Incrementality means the actual business impact caused directly by certain activities. It’s about deciding what would have happened if you didn’t run specific paid ads, launched a social media campaign, or run that out-of-home activity.
Consider a customer in your target market who wants to buy products from your online store. If they saw a paid ad or social post advertising a certain brand, you could argue that your marketing directly impacted their decision-making.
However, if they were already going to buy from you, the ads you’re measuring didn’t incrementally drive a purchasing decision, and so it’s hard to gauge the overall impact of your advertising and marketing efforts.
How can you be certain that your marketing investment was worth the money? According to Oberlo, global digital ad spending alone increased by 10.9% from 2023 to 2024, meaning that now is the ideal time to start checking where your money is going.
WHY IS INCREMENTALITY SO IMPORTANT FOR EFFICIENT SPENDING?
Efficient spending in marketing is all about making every penny count. It’s easy to fall into the trap of seeing increased profits from certain campaigns and assuming that they’ve worked effectively for you.
With incrementality, however, you can see just how efficient spending on specific marketing activities has been.
Attribution, which allows you to assign the value of a sale or conversion to various marketing touchpoints, differs slightly from incrementality. Instead of measuring the additional impact that a campaign has on sales/leads, attribution enables you to see how these channels contribute to sales or other business outcomes.
The issues start to arise when drilling down to the details, around 43% of retail marketers believe that the data they use in marketing attribution is inaccurate, despite 80% being confident in the accuracy of their web data analytics. This highlights the need for businesses to measure incrementality. With this method, you can better understand the value of your campaigns, which can in turn lead to more informed spending.
HOW CAN YOU MEASURE INCREMENTALITY?
The way that you measure incrementality in marketing depends entirely on what you want to track. You might, for example, want to measure the marketing incrementality of your website’s landing pages, social media post engagements or paid search traffic.
Regardless, you can run different control experiments to better understand what’s driving your marketing impacts.
One of the most popular experiments involves A/B testing with two groups of people. Say you expose one group to the paid media ads you want to measure and leave the other alone. You can hypothetically measure which connections you make naturally, and which directly result from your ads.
It’s one of the most popular incrementality experiments, with roughly 77% of companies running A/B testing on their websites, often in an attempt to identify why customer buying behaviours change.
Time series analyses, meanwhile, can help marketers to understand the direct impacts or underlying causes of incremental uplift over a given period.
For example, you might measure incremental interest before, during and after running social ads. Ideally, this data will show you what interest in your product(s) looks like with and without the campaign and its direct revenue and engagement impacts.
Other practices include predictive modelling and forecasting to measure incrementality, it’s all dependent on the case and resource available.
Brand marketers argue that this allows them to track what could happen without changing budgets or making new creative decisions, and without engaging individual users (which can be costly). Amy Gallo, in conversation with marketing analytics expert Kaiser Fung, echoes this in the Harvard Business Review. Gallo and Fung argue that much of the time, users don’t even know they’re taking part in A/B testing. Hypothetically, then, this removes the need to spend time and money engaging with them.
WHAT ARE SOME OF THE BIGGEST CHALLENGES?
Measuring incrementality is a long-term process. Combing through the data involved is always likely to be complex, especially when you’re running multiple campaigns at once.
Some of the biggest challenges can include building effective, non-biased test groups, moving away from broader attribution frameworks, deciding on optimal measurements and experiment durations, and considering seasonality (e.g., specific products selling better in December than in July).
In fact, around 24% of all digital marketers find performance analysis challenging. KORTX, the publisher of this data, suggests that focusing on business KPIs – which is made easier through incrementality – is more valuable than leaning into misleading insights and what it refers to as “vanity metrics”.
Of course, the challenges you’ll face when following incrementality will vary depending on what you want to measure and to what extent. It’s even more reason to work with digital marketers who can help you navigate these experiments.
WHAT TOOLS CAN YOU USE?
You can use a wealth of marketing analytics tools to dig deeper into data and better understand where your money makes the most difference.
Here’s a quick list of tools and software you could explore as a priority – but remember, there are no right or wrong choices. It’s important to determine the best providers for your specific measuring needs.
- Segment – An AI-powered data aggregator that cleans customer data for real-time insights and builds predictive models (it’s the fourth-ranked analytics software worldwide).
- Qualtrics – A program that tracks industry trends, long-term KPIs and offers built-in A/B testing.
- SegmentStream – An AI-powered platform that lets you build custom control groups and compare local data to enhance marketing budget decisions.
THE VALUE OF INCREMENTALITY
There’s a chance that you’re wasting marketing money in areas that just aren’t driving sales and engagement.
If you look at attribution alone, it’s easy to assume that you’re making the most of your marketing budgets. However, research suggests that many companies are wasting up to 60% of their digital marketing spend.
Measuring incrementality gives you a clearer picture of your performance with and without certain marketing activities. Is it worth funnelling money into Instagram campaigns, or are you better off repurposing it for local SEO?
Keep an open mind and be more data-driven – it pays to experiment.
