How does the ad auction actually work?

Most platforms (Google, Meta, TikTok) run a second-price-style auction where rank = bid × predicted relevance. You don't pay your bid; you pay just enough to beat the next-highest competitor. This means creative quality and CTR directly lower your cost per result, often more than bid increases do.

What is creative iteration speed and why does it matter in paid?

Creative iteration speed is how many distinct ad variants you can ship and learn from per week. In modern paid, where targeting is largely algorithmic, the creative is the targeting. Teams shipping 20 variants/week routinely outperform teams shipping 2, regardless of budget.

What does the Paid chapter mini-game teach about ad auctions?

You bid in a simulated auction with finite budget, watch CPMs rise as you scale, and learn where ad fatigue, audience saturation, and attribution lag break naive scaling strategies. The game makes the difference between 'spending more' and 'scaling' visceral.

Why does scaling paid budgets often hurt CAC?

Because you exhaust the cheapest pockets of demand first. Each additional dollar reaches a less-qualified user at a higher CPM. Without creative refresh and audience expansion, CAC rises faster than volume.

Chapter 05 · Paid — Growth Marketing

Growth / A Story

Ch. 05 · Paid

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