What do you do if your manager asks how much more can we spend on a marketing channel?

CMO or CFO asks: "How much more can we spend on Social, Search, YouTube, TV or any other media channel”

What do you do?

You need a diminishing returns curve - like the example. This tells you, for every additional £/€ you invest in a media channel, how much incremental revenue or profit you can expect in return.

With this curve, you can forecast the impact of scaling spend and identify the point at which further investment starts delivering fewer extra returns.

You can also build the Net Revenue/ Profit Curve to establish the level where the next £/€ you spend returns less than £/€1 in revenue. That’s your unprofitable zone.

How do you actually build your diminishing returns curve?

1️⃣ The "Back of a napkin" version:
Pull daily or weekly spend and ROAS data from your platform. Drop it into Excel/Sheets in a long format. Chart it (spend along the bottom). Fit a linear/ polynomial trendline that best represents the relationship. Simple? You (hopefully) now have a curve that estimates expected return at any spend level. Tools like Google’s Performance Planner can also offer a similar estimate for each key word.

2️⃣ The "we're spending £/€1000s per day maybe we do this properly" version:
This is where Marketing Mix Modelling (MMM) comes in. With MMM, we estimate diminishing returns curves for each channel using historic performance data isolating the impact of media while controlling for all other factors.

This gives you a robust, channel by channel view of profitable scaling - allowing you to scale channel spend faster. Linea’s focus on building fast scalable solutions allows us to build this type of analysis for brands of all sizes.

If you're not already modelling diminishing returns, it's time to start. This can be the difference between growing profitably and just spending more.