Spend as a Lever, Not a Reflex

I can’t think of a founder scaling a direct-to-consumer brand who has not, at some point or another, asked me some version of this question: “can we spend more?”

Of course, it’s a reasonable thing to want to know. Paid acquisition is perhaps the most legible growth lever that consumer brands have, and when certain indicators are moving in the right direction, the reflex to add budget feels like the obvious next move.

At the platform level, the answer is usually “yes”: feed your campaigns a healthy budget, add creative, and in many cases the auction will absorb it, returning impressions, clicks, and engagement. But audience expansion does not equal market potential, and volume often comes at the expense of margin on the incremental media dollar. So this reflex, when read as opportunity, tends to be the wrong instinct.

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The measure that settles it

Most teams reach for ROAS or blended CAC to help them decide, but neither answers the question on its own merit. Blended metrics can fold together very different things, such as the conversions that flatter it (e.g., brand-aware, in-market, and returning buyers with higher intent, plus organic brand demand) and the genuinely incremental customers you are paying to create (new-to-category or new-to-brand shoppers). Because that first group tends to be cheaper and platforms have become efficient at identifying them, it often dominates the average. This means that the blended number can hold steady even as the cost to win a net-new customer climbs. In this way, the blend does not cause that rise, but it does hide it.

The measure that more accurately governs incremental spend is whether the cost to acquire a new customer still clears your established payback tolerance on a variable contribution margin basis. In plainer terms: take the order total and subtract the associated costs (e.g., COGS, your variable load, etc.) and you’re left with the contribution each new order generates. That number, held against the acquisition cost and the window over which you’re willing to recover it, is the benchmark; most everything else is optimism.

To make that benchmark more precise, separate prospecting from retargeting and brand. As noted above, a blended CAC flattered by warm retargeting and branded search or shopping tells you little about the incremental customer you are paying to find. You can also set your payback window deliberately: a brand in a strong cash position with healthy repeat-purchase behavior can usually tolerate a longer recovery than one that depends on first-order profitability, and that tolerance is best set in partnership with finance.

Once you’ve oriented yourself around this measure, “can we spend more” resolves into a sharper question: is the next dollar still recovering inside our tolerance?

Here’s how I think about it.

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1. Payback on a contribution margin dollar basis
The signal that matters is not whether volume is available but whether a newly-acquired customer pays back inside your window on a contribution basis. When the incremental acquisition dollar stops recovering there, the channel has crossed a line that blended ROAS and CAC averages can hide.

It is worth drawing that line explicitly at the SKU level, or at most the category level. To help me do this, I built a tool that plots each SKU's contribution margin against two reference lines: (1) the margin it requires to clear first-order breakeven, and (2) the lower margin it can still run at once repeat purchasing is factored in, keeping an eye on inventory along the way. This helps me see which products can genuinely support acquisition and which only pay back on the second order and beyond. 

‍Not every hero SKU is a good acquisition vehicle, and plotting them this way tends to make that clear.

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2. When the incremental media dollar loses its value
Efficiency erodes for concrete, if often unglamorous, reasons. For example, creative fatigue can lift costs as your top-performing assets age out. Inventory constraints can also push spend toward variants that convert worse (think: “b-side” patterns or color ways) or SKUs that carry thinner margins. And to sustain volume, platforms reach further up the funnel into colder audiences.

Each of these, among other things, raises the effective cost of the next new customer well before your portfolio-level metrics register the problem.

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3. Long payback horizons and cross-sell dependencies
Sometimes the customer will pay back, but only over a long horizon, or only if a second purchase or post-purchase upsell/cross-sell takes place. This can be a deliberate strategy, and some CPG brands knowingly acquire at a first-order loss and profit instead over the customer lifetime.

This is, however, a financing decision, not a growth signal, and operators should exercise caution. Such a brand is choosing, in effect, to fund a longer cash-conversion cycle and to lean on retention it has genuinely proven. Where the payback rests instead on cross-sells that are not yet showing up in the cohorts, the plan is closer to a hope.

Hope is expensive to scale.

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4. Efficient audiences saturate
Most healthy brands have a finite core of efficient demand. Once it’s maxed, incremental spend necessarily reaches colder audiences, and those tend to cost more and convert worse because they’re evaluating you with none of the trust that brand-aware customers brought to the table. Adding budget doesn’t change the arithmetic. Know where the edges of your efficient audiences are.

5. Where the outlay might yield a higher return
In my opinion, too few in my line of work consider alternative ways of deploying capital. Sometimes the most efficient home for the next dollar is somewhere else entirely: it’s in conversion rate, where a more convincing landing page earns more from the traffic you are generating; in sharper product-market fit, so the offer resists fatigue; in inventory; or in the funnel-building that makes colder traffic convertible in the first place.

Redirecting OPEX is not a retreat from growth or a failure of the growth function. It is a recalibration, moving the dollar to where the constraint actually sits.

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“Can we spend more” is really a proxy for a more difficult question: is the business (capable of) growing, or is repeat revenue masking a decline when paid channels, measured on the bases above, underperform? Online channels can post rising top-line for several quarters (or more) while new customer economics slowly deteriorate and acquisition slips below attrition. Adding more budget doesn’t always fix that.

I sometimes operate as a fractional Head of Growth, and none of the above argues against spending; paid acquisition remains one of the most powerful levers a direct-to-consumer brand has.

Rather, this article argues against reflexive spending. Treat the budget as a lever with a fulcrum, know where that fulcrum sits, and you'll know when more spend compounds and when it merely accelerates a loss or decline. Platforms tend to absorb what you throw at them; whether they ought to is a decision your unit economics should help you make.