Response Curve

In one line

A response curve shows how conversions respond as spend rises — typically S-shaped: efficient at first, then flattening out, eventually going nearly flat.

Why it matters

Once you're in the flat part of the curve, more spend barely moves conversions. Estimating this curve lets you judge whether a channel still has room to scale or is already saturated.

Where it's used

Once you have a channel's response curve, you can derive its marginal CPA and use that to decide where to allocate more budget.

What to watch out for

A response curve is estimated from past data, so predictions far beyond any spend level you've actually tried are unreliable. It's safer to scale gradually near the range you've already tested.

Go deeper

Using response curves to optimize budget allocation is covered in Marketing Budget Allocation.