What is Incrementality in Marketing?

Incrementality in marketing refers to the concept of quantifying the actual sales lift originating from investments to media, in contrast to sales driven by other factors, such as seasonality, promotions or organic demand. Incrementality-based measurement provides marketers an estimate how much additional revenue each channel and campaign have been driving.

Example of Incrementality in Digital Marketing

You're Head of Marketing in an eCommerce business and have just wrapped up your Black Friday campaign. It's time to analyze the results: which channels performed well, and which ones didn't. Like many eCommerce businesses, you're using last-click attribution for cross-channel measurement.

You first look at Branded Search. Last-click attribution is telling you that Branded Search has been driving $800,000 worth of revenue. You invested only $50,000, so the ROAS (Return on Ad Spend) is 16. Looks great!

You then look at your Meta Advantage+ campaigns. Last-click attribution is reporting that Meta Advantage+ campaigns drove $140,000. Huh, seems rather small compared to the spend of $100,000. The ROAS is 1.4.

Conclusion based on this data? Because last-click reported ROAS for Branded Search is so much higher than for Meta Advantage+, you are tempted to reduce spend on Meta Advantage+, and increase spend on Branded Search.

But is this the right conclusion? Your gut is telling you there's something sketchy about the numbers. Coincidentally, your friend is running marketing in another eCommerce business. She has been using Marketing Mix Modeling (MMM) for a year now to measure the true incremental sales impact of media.

You decide to test MMM as well, by starting a free trial. You learn that only 25% of sales reported by last-click attribution for Branded Search during Black Friday were incremental, meaning that the true ROAS is 4.0. You also learn that the true incremental sales impact of Meta Advantage+ is 4x compared to what last-click is reporting, meaning that the true ROAS is 5.6. The table below summarizes the situation in this example:

New conclusion? The situation has turned around: Meta Advantage+ was actually more effective that Branded Search. You decide to adjust your spend allocation more towards Meta Advantage+.

Visualizing Incrementality

The most common way to visualize incrementality is the sales decomposition chart that is often used in Marketing Mix Modeling (MMM). Sales decomposition chart shows which part of your sales was truly driven by marketing, and how much of your sales was driven by other factors. Below is an example of a sales decomposition chart for an eCommerce business on the Sellforte platform, where

• Bases Sales (Dark gray) represents sales you would get without media or promotions
• Promotion-drive sales (Light gray) represents sales driven promotions
• Media-driven sales (Colors) represent incremental sales driven by advertising on different platforms.

Why has Incrementality Become Popular?

While the concept of incrementality has been around for decades, it became popular in the 2020s as a counter-force to attribution-based media measurement.

Advertising platforms' own attribution methods typically overestimate campaign effectiveness, because they are unable to distinguish between

• Conversions that would have happened without media,
• Conversions that were truly incremental, driven by advertising on the platform, and
• Conversions driven by other advertising platforms.

Similarly, cross-channel attribution, like Last-Click attribution, suffers from inability to measure the true incremental sales lift of different media, typically penalizing top-of-funnel channels, like Paid Social, and over-crediting bottom-of-funnel channels, such as branded search. Last-Click's challenges have been widely reported in comparison reviews to incrementality-based measurement:

• The 3 Danger Zone of Last-Click
• How to measure Meta correctly? GA4 Last-Click vs. MMM
• How to Measure the True Effectiveness of TikTok Ads?

As an example, the chart below shows the typical multipliers for Meta Ads when transitioning from Google Analytics 4 Last-click to incrementality-based measurement:

Why Does Incrementality Matter for Advertisers?

By starting to measure the true incremental sales driven by each channel and campaign, advertisers can asses the true ROI of their channels and campaigns, which enables advertisers to re-allocate their spend to most effective channels and campaigns.

Based on Sellforte research, transitioning from attribution-based measurement to incrementality-based measurement helps eCommerce business drive +6.5% more revenue. This comes from three improvement levers:

1. More effective allocation across individual campaigns
2. More effective spend allocation across channels
3. More optimal budget pacing over time (weekly spend allocation)

Most of the improvement is in campaign-optimization, as shown by the image below:

How is Incrementality Measured?

Incrementality can be measured using methods that estimate the causal relationship between marketing activities and sales of the company. The two of the most common methods are:

1. Marketing Mix Modeling (MMM): Statistical time-series methods for estimating relationship between media and sales.
2. Incrementality tests (Incrementality experiments): Controlled experiments to compare groups who are exposed to advertising vs. groups who are not exposed to advertising.

In practice, modern media measurement solutions, such as as Sellforte combine MMM and incrementality tests for robust measurement. Incrementality tests are used to calibrate MMMs, and MMM provides continuous ROI measurement for all channels.

For a real-world example of modern media measurement, you can visit the no-sign-up Sellforte demo.

Case example: Brand Alley Started Incrementality-based Measurement with MMM and Conversion Lift Test

In a Sellforte case study, Brand Alley, a UK-based online fashion eCommerce, transitioned to incrementality-based measurement, leveraging both MMM and experiments.

Brand Alley first deployed Sellforte's MMM, to measure the true incremental sales impact of their channels. Brand Alley then started incorporating experiments, first focusing on Meta Ads using Meta's Conversion Lift test. Read the full case study here.

Authors

Lauri Potka is the Chief Operating Officer at Sellforte, with over 15 years of experience in Marketing Mix Modeling, marketing measurement, and media spend optimization. Before joining Sellforte, he worked as a management consultant at the Boston Consulting Group, advising some of the world’s largest advertisers on data-driven marketing optimization. Follow Lauri in LinkedIn, where he is one of the leading voices in MMM and marketing measurement.