Maximizing the impact of ad spend – and proving its value – is a major challenge for many brands. It’s easy to get lost in the sea of data provided by various platforms, and relying solely on platform-reported performance data can lead to a distorted view of your marketing funnel's health and true effectiveness.
The following insights are from our recent eMarketer Tech Talk webinar: Fixing the Funnel: Actionable Insights from 1,000+ Google and Meta Geo Tests – featuring Measured’s VP Client Partner Alex Lawrence and Chip Malt, CEO of cookware brand Made In.
To watch the complete webinar, please visit our Resource Center.
The Perils of Over- and Under-Crediting the Funnel
Lower-funnel media – being closer to the point of purchase – often receives disproportionate credit from the ad platforms. The competition among platforms to claim conversions increases as users move closer to buying, resulting in potential double or even triple counting.
Conversely, upper-funnel tactics, which target audiences who may not yet be aware of your brand, often get shortchanged. These tactics take longer to influence purchases and their impact may be attributed to mid- to lower-funnel ads that capitalize on the conversion.
This creates a dangerous dynamic: lower-funnel efforts appear to be performing exceptionally well, while the crucial upper-funnel activities seem less effective.
A critical issue in advertising is unreliable platform-reported performance data. Platforms like Google’s Performance Max (PMax) and Meta Advantage Shopping Campaigns (ASC) often over-credit lower-funnel media and under-credit upper-funnel investments, leading to misallocation of ad budgets.
Understanding the Bias in Platform Data
- Lower-funnel media (e.g., retargeting ads) is over-attributed because conversions are closer to the point of purchase.
- Upper-funnel media (e.g., awareness campaigns, YouTube ads) is under-attributed because it influences purchases outside of short attribution windows.
Incrementality: The Key to Accurate Measurement
To combat this platform bias, incrementality measurement provides an adjustment factor for every marketing tactic. Think of it as an exchange rate that allows for a fair comparison of performance across different platforms. This factor reveals the percentage of reported conversions that truly drive incremental growth for your business.
For example, a platform reporting a $4 ROAS with a 75% adjustment factor only contributes $3 of truly incremental ROAS. The remaining $1 is attributed to conversions that would have occurred regardless of the advertising effort. Upper-funnel media might even have adjustment factors greater than 100%, indicating under-reporting, while lower-funnel media will typically fall under 100%.
Incrementality testing, ideally through geo-tests that calibrate Media Mix Modeling, is essential to measuring the true performance across your entire media portfolio. Without it, you're likely over-allocating budget to mid- to lower-funnel channels simply because they look better on the surface.
The Impact of AI-Powered Campaigns
AI-powered ad campaigns, such as PMax and ASC can be powerful tools. However, their design often prioritizes conversion rate optimization, which can lead to over-crediting lower-funnel conversions.
Therefore, it's crucial to optimize these campaigns carefully to ensure they align with your true business goals and don't come at the expense of other parts of the funnel. By focusing on incrementality, adopting a holistic approach, and understanding the role of each funnel stage, marketers can effectively fix their marketing media funnel and drive sustainable growth.
Without proper measurement, marketers end up:
- Overspending on lower-funnel retargeting
- Underinvesting in brand awareness and new customer acquisition
- Chasing platform-reported ROAS, instead of true incrementality
How to Fix This?
- Exclude brand keywords from PMax – Brands that did this saw 50% higher incremental ROAS.
- Test audience exclusions in Meta ASC – Traditional prospecting campaigns had a 30% higher incremental ROAS compared to ASC when ASC ran without strict audience controls.
How to Identify Misallocation in Your Media Mix
One of the biggest red flags of media misallocation is post-sale sluggishness. Brands often run a major sale (e.g., Black Friday or Memorial Day) and then see a sharp drop in sales for the following two weeks. This happens when brands wipe out their funnel during peak periods but don’t properly reinvest in upper-funnel tactics to replenish demand.
This was a major red flag for the marketing team at premium cookware brand Made In. Click here to read the case study.
Like many brands, Made In had been spending heavily on Meta’s ASC for years as a key tactic in their overall media strategy. But performance data was volatile and subject to over-indexing and they needed a way to optimize in-platform performance for incrementality so they could develop a more accurate and efficient allocation strategy going forward.
Common Symptoms of Poor Media Allocation:
- Low new user growth (stagnant acquisition rates)
- Declining email engagement (indicating lack of fresh, engaged leads)
- Over-reliance on retargeting (causing diminishing returns)
- Skyrocketing customer acquisition costs (CAC)
Why ROAS Alone is Not Enough
While ROAS is a useful metric, relying solely on platform-reported ROAS can mislead decision-making. Instead, brands should shift toward contribution margin-based measurement, considering:
- Gross margin
- Discount rates
- Return rates
- Ad spend efficiency
This ensures ad dollars are driving real profitability, rather than just optimizing for platform-attributed efficiency.
A Holistic Approach to Funnel Management
To address these issues, a holistic framework for defining success across the funnel is crucial:
- Set Clear Goals: Establish specific goals and targets for each stage of the funnel, tailored to your brand.
- Test and Validate: Employ incrementality testing to measure and validate performance relative to your goals.
- Learn and Optimize: Use the insights gained from testing to optimize your media mix continually.
The Ideal Funnel Pattern
After adjusting for incrementality, a healthy funnel typically exhibits this pattern:
- Upper Funnel: Lower ROAS, but critical for long-term growth.
- Mid Funnel: ROAS around the average.
- Lower Funnel: Highest ROAS, but least incremental.
If your funnel deviates from this pattern, it's likely that you're either under-spending in the right areas or your top-of-funnel media is more conversion-focused than you realize.
The Importance of Awareness Marketing
While awareness marketing may feel risky in the short term due to its lower immediate ROAS and attribution challenges, it's essential for long-term growth.
Measured data reveals that brands that allocate at least 20% of their budget to upper-funnel strategies grow, on average, four percentage points faster than those that don’t.
For smaller brands ($0-$10M revenue), focusing on mid and lower-funnel tactics may be enough. But for scaling brands, awareness marketing is non-negotiable.
Agency vs. In-House: Aligning Incentives for Growth
If you rely on an agency to manage ad spend, your incentives may not always be aligned with theirs. Agencies are typically measured on ROAS, not incrementality, which means they are incentivized to:
- Focus on lower-funnel tactics to hit short-term ROAS goals
- Avoid long-term investments in awareness marketing
- Prioritize spend in PMax and ASC, which over-attribute conversions
Solution: Shift Agency Goals from ROAS to Incrementality
- Redefine agency KPIs to align with incrementality-based measurement
- Invest in geo-testing to validate true media impact
- Ensure upper-funnel investment is driving growth rather than just optimizing for last-click efficiency
How to Future-Proof Your Media Strategy
To stay ahead, marketers must embrace a test-and-learn mindset while balancing short-term efficiency with long-term scale.
Key Takeaways to Implement Today:
- Allocate 20-30% of your media budget to upper-funnel tactics (YouTube, TV, prospecting ads)
- Set contribution margin-based ROAS goals, rather than relying solely on platform-reported ROAS
- Use geo-testing and incrementality models to measure true media impact
- Optimize AI-driven campaigns (PMax, ASC) to prevent over-attribution of low-funnel conversions
- Align agency goals with incrementality rather than just ROAS
By making these strategic shifts, brands can maximize ad spend, drive sustainable growth, and optimize for long-term profitability.
Final Thoughts & Resources
As the advertising landscape evolves, understanding incrementality and full-funnel optimization is more important than ever. If you’re interested in a full-funnel analysis with a Measured expert, please reach out today.
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