Understanding Incrementality in Marketing: Q&A with SeQuel’s Senior Marketing Strategist, Ryan Wilder
Measuring incrementality in marketing campaigns provides a critical view into the direct impact and true value of your channels and strategies on audience behavior. In today’s Q&A, SeQuel’s Senior Marketing Strategist, Ryan Wilder, answers top marketer questions about marketing incrementality. Keep reading to learn the best methods to measure incrementality and how to optimize your marketing efforts to drive business growth.
What is incrementality in marketing?
Wilder: Incrementality in marketing refers to the additional business outcomes, typically conversions or revenue, that are directly attributable to a marketing strategy or campaign. An “incremental lift” is the boost in results that happens when the marketing campaign causes more success than would have happened naturally. Measuring incrementality is important because it helps marketers determine the true impact of their advertising efforts. It also prevents them from misattributing sales to marketing efforts that may not have actually influenced conversions.
How can measuring incrementality help optimize marketing campaigns?
Wilder: When marketers discuss Return on Investment (ROI), they are often looking at the overall effectiveness of their campaigns in generating revenue. This does not always reveal the true incremental impact of a campaign. By measuring incrementality, marketers can make better informed decisions about where to allocate their budget and optimize their marketing channels and campaigns for maximum ROI.
What is the best method for measuring incrementality in marketing?
Wilder: Measuring incrementality can be complex, but it’s essential to understand the impact of your campaigns. One of the most popular methods for measuring effectiveness is A/B testing with control groups. This method compares the behavior of a group exposed to the campaign (test group) with a group not exposed (control group). This helps determine the impact of the campaign on the target audience. The common metrics used to track and evaluate incrementality are sales lift, conversion rate, and customer acquisition cost.
How does incrementality measurement relate to attribution?
Wilder: You can use both metrics individually to evaluate marketing campaign performance and optimize strategies, but together, they provide a comprehensive view of your campaign’s influence. Incrementality measures the additional results that a campaign generated above what would have naturally occurred. Attribution assigns credit to an individual touchpoint or channel in the customer journey.
What are the challenges and limitations of incrementality measurement?
Wilder: Reliable measurement requires high-quality data to ensure insights are accurate and not misleading. Finding or creating a control group that accurately represents that of the test group can be a challenge. For example, some agencies use a sample from the general population as the holdout group, rather than using a percentage of the mailing list audience as the control. This biases the results in favor of the test group because the general population is not a representation of the true potential customers. Protecting the control audience from exposure to other campaigns right before the incrementality test is also challenging, but important to ensure they are a true holdout. External factors such as seasonality, economic conditions, and competitive actions can also influence audience behavior and make it harder to isolate the campaign’s impact.
How can marketers maximize incrementality?
Wilder: Audience segmentation, introducing new channels, and personalization are three strategies that can significantly boost incrementality by delivering relevant content, on the best channels, to audiences that may not otherwise have converted. In addition, the modeling build process should mirror the KPI. If the goal is to drive incremental sales, marketers should attempt to identify which sales are truly incremental and use that audience as a seed file to build data targeting models from. For example, a SeQuel client sought to scale its new audience reach and increase conversions while effectively measuring the incremental cost of acquisition (CAC). Within the first year, a regular audience testing strategy produced a 20% cost savings. To continue to drive scale and elevate the program, SeQuel tested and implemented digital marketing and shared mail strategies and measured their incremental impact. For the past five years, direct mail has emerged as a top-performing channel for the client.
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Marketers who can accurately gauge the incremental impact of their campaigns will be better equipped to justify their budgets, refine their strategies, and drive sustainable growth for their businesses.
We are here to help! To learn more about campaign attribution and measuring incrementality in marketing, check out our free e-books, The Ultimate Guide to Direct Mail Attribution, or Optimizing Direct Mail for Performance, Profitability and Scale. You can also contact a SeQuel Strategist directly to learn more about performance measurement.