What is incrementality in marketing?

What is Incrementality in Marketing?

Incrementality in marketing is the lift or increase in the desired outcome (for example, awareness, web visits, conversions, revenue, profitability) provided by marketing activity. Incrementality marketing helps businesses make data-driven decisions by understanding the impact of their campaigns on paid media at the channel, tactic, campaign, or ad set level. Incrementality marketing is particularly crucial for channels where ad impressions are difficult to map and measure, such as “walled garden” social channels like Facebook, Snap, and Pinterest, or even TV and direct mail.

Why Is Incrementality Measurement Important for Media Investment?

Incrementality measurement is essential for optimizing media investment and making informed investment decisions. Ad platforms often use flawed last-touch attribution methods due to their limited access to data outside their own environments. Reports provided by ad platforms may not match site-side analytics reports or a brand's sales data, which can lead to inaccurate media investment decisions.

To optimize media investment for maximum ROI, marketers must know which media investments contribute to business metrics and by how much. Incrementality measurement identifies opportunities to eliminate waste and scale, expand, and reallocate media spend for maximum growth.

Benefits of Incrementality Measurement in Media Investment Decisions

Incrementality measurement can help you answer questions like:

• Which media channel, publisher, or campaign is contributing to my desired outcome (leads, LTV, ROAS, revenue, net profit/$, etc.)?
• What happens if I start buying media from a new platform or if I reduce or stop buying ads with a platform?
• Will launching new campaigns or ads increase contribution to conversions at the portfolio level or will it cannibalize from other channels?

Incrementality measurement helps businesses make data-driven media investment decisions to optimize their media investments.

How to Measure Incrementality of Media Investment?

The most accurate way to measure incrementality of media investment is through testing and experimentation. To measure incrementality, audiences are randomly segmented into test and control groups. The difference in conversion rates between the two groups demonstrates the marginal incremental contribution of that media channel.

Maximizing Media Investment Through Incrementality Measurement

Incrementality measurement can vary in complexity from a simple holdout test to multivariate experiments that require the expertise of a trained data scientist. When carefully designed and cleanly executed, controlled experiments can utilize data from an unlimited number of sources to reveal the incremental impact of just about anything marketers want to test – on any outcome that can be measured.

Incrementality measurement can help marketers understand the true value of their media investment, allowing them to adjust their spending accordingly and improve overall ROI.

Incrementality Measurement Case Study: Soft Surroundings

Soft Surroundings, a women’s clothing retailer, chose to work with Measured to better understand and optimize their retargeting efforts. By incorporating incrementality measurement, they were able to make more informed media investment decisions.

Measured’s retargeting experiment revealed that the incremental cost per acquisition CPA(i) was well above CPA targets and what was reported by the vendors. The company’s largest retargeting vendor by spend was heavily over-indexed and serving ads beyond a recommended frequency cap.

As a result of these findings, retargeting budgets were reduced by 52% in the next few months. The extra budget was shifted to higher-performing prospecting tactics like Facebook. Topline revenue improved 17% MoM while yearly sales comps increased 12%.

The Impact of Incrementality Measurement in Marketing

Incrementality measurement allows businesses to optimize media investment by identifying the most effective channels, audiences, and platforms for their advertising efforts. This leads to better investment decisions and increased ROI. Implementing incrementality measurement can greatly enhance a brand's marketing strategy and overall performance.

Other methods of measurement, such as media mix modeling (MMM) and multi-touch attribution (MTA), cannot measure views or impressions, so you’re essentially just measuring clicks. Incrementality measurement accounts for the impressions and clicks within each of the platforms under test to give marketers a more accurate view of the true contribution of their media across the entire portfolio.

Read our guide all about incrementality management!

Video: Leveraging Incrementality to Value Retargeting vs. Prospecting

Only Measured delivers ongoing, reliable insights based on scientifically sound experiment designs that incorporate your source of truth transaction data. Everything is automated – ingestion and management of data from hundreds of sources, experiment design and implementation, and continuous reporting for confident, agile decision-making.

Could your advertising deliver more business value?

Try the free incrementality calculator to reveal how much you could improve your CPO or ROAS by replacing last-click with incrementality measurement.

Want to learn more? Get a Demo