Marketers should prioritize fast growth like sequoia trees and not be like the pretty bonsais

95% of marketers focus on efficiency metrics like CAC and ROAS rather than profitability, according to Nicolas Darveau-Garneau. He recommends adopting a single, clear profit metric that captures full margins (including fees, shipping and omnichannel effects), running flexible ad budgets (adjusted frequently) to invest where incremental dollars raise profit, and aligning incentives across franchises; he notes 30% of ad spend didn't directly drive acquisition but cutting it reduced acquisitions by >40% with incomplete recovery. For investors, companies prioritizing short-term efficiency over long-term profit and cross-organizational alignment risk underinvesting in valuable customer journeys and impairing sustainable growth.

Analysis

A structural shift in KPI incentives from efficiency to long-term profit will reallocate incremental marketing dollars to channels that can demonstrate end-to-end LTV lift in near‑real time. That favors platforms with scale in identity, measurement and auctioning (real‑time budget reallocation), and creates durable pricing power for ad networks that can convert higher spend into demonstrable lifetime margin expansion within 3–12 months. Expect a multi‑quarter reweighting rather than an immediate one‑month move as measurement pipelines, attribution models and finance alignment are implemented.

Second‑order winners include cloud analytics, POS/attribution vendors and logistics partners whose costs are newly internalized into “true profit” models—they become gating factors for profitable campaign scaling. Conversely, independent demand‑side vendors and franchise models with misaligned local incentives are at risk of being bypassed or repriced; where central marketers can’t capture full LTV they’ll either underinvest or create bespoke incentive mechanisms, compressing returns for intermediaries. Privacy/regulatory noise (cookieless, ATT) and macro ad pullbacks are realistic reversals; if one or two quarterly advertiser surveys show falling marginal ROAS on LTV bids, reallocation could reverse within 1–2 quarters.

For platform owners, the runway is measurable but not unlimited: higher ad churn and flexible daily budgets raise short‑term revenue volatility even as long‑term ARPU per advertiser rises. Monitor retailer cohort LTV curves, incremental margin disclosure and ad RPM trends as leading indicators. A disciplined play is to capture the implied permanent reallocation of spend into closed ecosystems while hedging regulatory and macro demand risks over a 6–18 month horizon.

Key Decisions for Investors

• Long GOOGL (6–12 month call spread): Buy a 9–12 month call, sell a higher strike to fund premium – target asymmetric payoff capturing a 25–40% move in ads/Cloud upside. Position size 1–2% of portfolio risk. Entry: on two of three signals: (1) sequential improvement in ad RPMs, (2) retailer earnings noting LTV‑based budget shifts, (3) Google product releases on measurement/identity. Hedge: 10–20% of notional in OTM protective puts to cap drawdown if ad demand collapses.
• Pair trade — Long GOOGL / Short open‑web adtech (example: TTD) — 6–12 months: Size 0.75–1% net risk. Rationale: reallocation toward walled gardens with superior cross‑device LTV measurement. Exit/triggers: cut if TTD reports stronger than expected closed‑loop measurement adoption or if privacy headwinds materially impair closed ecosystems. Risk: open‑web recovery could narrow the spread quickly.
• Event‑driven trade — Buy GOOGL ahead of major retailer earnings season (3 months) with defined risk: purchase March/June calls or go long stock with a 5–7% stop; target 15–30% realized upside if multiple large retailers disclose LTV optimization. Catalyst: sequence of retailer commentary and early cohort LTV improvement; tail risk: macro ad spend pullback or adverse regulation within earnings window.