Spend Elasticity
Spend elasticity measures the responsiveness of revenue to changes in marketing spend. If elasticity is high (>1.0), doubling spend more than doubles revenue. If low (<1.0), returns are diminishing. SpendSignal calculates elasticity dynamically to tell you which channels have room to grow.
The Short Version
If I pull the lever harder, how much faster does the machine go?
Visual Explanation
What Are Marginal Returns?
Your best channel eventually stops working. Understand diminishing returns.
Prerequisites
Scaling Blindly
You want to double the budget. Do you put it in Search or Social?
Without knowing elasticity, you are guessing. You might put money into a rigid channel that won't bulge, while starving a highly elastic channel that could have exploded.
How it works
Analyze historical changes in spend vs revenue
Calculate the coefficient: % Change in Revenue / % Change in Spend
Rank channels from High Elasticity (Scale this!) to Low Elasticity (Maintain/Optimize).
Common Misconceptions
Applying elasticity from last year (It changes constantly)
Ignoring the saturation point (Elasticity drops as you spend more)
Confusing Price Elasticity with Spend Elasticity
Frequently Asked Questions
QWhat is a good elasticity number?
Anything above 0.8 is generally considered scalable. Above 1.0 is a 'gold rush' opportunity—scale immediately.
QDoes elasticity change?
Yes. As you scale, elasticity naturally decreases. This is why you need continuous monitoring.