Diminishing Returns
Diminishing returns describe the decline in incremental revenue as spend increases. This effect is universal in marketing: the first $1,000 you spend helps you harvest low-hanging fruit; the next $1,000 is harder work. SpendSignal explicitly models this curve to prevent over-investment.
The Short Version
The more you spend, the less efficient the next dollar becomes.
Visual Explanation
What Are Marginal Returns?
Your best channel eventually stops working. Understand diminishing returns.
Scaling Into a Wall
Marketers often scale budgets assuming efficiency will stay constant. It never does.
Ignoring diminishing returns leads to 'profitless scaling', where you spend more to acquire customers at a loss, destroying unit economics.
How it works
Analyze the relationship between spend levels and return
Identify the 'saturation point' where the curve flattens
Calculate the marginal return at every spend tier
Common Misconceptions
Linear extrapolation ('If $1k made $5k, $10k will make $50k')
Confusing Average ROAS with Marginal ROAS
Blaming 'Creative Fatigue' when it's actually 'Audience Saturation'
Frequently Asked Questions
QDoes every channel have diminishing returns?
Yes, eventually. The curve shape varies (TV saturates differently than Search), but the law of diminishing returns is universal.
QCan I reset diminishing returns?
Sometimes, by expanding targeting or launching entirely new creative concepts, you can shift the saturation curve upwards.