E-commerce Insights: Multichannel Planning Is a Complex Endeavor

In brief, the square root function:
• shows decreasing returns to scale,
• is internally consistent, and
• offers theoretical properties.

At www.rimmkaufman.com/squarerootrule, I’ve placed an Excel spreadsheet which uses the square root rule to model the potential effect of slight increases or slight decreases in your advertising spend, as well as suggested the advertising level which optimizes contribution (see Figure 2 below).