Compute and interpret marginal ROI from a simple MMM response-curve scenario.
Paid social spent $500K and generated $1.25M in modeled incremental revenue. The team is considering another $100K, but the response curve projects only $120K in additional incremental revenue. Average ROI explains historical efficiency; marginal ROI estimates the next spend increment. The common trap is to rank channels by average ROI and treat the highest historical ratio as the best destination for new budget. That ignores saturation and can push money into a flattening curve. Historical spend Start with current paid social spend: $500K. This is the location on the response curve where the next-dollar question begins. Historical contribution Modeled incremental…
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