Paid Media Budget Allocation

Allocate a paid advertising budget across channels by cost per customer, not gut feel — funding each channel until the cost of its next customer reaches the target, so the marginal cost of a customer is roughly equal everywhere. This is the most customers a given budget can buy.

Before you start

1. Read the brand/product context first. If a context file exists (e.g. .agents/product-marketing.md, .agents/aaj-brand.md, or similar), read it for the product, audience, pricing, and positioning. If none exists, ask the user for the essentials below before allocating.
2. Establish the unit economics. You need: business model (B2B SaaS / ecommerce / local-services / marketplace), average contract or order value, gross margin, and gross-margin LTV per customer. If LTV is unknown, help the user estimate it (or invoke the unit-economics skill) before continuing.
3. Confirm the objective — one of: a fixed monthly budget, a CAC target, or a customer goal.

Method

1. Set the CAC ceiling from LTV. A healthy LTV:CAC ratio is ≥ 3:1. Work backwards: ceiling ≈ LTV ÷ 3. This is the most you should pay per customer from ads (blended). Note this is paid-media CAC; fully-loaded CAC is higher.
2. Pick the channel set for the model. Don't run every channel — pick the 3–5 where the buyer actually researches and purchases. See resources/channel-benchmarks.md for the default set per model.
3. Get a base CAC per channel from the funnel inputs (formula below). This is the cost per customer at efficient, modest spend.
4. Allocate against diminishing returns. Each channel gets more expensive as you scale (you exhaust the best-matched audience), so the cheapest channel is not where all the budget goes. Fund each channel until the cost of its next customer hits the target, then stop. Channels whose first customer already costs more than the target drop out — correctly.
5. Present the split with projected customers, blended CAC, LTV:CAC, ROAS, payback, and pacing, plus guardrails.

The math