week! I hope you all enjoy the last week of “official” summer

Cheers,

Sam
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