Accurate data measurement in marketing plays a crucial role in optimizing media investment and enabling well-informed decisions. Although ad platforms like Google Analytics or Facebook Ads currently provide reports on the effectiveness of marketing activities, there remains a risk of under- or overestimating the impact of certain media channels. This occurs because ad platforms heavily rely on the last-touch attribution method having limited access to data beyond their own environments. It often doesn't show an accurate picture of exactly which media channel drove the customer to make a purchase. As a result, disparities arise between the reports generated by ad platforms, site-side analytics reports, and a brand's sales data that ultimately lead to erroneous media investment choices. To address this challenge, today's post will delve into the concept of Incrementality measurement as a potential solution.
What is Incrementality in Marketing
Incrementality is the increase in desired metrics generated by a certain marketing campaign or strategy. It aims to determine whether the marketing efforts actually contribute to the desired outcomes or whether those outcomes would have been achieved anyway without the marketing intervention as multiple factors may influence customer behavior simultaneously.
Incrementality analysis enables marketers to evaluate the true impact of their campaigns, optimize marketing spend, and allocate resources more effectively. It helps answer questions like whether a particular marketing channel or tactic is driving incremental results or simply cannibalizing existing demand, and whether the investment in a campaign is generating a positive ROI.
Moreover, advertising that generates numerous impressions, even without immediate clicks or actions, still holds a significant brand value that ultimately contributes to conversions or sales. Various channels like online display, YouTube, Facebook, TV, and direct mail generate impressions, even though they might not always be assessed based on clicks or direct responses. This is precisely where incrementality testing plays a crucial role.
Benefits of Measuring Incrementality
There are several benefits of measuring incrementality. Firstly, it helps marketers identify the true impact of each marketing channel and strategy on sales, enabling them to allocate their resources more efficiently. Secondly, it helps marketers avoid investing in channels that don't add incremental value and redirect those resources toward channels that do. Thirdly, it helps marketers optimize their campaigns by identifying the most effective messaging, creative, and targeting strategies.
How to Measure Incrementality of Media Channels
Measuring incrementality is usually done through testing and experimentation. To begin, it is important to establish a control group unaffected by any marketing efforts from the brand. Next, a test group should be formed, which will be exposed to the advertisement, and then the revenue generated by both groups can be compared. This allows marketers to isolate the incremental impact of the marketing activity from other factors that may influence sales or revenue.
The incrementality calculation formula varies depending on the specific scenario and KPIs being measured, but a common formula for measuring incremental lift is:
In this formula, the conversion rate refers to the percentage of individuals in each group who took the desired action, such as making a purchase or signing up for a newsletter. The incremental lift indicates the percentage increase in the desired outcome that can be attributed to the media channel.
In conclusion, measuring incrementality is critical for marketers to understand the true impact of their marketing activities on sales or revenue. Fieldstream marketing analytics platform offers a machine learning model to identify the true effect of all marketing activities. The model can be even more accurate by insights derived from scientifically rigorous experiments, which integrate your authentic data. That is why Fieldstream can guide you to incorporate incremental uplift studies as a part of the marketing strategy. Enabling you to make confident and agile decisions.