Use Marginal ROAS for Scaling Decisions
Calculate why marginal return is more relevant than average return when scaling spend.
A team wants to double paid social spend because average ROAS is 3.2x. Budget scaling should use marginal return against the hurdle rate. A high average can hide a weak last tranche when response curves saturate. Before $100k spend / $320k credited revenue = 3.2x, so double spend. After Last $20k produced $18k incremental revenue; at 60% margin, contribution is $10.8k, below spend. Average ROAS $320,000 revenue / $100,000 spend = 3.2x Good historical summary, weak scale signal. Marginal revenue Last spend increase: $18,000 incremental revenue from $20,000 incremental spend. This approximates what the next tranche may do. Margin view…
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