Understanding Incrementality – The key to measuring your advertising impact (Part-1)
As an advertiser, it must feel great to increase the number of products you sell. For the users who haven’t yet converted, you have the provision of running retargeting ads too. In the end, if your ads enable you to drive more conversions, everything seems to work just fine.
Even if you have a good revenue stream pouring in, it is often tedious to ascertain, how much of it is caused because of your ad campaign efforts. However, knowing the return on your ad spends quantitatively, is integral for optimizing your spend to get the best results. This is obviously more so in case of retargeting ads.
You must know the full impact of your retargeting campaigns on your users. Unless you do that, you are taking the risk of spending more money without knowing how much the campaigns would actually need for maximum impact.
Here, the primary metric that marketers and advertisers focus on regarding measuring the marketing impact is ROAS or Return On Ad Spend. This is quite critical in understanding the overall value generated from certain campaigns. However, it fails to identify the real impact of retargeting ads. Consequently, it makes the task of measuring the validity of the ads budget quite tricky.
No wonder marketers and advertisers are concerned about measuring the impact of retargeting ads. This is where Incrementality, or the measurement of the lift that your advertising spends provide, can help you to find a viable solution.
As Incrementality is a crucial component of measuring the ad impact, we will be bringing in a series of blogs to explain the intricacies of it. This particular blog is the first in the series, and explains the motivation behind understanding and implementing Incrementality in your marketing and advertising strategies.
Incrementality – What is it?
Incrementality is a method of understanding the impact of the advertising campaigns and optimizing the overall ad spend. In other words, Incrementality identifies the effectiveness of your ad spend vs. the organic conversion you have towards your product.
The fundamental measurement of Incrementality is simple. It calculates the conversion statistics of two user groups – those who have been exposed to ads and those who haven’t. Measuring the conversion rates help in understanding the impact of your ads.
Let’s take an example to clarify further what Incrementality does.
Let’s consider, from a pool of 2000 users, which form our retargeting group, we make two equivalent subsections of 1000 users each, namely Control (C) and Treatment (T). Group C was left undisturbed, but Group T was subjected to retargeting ads. Finally, let’s measure the conversions coming from both these groups.
The measurement showed that the Control Group gets 300 conversions and Treatment Group gets 350 conversions within a specific period. Therefore, the group exposed to the retargeting ads experienced an increase of 50 conversions than that didn’t.
As you can see, the retargeting ads increased the number of conversions by 50 or 16.67%. This can also be stated as these retargeting efforts produced a lift of 16.67% on conversions.
The achieved results can be considered an indication of your effective ad spend. The calculations are considered provided that the test has been done on a large enough group, which is statistically significant and hence the results are reproducible. Hence, it becomes easier for you to measure your spend vs the impact of retargeting ads, which in turn could significantly improve your conversions.
The metric considered here would be similar to incremental Return on Ad Spend (iROAS), and incremental conversions (iConversions).
Why Incrementality is Crucial for Marketers and Advertisers?
While there are several reasons to include Incrementality to your marketing strategies, the top three are:
- Understand the ad performance and control spend
When you understand the impact of your ads on the consumer groups, you can control your marketing budget better. Additionally, you can identify the better performing ads and run them according to the target group you choose. Further, you can even decide whether to run an ad or not, depending upon the Incrementality reports of your campaigns. Without the understanding of Incrementality, your ads will run blind, without giving you any indication of the unnecessary expenses incurred.
- Reveals granular and scalable user insights
As Incrementality is run on selected audience groups, you can gather actionable user insights at a much granular level. You can use these data to modify your future campaigns or scale them to target a larger group. Also, your Incrementality report could help you to identify the non-responsive users and run future campaigns in better ways.
- Helps in adopting according to the advertising requirement
When you are in control of your marketing budget and the user insights, you can choose better retargeting practices. Moreover, you can tweak and modify your ads to be more interactive and invoke a better user response from them.
Things to consider for a better incremental performance of an ad campaign:
When you are looking to increase the impact of your ad and measure its incremental performance, five things that matter the most are:
- Target Audience
Selecting the right audience remains the cornerstone before launching any marketing campaigns. Choosing the right audience helps you to understand the impact of your ads. Unless your ads are relevant to your users, setting parameters for incrementality won’t work out much.
- Devices Associated
Along with the audience, the devices they are on plays a vital role too. You need to identify the various devices your audience is using to improve the overall user experience of your ads.
- Contents and Creative
As with every ad campaign, the content of the retargeting ads is crucial in determining your campaign performance. You must align the content with your objective as well as users’ interest to derive maximum momentum from them.
- Ad Placements
Target users need to see your ads so that they can take action on them, which makes ad placement crucial. Misplaced, or obscurely placed ads will make your ads underperform.
- Optimize and Repeat
You must let the ad campaigns to run for some time to identify and optimize the performance of your Incrementality. You need enough data through multiple iterations to establish the validity of the data and insights you generate.
Incrementality is an excellent method to understand the impact generated by your ads. It also lets you find out whether the users are converting because of their exposure to your ads. Moreover, it helps you to optimize your marketing ROI or ROAS and let you make smarter decisions.
The RevX platform (now acquired by Affle International Pte. Ltd., Singapore) is a self-serve mobile marketing platform that drives performance and brand experience through the power of programmatic, personalization and data science. It helps digital marketers to drive new user acquisition and grow retargeting / re-engagement-based transactions through targeted digital advertising. The platform is used by several top e-commerce and mobile app-driven companies in fast-growing markets and industry segments.
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