Marginal Returns
Marginal returns represent the revenue generated by the *next* unit of spend in a channel. Unlike average ROAS, which looks at the total pile of spend and revenue, marginal returns answer: 'If I spend one more dollar here, what do I get back?'
The Short Version
Average ROAS tells you where you *were*. Marginal Returns tell you where to *go*.
Visual Explanation
What Is Incremental ROAS?
Your ROAS might look great. That doesn’t mean it worked.
Prerequisites
The Average Trap
A channel can have a great Average ROAS (e.g., 5x) but be completely tapped out, meaning the next dollar earns nothing (0x Marginal ROAS).
Budgets allocated based on Average ROAS lead to over-investment in saturated channels. You keep pouring water into a full bucket.
How it works
Fit a curve to the spend/revenue relationship (Response Curve)
Calculate the slope of the curve at your current spend level
That slope is your Marginal Return
Common Misconceptions
Equating Average vs Marginal (They are rarely same)
Ignoring the 'Point of Diminishing Returns'
Scalling purely based on 'Blended ROAS'
Frequently Asked Questions
QCan marginal returns be higher than average?
Rarely, only in early localized scaling. Typically, marginal returns are lower than average due to saturation.
QWhy does SpendSignal stop me from spending more on high ROAS channels?
Because while the *average* is high, the *marginal* return has likely dropped. We stop you when the next dollar isn't profitable.