Marketing forecast accuracy improves once platform, incremental, and marginal ROAS are tracked separately, not blended into one number. This matters because platform ROAS shows audience quality, incremental shows if advertising worked, and marginal shows what the next dollar does. Without marginal ROAS, marketers fund a channel past the point average drops below target, instead of reallocating immediately. This video explains how combining all three raises the odds of hitting forecast.
Why Marketing Forecast Accuracy Depends on Three Different ROAS Metrics
Marketing forecast accuracy depends on three different ROAS metrics, because each one answers a genuinely different question, and using the wrong one to make a spending decision is exactly what causes a missed forecast. In this conversation, Jon Lorenzini and John Wallace of LiftLab define the three: platform ROAS, which mostly reflects how qualified an audience already was rather than whether advertising did anything; incremental ROAS, which strips out that baseline to isolate advertising’s real contribution; and marginal ROAS, which measures specifically what the most recent dollar spent actually returned.
Wallace argues marginal ROAS is where the real optimization happens, since managing to an average means a channel keeps absorbing bad spend until its average finally drops below target, while managing to the marginal number lets a marketer reallocate the moment performance actually turns. Lorenzini ties this back to forecasting directly: agencies and brands alike are ultimately rallying around hitting the number, and understanding marginal effects is what raises the odds of getting there, or at least surfaces early enough that a brand isn’t going to hit forecast so there’s still time to intervene, whether through more spend, a promotion, or another lever entirely, rather than finding out only when the quarter closes.
In this video, you’ll learn:
The fundamental differences between platform ROAS, iROAS, and mROAS
Why optimizing for average ROAS often leads to inefficient spending
How marginal ROAS identifies the saturation point of advertising channels
The value of using incremental data to improve forecast accuracy
Strategic ways to adjust media spend based on performance metrics
TIME STAMPFull Video Transcript: Platform ROAS, Incremental ROAS, and Marginal ROAS Explained
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In this video, Jon Lorenzini and John Wallace explain the difference between platform ROAS, incremental ROAS, and marginal ROAS, and why marginal ROAS should drive reallocation decisions.
[0:00 – 0:24] Defining the Three ROAS Metrics
[Jon Lorenzini]: There’s three different metrics, and they tell different stories. Your ROAS is what happened and how qualified was your audience, basically. It doesn’t really say does advertising work. That’s iROAS, because you’re removing the baseline; you’re removing what would have happened anyway without the advertising. iROAS is incremental.
[0:24 – 0:49] Optimizing with Marginal ROAS
[John Wallace]: And then mROAS is, with those incremental dollars, what did that last dollar do, or where along the curve are you for that specific value? And really, that’s where you want to optimize, because if you optimize on averages, you have to keep spending bad money before your average drops below your goals. If you’re using the marginal, you know the second it drops below, and then you could reallocate those dollars to higher performing channels.
[0:50 – 1:31] Improving Forecast Accuracy
[Jon Lorenzini]: I think if you have those three metrics, the platform ROAS, incremental ROAS, and the marginal ROAS, it does kind of simplify down to, you’re more likely to hit your forecast if you’re making investments by understanding the marginal effects. If we all have, and I think the agencies are on board, they want to see their clients hit their forecast, so that ends up being the rallying point. We know we’re not going to hit our forecast every time, but how do we increase our odds of hitting our forecast, or let’s also reserve the room to say, we can’t get to this forecast with this much paid media. I’d rather know that ahead of time and give guidance and be able to take an intervention, be it more spend or another promo or something like that, than to just miss the forecast.
Key Lessons: Using Platform, Incremental, and Marginal ROAS Together
Metric definitions: Platform ROAS represents overall audience quality, iROAS identifies the true incremental impact of ads, and mROAS measures the efficiency of the final dollar spent.
Optimization strategy: Prioritizing mROAS allows marketers to stop spending on low-performing channels the moment they drop below target goals, preventing wasted budget.
Forecast alignment: Combining these metrics creates a more reliable framework for hitting forecasts, allowing for proactive interventions like adjusting media spend or promotional tactics when targets are at risk.
