{"id":259243,"date":"2025-05-27T05:57:13","date_gmt":"2025-05-27T05:57:13","guid":{"rendered":"https:\/\/peraltafinancing.com\/analytics\/being-replaced-by-ai-is-delayed-for-now\/"},"modified":"2025-05-27T05:57:13","modified_gmt":"2025-05-27T05:57:13","slug":"being-replaced-by-ai-is-delayed-for-now","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=259243","title":{"rendered":"Being Replaced by AI is Delayed &#8230; For Now"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<p style=\"text-align: justify\"><span style=\"font-family: arial\">You know about my diminishing returns relationship.<\/span><\/p>\n<p style=\"text-align: justify\">\n<div class=\"separator\" style=\"clear: both;text-align: center\"><a href=\"https:\/\/blogger.googleusercontent.com\/img\/b\/R29vZ2xl\/AVvXsEifWrpEC4As4rn5fuGu6qTNSUXeTpgGtYRv5uNLH7DGs7grE6p0VMCslGiyrbAiQE6vorUmPKo9CEmiuaDSojzYOROhrDyh-SaWL6gQJyI-h6aP6W__D8ZpAsq5H1cKlZgGQsHH9_c3lyU0ghFvizJwKFgb_XWwKjvsKvAz4-NbuYv063w3FnFxdA\/s1280\/mtd_20250428a.jpg\" style=\"margin-left: 1em;margin-right: 1em\"><img loading=\"lazy\" decoding=\"async\" border=\"0\" data-original-height=\"720\" data-original-width=\"1280\" height=\"225\" src=\"https:\/\/blogger.googleusercontent.com\/img\/b\/R29vZ2xl\/AVvXsEifWrpEC4As4rn5fuGu6qTNSUXeTpgGtYRv5uNLH7DGs7grE6p0VMCslGiyrbAiQE6vorUmPKo9CEmiuaDSojzYOROhrDyh-SaWL6gQJyI-h6aP6W__D8ZpAsq5H1cKlZgGQsHH9_c3lyU0ghFvizJwKFgb_XWwKjvsKvAz4-NbuYv063w3FnFxdA\/w400-h225\/mtd_20250428a.jpg\" width=\"400\" \/><\/a><\/div>\n<p><span style=\"font-family: arial\"><br \/><\/span><\/p>\n<p style=\"text-align: justify\"><span style=\"font-family: arial\">I asked ChatGPT to create an answer to a diminishing returns relationship. It figured out the diminishing returns part. It didn&#8217;t figure out a credible answer. For now. The credible answer is clearly on the horizon. So is a whole lot of change to ecommerce.<\/span><\/p>\n<p style=\"text-align: justify\"><span style=\"font-family: arial\">Ready?<\/span><\/p>\n<p style=\"text-align: justify\"><span style=\"font-family: arial\"><br \/><\/span><\/p>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">To estimate next year\u2019s sales based on your advertising investment, let\u2019s analyze the return on ad spend (ROAS) from previous years:<\/span><\/p>\n<h3 style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Last Year:<\/span><\/h3>\n<ul>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Ad Spend:<\/strong> $50,000<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Sales:<\/strong> $200,000<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>ROAS:<\/strong> $200,000 \/ $50,000 = <strong>4.0<\/strong><\/span><\/p>\n<\/li>\n<\/ul>\n<h3 style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">This Year:<\/span><\/h3>\n<ul>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Ad Spend:<\/strong> $100,000<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Sales:<\/strong> $300,000<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>ROAS:<\/strong> $300,000 \/ $100,000 = <strong>3.0<\/strong><\/span><\/p>\n<\/li>\n<\/ul>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">The ROAS is decreasing as spending increases, which is typical due to diminishing returns.<\/span><\/p>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">To predict next year\u2019s sales with a $150,000 ad spend, we can estimate ROAS will continue to decline. If the ROAS drops linearly:<\/span><\/p>\n<ul>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Change in ROAS: 4.0 \u2192 3.0 (drop of 1.0 when increasing spend by $50,000)<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">If it continues, the next $50,000 increase may bring ROAS down to <strong>2.0<\/strong><\/span><\/p>\n<\/li>\n<\/ul>\n<h3 style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Projected Sales Next Year:<\/span><\/h3>\n<ul>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Estimated ROAS:<\/strong> 2.0<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Ad Spend:<\/strong> $150,000<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Projected Sales:<\/strong> $150,000 \u00d7 2.0 = <strong>$300,000<\/strong><\/span><\/p>\n<\/li>\n<\/ul>\n<h3 style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Alternatively, using a <strong>weighted average ROAS<\/strong>:<\/span><\/h3>\n<ul>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Total past spend: $50K + $100K = $150K<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Total past sales: $200K + $300K = $500K<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Average ROAS: $500K \/ $150K \u2248 <strong>3.33<\/strong><\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Projected Sales: $150K \u00d7 3.33 = <strong>$500,000<\/strong><\/span><\/p>\n<\/li>\n<\/ul>\n<h3 style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Conclusion:<\/span><\/h3>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Depending on how you model ROAS:<\/span><\/p>\n<ul>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Conservative (diminishing returns):<\/strong> ~$300,000<\/span><\/p>\n<\/li>\n<li>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><strong>Average performance:<\/strong> ~$500,000<\/span><\/p>\n<\/li>\n<\/ul>\n<p style=\"text-align: justify\">\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\">Let me know if you want a more precise forecast using regression or another model.<\/span><\/p>\n<p style=\"text-align: justify\"><span style=\"color: #990000;font-family: arial\"><br \/><\/span><\/p>\n<p style=\"text-align: justify\"><span style=\"font-family: arial\"><br \/><\/span><\/p>\n\n","protected":false},"excerpt":{"rendered":"<p>You know about my diminishing returns relationship. I asked ChatGPT to create an answer to a diminishing returns relationship. It figured out the diminishing returns part. It didn&#8217;t figure out a credible answer. For now. The credible answer is clearly on the horizon. So is a whole lot of change to ecommerce. Ready? To estimate [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":239303,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12033],"tags":[17965,35337],"dealstore":[],"offerexpiration":[],"class_list":["post-259243","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analytics","tag-delayed","tag-replaced"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Being Replaced by AI is Delayed ... 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