Diminishing Returns

Definition

The point at which additional marketing spend stops producing proportional results. It's when you've already converted everyone who will reasonably convert, and the remaining holdouts aren't worth the cost to persuade.

Example Usage

We're seeing diminishing returns on our Facebook ads after spending $50K this month—time to shift budget to untested channels.

Origin

Economics theory applied to marketing optimization, 1900s-modern era

Fun Fact

Most marketers hit diminishing returns around 70-80% market saturation in a given channel

Source: Economics and Marketing Optimization Theory

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ascription

In data analytics and sociology, the act of assigning credit, blame, or characteristics to a person or thing based on analysis rather than self-identification. Marketers use this to decide who deserves credit for a conversion, while sociologists use it to study how society boxes people into categories they didn't choose. Both involve making assumptions that may or may not reflect reality.

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