Why Incrementality Measurement Matters for your Business?
Introduction
Taking platform-based marketing campaign reporting at face value can be hazardous, lead to bad decisions, or lost revenue. Determining which marketing investments are contributing to key business metrics and by how much is critical to evaluating campaign success and influencing strategic decision making. Incrementality measurement can help identify where to allocate resources most efficiently and identify opportunities to scale or expand media spending for maximum growth or return on ad spend. For a quick synopsis regarding incrementality measurement, you can read this related blog post by my colleague Brad Kossmann: Incrementality: An Explainer
What Questions Can be Answered by Incrementality Measurement?
With incrementality measurement, you will be able to answer questions like:
How Do You Measure Incrementality?
The most accurate way to measure incrementality of digital marketing campaigns is by implementing testing and experimentation processes. To measure incrementality, the campaign audiences are randomly split into test and control groups. Calculating the difference in conversion rates between the test and control groups returns the marginal incremental contribution of that marketing channel. Incrementality measurement can vary in complexity from a simple holdout test as described above to complex multivariate experiments that require the expertise of a trained data scientist. When carefully designed and executed, controlled experiments can utilize data from an unlimited number of sources to reveal the incremental impact of almost anything marketers want to test – on any outcome that can be measured.
How is Incrementality Calculated?
Incrementality is most accurately and effectively measured through the proven test & control experiment methodology. By withholding the advertisement (the treatment) being tested from a significant sample of the intended audience (the control group), marketing professionals and data scientists can determine the natural rate of conversion of the target audience when they are not exposed to the treatment. Subtracting that percentage from total conversions by the exposed audience (the test group) results in the actual incremental contribution of the media or marketing channel in question.
Incrementality measurement can vary in complexity from a basic holdout test as described above, all the way up to complicated multivariate experiments that require the expertise of an experienced data scientist. However, when carefully designed and executed, controlled experiments can make use of data from numerous sources to uncover the incremental impact of just about any variable marketers may want to test. The basic structure of the experiment follows: the test group will receive the ad; while the control group will not receive the ad. Sounds simple, but it is crucial to have the proper data collection methods in place prior to beginning testing and following stringent testing protocols that will allow for confidence in the results.
Why does any of this matter?
Campaign managers and marketing professionals do not only care about impressions and clicks, but also want to understand the full cost and impact of their marketing efforts. Relying on measurement techniques that are dependent on tracking users and pixels, like last touch attribution, is becoming increasingly difficult in today’s digital privacy focused world. Another problem with relying on other measurement techniques is that it can lead to sub-optimal business decisions and marketing strategies with a cookie-less world on the horizon. Incrementality measurement has its roots firmly based in the scientific method and is the only true way of determining the causal effects and impact of your marketing efforts.
If marketing performance measurement is not based on actual transaction data, companies could accidentally reduce budgets from high-performing channels or miss an opportunity to reallocate their budgets into a more lucrative channel. Incrementality testing can answer key questions about the true impact of marketing efforts like: “if I reduce my social media budget, how many sales would I potentially lose?” or “how much can I increase my spending in Display media while maintaining my ROAS (Return on Ad Spend) goals?” Major players in the digital marketing industry like Facebook & Google have already acknowledged that last touch platform reporting is unreliable and that companies should embrace a data-driven culture of decision making based on incrementality testing.
At Softcrylic, our Data Science & Analytics team is well-versed in many of the current attribution models and data platforms. We host attribution workshops where we can meet directly with you and your team to discuss how to address the needs and meet the goals of your business. We also publish a newsletter that discusses many of these topics to keep you informed of changes in the industry and new developments in the field. Softcrylic has helped many clients successfully achieve their marketing attribution goals by implementing solutions like Tapestry Passport or in some cases more bespoke measurement solutions tailored to fit their specific needs. If you have any questions about incrementality measurement or would like a free consultation on any of the solutions discussed above, please feel free to contact us by email: info@softcrylic.com.
