Incrementality Explained

Crucial in marketing measurement lies a concept that has been gaining increasing attention in recent years: incrementality. In this blog post, we’ll walk you through this fundamental concept, offering a brief explanation and highlighting its significance.

At its core, incrementality signifies the impact that marketing efforts have on your performance metrics. Specifically, it refers to the additional sales generated as a result of marketing campaigns when compared to a scenario lacking of such initiatives. This concept is best understood when visualised through a graph.

Essentially, when we speak of incremental sales attributed to a particular marketing channel, we’re delving into the added value of marketing. It quantifies the extra sales brought about solely by integrating an additional channel into your marketing mix. It can be defined in any of your performance metrics, like sessions, orders or leads. This distinct value generated by each marketing channel -incrementality- offers high quality information for steering budget.

But why is this concept so crucial?

Traditionally, marketing performance has been evaluated through metrics such as clicks and various attribution models, often labeled as AI-driven or data-driven. However, these models tend to distribute the entirety of sales among marketing channels, without accounting for the wide range other factors that influence consumer behaviour. Consider elements like word of mouth, market size, loyal customers, pricing strategies, and more, all of which contribute to sales but are overlooked in conventional attribution models.

By prioritising incrementality in Attribution, we shift our focus solely to the incremental value brought about by marketing efforts. Instead of dividing the entire sales pie among marketing channels, we allocate each channel its rightful share, leaving room for the influence of other contributing factors. In essence, incrementality unveils the true efficacy of your marketing efforts, empowering you to make informed decisions that drive growth while optimizing expenditure.

Measuring incrementality is best achieved through incrementality experiments. Divide your marketing audience into two groups: a control group and a test group. Pause a marketing campaign or channel in the test group, while maintaining regular marketing activities in the control group. The variance in your performance metrics between these groups represents the incremental impact. More information on incrementality testing in our Blog