What is marginal ROAS?
Start with the version most reports show. Regular, or average, ROAS divides all revenue by all spend. Marginal ROAS looks only at the change: how much extra revenue the extra spend produced.
The difference matters because returns diminish. The first dollars in a channel reach the most responsive people, and later dollars work less hard. A channel can show a strong average ROAS while its next dollar barely pays back.
How do you calculate marginal ROAS?
Marginal ROAS is the change in revenue divided by the change in spend between two spend levels.
| Spend level | Revenue | Average ROAS | Marginal ROAS of the step |
|---|---|---|---|
| $100,000 | $500,000 | 5.0 | n/a |
| $150,000 | $650,000 | 4.3 | 3.0 |
| $200,000 | $725,000 | 3.6 | 1.5 |
In this illustration, average ROAS still looks healthy at $200,000, but the last $50,000 returned only $1.50 per dollar. In practice, marginal ROAS is read from a response curve built by marketing mix modeling, or measured with spend tests.
What is an example of marginal ROAS?
Two channels with the same average
Search and paid social both show an average ROAS of 4.0. Search is near saturation, so its marginal ROAS is 1.2. Paid social still has room to grow, with a marginal ROAS of 2.8.
Moving the next $50,000 into paid social rather than search produces more revenue for the same total budget, even though the averages looked identical.
Marginal ROAS vs. average ROAS
| Average ROAS | Marginal ROAS | |
|---|---|---|
| Formula | Total revenue / total spend | Change in revenue / change in spend |
| What it describes | Every dollar spent so far | The next dollar |
| Effect of saturation | Hides it for a long time | Shows it early |
| Best used for | Reporting past performance | Deciding where more budget goes |
Why does marginal ROAS matter?
Budget decisions are often about the next dollar. Using average ROAS to make them tends to keep adding money to channels that are already saturated.
- Smarter reallocation. Shift spend from channels with low marginal returns to channels with headroom.
- Realistic targets. Set expectations for a budget increase based on the next dollar, not the average.
- A clear stopping point. Stop increasing a channel when the next dollar no longer pays back.
How does Alli do this?
Alli by PMG's Scenario Planner models media response by channel, alongside signals from Alli Brand Equity, and shows where each channel's returns start to diminish. Diminishing-return curves show channel saturation, and brand-adjusted ceilings show how brand strength can raise the point where returns drop.
Teams test reallocation scenarios, lock channels they want to hold, see predicted revenue for each option, and take the strongest plan into Alli Media Planner.
Explore Alli Scenario PlannerMarginal ROAS FAQ
What is the difference between marginal ROAS and ROAS?
ROAS usually means average ROAS: total revenue divided by total spend. Marginal ROAS is the return on the next dollar of spend, which is usually lower because returns diminish as spend rises.
What is a good marginal ROAS?
It depends on your margins. A common rule is to keep adding spend while the next dollar returns more than it costs after margin, and to balance marginal returns across channels.
How do you find marginal ROAS?
Compare revenue at two spend levels and divide the change in revenue by the change in spend, or read it from a channel's response curve in a marketing mix model.
Is marginal ROAS the same as incremental ROAS?
They're related but not identical. Incremental ROAS measures the revenue marketing caused versus no marketing. Marginal ROAS measures the return of an additional increment of spend on top of current spend.
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