The question “Are my ads working?” plagues every marketer I know. But because marketing deals with the complexities of human behaviour, answering this question requires more than simple “likes” and click-through rates.
While it is impossible to answer with absolute confidence why an ad influences people’s buying decisions, while another gets lost in the noise, with innovative technology and data science, we are continuously getting more clarity into the buyer’s journey.
One innovative concept has in the last year caught the attention of many marketers who want to measure their progress in more concrete terms. This concept is known as “incrementality”.
The question incrementality tries to address is whether its ad spend actually drives new subscribers.
What is incrementality?
How is incrementality defined? Let’s start with an example. Consider Netflix, a household name everyone familiar with. Netflix spends a fortune producing and promoting its content.
The question incrementality tries to address is whether its ad spend actually drives new subscribers. Put another way, would new subscribers have signed up independent of the ads?
Answering this question would be very valuable to Netflix, as it would help them deploy promotional dollars in a cost-effect way that drives tangible business results.
With incrementality, you are trying to find out whether an ads impact signups or purchases.
Incrementality is often confused with A/B testing. They are, however, two very distinct concepts.
In A/B testing, you compare the performance of two creatives to see which one drives better click-through or conversion rates.
Incrementality demonstrates how native advertising, historically viewed as a mid-funnel strategy, actually impacts bottom-of-the-funnel metrics such as leads or sales using both to prospecting and retargeting efforts.
In the coming 12 months, incrementality measurement will start gaining momentum outside of e-commerce segment.
According to eMarketer, in Q1 2018, 57% of US e-commerce retailers already perform some form of incrementality. The frequency at which they measure it for the majority of them is quarterly (51%).
Being the only chart covering incrementality, eMarketer signals the nascence of the methodology and the opportunity to bring deeper insights into the channel performance.
As more marketers shift from the spray-and-pray approach to buying media and using sophisticated technologies to deliver targeted advertising, the topic of incrementality will become increasingly prevalent.
In the coming 12 months, incrementality measurement will start gaining momentum outside of e-commerce segment, expanding into industries such as travel, automotive, healthcare, and other segments where advertisers are looking for user opt-in (lead) or purchase online.
Agencies can take advantage of the incrementality trend by aligning their work closer to the metrics that affect the bottom-line metrics for the brands they work with.
This is the mentality with which consultancies are starting to compete with agencies, and there is an opportunity for agencies to further develop the “measurement muscle” to battle more effectively for brands’ dollars.
On the technology front, it isn’t far-fetched to see advertising platforms in the future mandate incrementality for all conversion-based campaigns to push marketers to measure what matters.