Inefficient spend, which can be found in the centre of the Overview page, tells you the value of spend that is predicted to not be returned within the payback window.
Example:
The 20-October to 27-October install cohort for Campaign ABC cost $1,000 to acquire.
Currently, you are targeting a gross, paid ROAS of 120% by d180 for Campaign ABC
For this install cohort, predicted gross, paid ROAS at d180 is 85%
Inefficient spend = 100% - 85% * $1,000 = $150
Inefficient spend % = $150 / $1,000 = 15%
This process is repeated for all campaigns, where predicted ROAS is below 100%, and then summed.
Notes:
Inefficient spend is not calculated using a campaigns ROAS target (above, this is 120%) because this would be “investment inefficiency”. It would overstate the inefficiency because the hurdle is 120% and not 100%
If you set a blended or net target for Campaign A, the inefficient spend calculation would use the blended or net predicted ROAS for this calculation.
Inefficient spend may not be 0% for a number of reasons:
UA testing where ROAS below a target is deemed temporarily necessary
Meeting minimum spend thresholds on ad networks so as to not “kill the campaign” and lose all learnings.