The Beginner’s Guide to Incrementality

So, your paid activities for your recent campaigns are yielding impressive results? Great! Glad to hear it. There’s nothing we love more than knowing campaigns are doing their rounds and raking up attention in the digital sphere!

But have you ever wondered if you are getting your money’s worth?

In an ecosystem where the lines between organic and paid installs is often blurred, how do you verify and authenticate sources that truly add value to your campaign? More so, how do you know the audience you are targeting or the strategies you are employing are truly contributing to your bottom line?

Simply put, how do you know you are investing in the right sources?

If you’ve been mulling over these questions or are keen to know more, you’re in the right place! We’re here to help you navigate through the world of Incrementality.

Let’s begin by first defining Incrementality

Incrementality is a means to measure the value added from a specific event (such as ad view) that resulted a the desired outcome (such as an install) owing to paid marketing activities.

To break it down – Incrementality helps you measure the value of your investment. This in turn, opens a world of opportunities to help you make informed and selective decisions on where to allocate and validate your marketing budget.

Further, Incrementality helps you avoid cannibalizing your market and budget. What does this mean? Sometimes, although a campaign might show you impressive returns on your ad spend, when you investigate it, you realize, a huge chunk of your traffic is organic in nature. This means you paid for traffic and conversions that would have occurred naturally irrespective of your ad spend. When you bear this in mind and view your marketing activities from a bird’s eye view, it puts into perspective the importance of Incrementality and Incrementality testing.

How do you test for Incrementality?

The answer is simple – A/B testing.

These tests can be done on a cohort level and can be as detailed as you choose. For example, to truly test the effectiveness of your creative. You could hypothesize and test something as minute as the impact the background colour of a creative has on incrementality. When you get into testing for incrementality, you realize the vast opportunity and difference this has on your campaign and investment, which let’s be honest, is the dream!

Back to Incrementality testing.

Let’s say a leading Advertiser wants to test the incrementality of an ad campaign.

We would go about this by first splitting a cohort audience into two random groups – Test Group A and Control Group B. The test group A would be exposed to the ad campaign to test the hypothesis, while, the control group B, would not be exposed to the ad.

When the campaign has run its course, we find that:

The conversion rate for Test Group A is 6%

While the conversion rate for Control Group B stands at 3%

This means the Test Group A saw a lift (the difference in the conversion rate between the two groups) of 3%

The formula to test for Incrementality is as follows:

(Test Conversion Rate – Control Conversion Rate)/ (Test Conversion Rate)

This gives us a 50% incrementality in conversion.

Although it may seem simple enough, A/B testing allows for Marketers to test for incrementality in multiple aspects of a campaign. Some of which include:

• Publisher/Traffic Source
• Audience
• Campaign Strategy
• Ad/Creative
• Placement

All of which add to promoting ad effectiveness, which at the end of the day, is the goal of every Marketer.

If you’d like to learn more about Incrementality and how we can help you test for Incrementality, drop us a note and we’ll be sure to get back to you!