What is Incrementality Testing?
Incrementality testing creates an experiment that systematically withholds media channel exposure to a representative subset of users (the control group) while maintaining normal media channel exposure to the broader user set (the test group). If the control group is both sizable enough to be statistically significant and selected at random such that they are broadly representative of the user base, then the media channel’s incremental contribution can be determined by the difference in business outcome (conversion, revenue, profitability, etc.) between the test and control groups.
Incrementality testing is sometimes referred to as Incremental Sales Lift, Uplift Modeling, or A/B testing.
Difference between Incrementality and Lift
- “Incrementality” indicates the portion of last touch conversions that were truly driven by that Media.
- “Lift” indicates the increase to the overall business that these incremental conversions represent.
How Do You Calculate Incrementality?
In general, the control group should represent a minimum of 10 percent of the total test and control reach. The test group will receive your ad, media in question; the control group will not receive the ad message. There are multiple ways to build a control audience. Some examples are:
- Flight a placebo ad or PSA ad (Public Service Announcement) that is irrelevant to your business ad to an exact replica or mirror audience of the exposed audience.
- Hold out a subset of the target audience and suppress from the ad exposure.
- Programmatic executions have counterfactual bid loss data for the target audience that did not win the media auction.
In order to calculate incrementality, we want to calculate the conversion difference between the test group versus the control.
Incrementality Calculation Formula
(Test Conversion Rate – Control Conversion Rate) / (Test Conversion Rate) = Incrementality
Incrementality Test Calculation Example
Your test group saw 1.5% conversion whereas your control group saw a 0.5% conversion. The control data suggests that, without any media exposure, you would have seen a 0.5% conversion. Keep in mind that conversion could mean leads, sales, profit or whatever metric that is important to your business.
So (1.5% – 0.5%) / 1.5% = 66.7% incrementality in conversions
Incrementality is volatile and it is important to look at it longitudinally over time, within business context. Statistical significance has two primary variables: difference in conversion rates (%CR) and sample sizes. The larger the difference in conversion rates, the less sample you need. As a general rule, we like to see a control reach > 10% of the total test and control reach.
What Techniques Measure Incrementality of Marketing Channels?
Incremental sales driven by a media tactic are calculated using advanced marketing measurement techniques. There are three major types of advanced marketing measurement techniques.
Why is Incrementality Testing Needed?
Advertising where there are a lot of impressions but not immediate action like a click has brand value that ultimately leads to conversions or sales. Channels such as online display, video/YouTube, Facebook, TV, direct mail all provide impressions but it’s not always measured at the click or direct response level. You can read more about the following channels here:
- Measuring Incrementality on Display Advertising
- Measuring Incrementality on Facebook
- Measuring Incrementality on Direct Mail
- Measuring Incrementality on Catalog
Measured Incrementality Testing
Measured provides incrementality measurement and testing with ease and speed. We are already plugged into 100+ media platforms which allows us to run 100s of audience-level testing with quick set up. Find out your incrementality across your media channels.