How to play
You are the first CMO of Zippity, a direct-to-consumer e-bike brand with a hit product and
growing sales. Zippity sells online and ships nationwide, so you buy national media against
one audience. Zippity has never advertised before, but is now ready to invest in advertising
to maximize its returns.
Your goal: maximize total profits for shareholders during your one-year
contract. You will make decisions in thirteen consecutive four-week Blocks. Profits come from
bike sales revenues net of production costs and advertising spending. When your contract
ends, the board will review your performance and decide whether to renew your contract.
Each four-week Block
- The CFO memo announces your Max Ad Spend — the most you may spend this Block on
advertising and measurement combined.
- You can buy Brand Spend, which builds longer-term demand, and/or
Performance Spend, which drives immediate sales, in 6 Channels:
Search, Social, Video, Display, QMax (an AI-driven ad medium), Influencer. Your ad budgets
will be split randomly across the four weeks within the Block.
- Your advertising vendors will report free attribution scores in every Block, indicating
their estimates of your campaign ROAS.
- You can run an incrementality experiment in any Channel with Performance Spend at
a cost of $100k. The experiment randomly splits that Channel's Performance-targeted audience into
three groups: a 10% holdout group sees no ads, and the remaining 90% is split evenly into
receiving either 75% or 125% of your chosen Performance Spend. Delivered spending totals
90% of your plan. The experiment returns three causal estimates: the average iROAS of the
lower-intensity ads, the average iROAS of the higher-intensity ads, and the marginal iROAS
— an approximation of the return on the next advertising dollar at your chosen Performance
Spend level.
- You may commission a marketing mix model which reports mROAS estimates for each Channel
with spending. The MMM only becomes available in Block 3, as it requires sufficient
advertising data to become estimable. The MMM is a Bayesian ridge regression with time trends and
seasonality controls, and is fit to your actual weekly advertising spending choices. The MMM specifies
diminishing marginal returns of ad spend, and assumes exponential decay to estimate Brand
Spend carryover.
- If you run an incrementality experiment in the same Block you commission the MMM, the
experiment is used to set the MMM's priors about the Channel's performance ads response
curve (both level and curvature). This is true for as many Channels as you run
incrementality experiments. Experiments from earlier Blocks do not carry over into the
calibration.
- After you complete your spending and measurement decisions within each Block, click the
'Submit Allocation' button to find out the resulting sales and profits, and to receive new
measurement information.
Important information
- Bikes sell for $2,000; each sale contributes $600 before marketing costs.
- ROAS is always defined as revenue attributed to advertising ÷ advertising
spending.
- Here is how to translate ROAS to profit. A Zippity
e-bike sells for $2,000 and earns $600 of contribution, so contribution is
30% of revenue. A dollar of advertising therefore earns
30% × ROAS in contribution, and nets
(30% × ROAS) − $1 after paying for itself.
For example, if ROAS is 5.0, then each $1 spent on ads brings in $5 in revenue; Zippity
keeps $1.50 of the $5 as gross margin; and that $1.50 in contribution is offset by the $1
in advertising spent to achieve it. So a ROAS of 5.0 means $0.50 in contribution per
advertising dollar spent. Similarly, a ROAS of 2.0 means we lost $0.40 in contribution per
ad dollar spent.
- The MMM mROAS estimates the extra revenue attributed to one more dollar in that cell at
the given spending level. mROAS will decrease with spending within each Channel, at a
Channel-specific rate. Brand Spend mROAS estimates are adjusted to account for
carryover into subsequent Blocks.
- Successful advertising will "fish out the pond" to some degree, but Channels will also
replenish at organic rates.
- The tables at the bottom of the page store prior Blocks' actions and results.
- The board's year-end decision will depend on the company's overall profitability. If you
perform exceptionally well, you may either get a raise or a big raise. If your
contract is renewed, you are invited to play another 13 Blocks. Your contract may be renewed
up to twice.
- This game can be challenging. Please take your time if you want to score highly. Relevant
information can be found in the AdMeas deck. Good luck!
Fine Print
- Each gameplay code enables up to three playthroughs, including contract renewals within
each playthrough. Each gameplay code features a unique draw of parameters. Therefore,
optimal strategies differ across gameplay codes.