Incrementality in marketing refers to the measure of the additional value or impact generated by a specific marketing campaign or channel compared to a baseline scenario where no marketing efforts are implemented. It seeks to quantify the true incremental effect of marketing activities on customer behavior and business outcomes.
Incrementality vs. Attribution
Both attribution and incrementality play pivotal roles in understanding campaign effectiveness and overall impact on business outcomes. The major differences between attribution and incrementality fall into:
- A Focus on Contribution vs. Additional Impact
- Timeframe of Measurement
- Allocation vs. Isolation
Attribution focuses on identifying the contribution of each touchpoint in the customer journey. It typically considers the entire customer journey, assigning credit based on touchpoints leading to conversion. Attribution allocates credit to different touchpoints, allowing businesses to understand the role of each in the conversion process.
On the other hand, incrementality focuses on measuring the additional impact or value created beyond what would occur organically and on the incremental impact during a specific timeframe, often involving controlled experiments. Incrementality isolates the impact of marketing efforts to measure the true incremental value generated.
How to measure incrementality?
Measuring incrementality is a crucial aspect of marketing analytics, providing businesses with insights into the true impact of their campaigns beyond organic customer behavior. Here’s a strategic approach to effectively measure incrementality.
1. Define Clear Objectives
Before diving into measurement methods, it’s essential to define clear objectives. Whether the goal is to assess the incremental impact of a specific campaign, channel, or marketing tactic, having well-defined objectives sets the stage for accurate measurement.
2. Experiment with A/B Testing
A robust method for measuring incrementality is A/B testing. This involves creating two groups – one exposed to the marketing campaign (experimental group) and one not exposed (control group). By comparing the behavior of these groups, businesses can isolate the impact of the campaign.
3. Implement Holdout Groups
Similar to A/B testing, holdout groups involve reserving a portion of the audience that is not exposed to the marketing efforts. This group serves as a benchmark against which the performance of the exposed group is measured, providing a clear view of the additional impact generated by the marketing activities.
4. Utilize Attribution Models
While attribution models are traditionally associated with crediting touchpoints in the customer journey, they can also be adapted to measure incrementality. By comparing attribution results for the exposed and control groups, businesses can identify the incremental contribution of the marketing efforts.
5. Consider Customer Lifetime Value (CLV)
Measuring incrementality should extend beyond immediate results. Evaluating the impact on customer lifetime value provides a more comprehensive understanding of the long-term value generated by marketing initiatives.
6. Monitor KPIs and Metrics
Establish key performance indicators (KPIs) and metrics aligned with the defined objectives. Whether it’s conversion rates, sales revenue, or customer acquisition costs, monitoring these metrics allows businesses to gauge the incremental impact accurately.
7. Account for External Factors
Recognize and account for external factors that might influence results. Seasonal trends, market changes, or external events can impact customer behavior, and adjusting for these factors ensures a more accurate assessment of incrementality.
8. Iterate and Refine
Incrementality measurement is an iterative process. Businesses should continuously refine their methods based on results, experiment with different approaches, and incorporate learnings into future campaigns for ongoing improvement.
Practical Implications and Strategies for Incrementality
There are 4 major implications and strategies to consider when planning a campaign to drive incremental results;
- Strategic Channel Allocation by analyzing incrementality data to allocate budget and resources strategically across marketing channels. Marketers should optimize spend by prioritizing channels with the highest incremental impact on desired outcomes.
- Creative Optimization by experimenting with different ad creatives, messaging, and formats to identify variations that drive the most incremental value. Tailor creative elements based on incremental performance data for enhanced effectiveness.
- Audience Targeting Refinement by utilizing incrementality insights to refine audience targeting criteria, ensuring marketing efforts reach those most likely to respond. Improved targeting precision leads to increased incremental impact and more efficient resource allocation.
- Seasonal and Promotional Strategies by leveraging incrementality data to tailor marketing strategies during specific seasons or promotions. Marketers should adjust campaigns based on incremental performance patterns, maximizing impact during crucial periods.
Driving Incrementality with Affiliate Marketing
Incrementality remains a guiding principle for businesses seeking to enhance their marketing strategies.
Only incrementality can reveal which media investments contribute to business metrics and by how much. Measuring for incrementality identifies where to eliminate waste and surfaces opportunities to scale, expand, and reallocate media spend for maximum growth.
When applied to affiliate marketing, businesses can strategically select partners, implement precise tracking, and align incentives to ensure that affiliate efforts contribute not only to baseline sales but also to true incremental growth. Here are some practical recommendations to prepare your affiliate marketing strategies and include incremental goals:
1. Select Strategic Partner
Choose affiliate partners strategically based on their potential to drive incremental value rather than merely contributing to baseline sales. Partnerships that focus on incremental impact can lead to more efficient resource allocation and increased overall ROI.
2. Unique Coupon Codes and Tracking
Provide affiliates with unique coupon codes or tracking links to attribute sales accurately to their efforts. Precise tracking enables businesses to measure the incremental impact of affiliate-driven sales.
3. Performance-Based Commission Structures
Implement commission structures that reward affiliates for driving incremental sales rather than just rewarding volume. Aligns the incentives of affiliates to generate additional value for the business.
4. A/B Testing with Affiliate Campaigns
Conduct A/B testing specifically within affiliate campaigns to assess the incremental impact of different promotional strategies. Informed decision-making on which affiliate tactics contribute the most to incremental results.
Conclusion
Measuring incrementality requires a strategic and multifaceted approach. By combining experimental methods like A/B testing and holdout groups with insights from attribution models, businesses can gain a nuanced understanding of the true additional impact created by their marketing efforts. This strategic approach not only informs current decision-making but also lays the foundation for more effective and impactful future campaigns.
