What Is Incrementality Measurement and How Does It Work?
If you’ve ever asked yourself what is incrementality measurement, you’re in the right place. Incrementality measurement is how you determine the lift your campaign generates above existing consumer demand.
Existing (baseline) demand is the demand consumers demonstrate for your brand when they’re NOT exposed to your marketing or advertising. It is demand that exists as a result of non-marketing factors like basic needs (e.g. thirst), established brand awareness (e.g. Coca-Cola), or external factors (e.g. a social media influencer like Kim Kardashian mentioning Coke Zero to her 192 million Instagram followers).
With incrementality measurement, you’re trying to determine how much additional, non-native demand your marketing creates for your products or services. The difference between the native demand and the non-native demand generated by your campaign is the “incremental lift.”
Make sense so far?
Imagine your marketing team is running a campaign for Dr. Pepper.
In the consumer market, there are a number of shoppers who faithfully purchase Dr. Pepper whenever they crave soda. These “brand loyalists” might be exposed to the messaging of your marketing campaign, but that messaging holds no sway over their buying decision. These people are going to buy Dr. Pepper whether they see your marketing materials or not—they love Dr. Pepper, period.
From an ROI standpoint, marketing to these Dr. Pepper fans (versus trying to attract new customers) will drive less revenue. These consumers don’t need to be persuaded to buy the product because they already have a case of Dr. Pepper in their shopping cart every time they go to the grocery store.
Your marketing team shouldn’t incorporate sales derived from this “loyalist” audience into its campaign evaluation process. What your marketing team wants to do is measure the incremental lift in sales generated by your campaign (the “extra” sales from “non-loyalists” who would not have purchased Dr. Pepper if not for the hard work of your marketing team).
By measuring the background conversion rate of shoppers NOT exposed to any of your marketing (Group A), you can better understand normal consumer purchasing behavior for Dr. Pepper. You can then compare that behavior to the behavior of shoppers who ARE exposed to your marketing (Group B).
The difference in purchases between the marketed-to population (Group B) and the non-marketed-to population (Group A) is the true measure of performance for your marketing campaign.
If you can demonstrate an incremental increase in purchases for the marketed-to population, you’ll know your campaign worked.
But if you can’t demonstrate an incremental increase in purchases for the marketed-to population, you’ll know your campaign had no impact.
Even if you now understand incrementality measurement, there’s no guarantee you’ll use it correctly in your business for the simple fact it’s difficult to do. There are a lot of moving pieces to consider, including:
To learn more about incrementality measurement and how you can use it successfully for your business, please read our whitepaper: The Costly Mistakes Marketers Make With Incrementality Measurement.
Existing (baseline) demand is the demand consumers demonstrate for your brand when they’re NOT exposed to your marketing or advertising. It is demand that exists as a result of non-marketing factors like basic needs (e.g. thirst), established brand awareness (e.g. Coca-Cola), or external factors (e.g. a social media influencer like Kim Kardashian mentioning Coke Zero to her 192 million Instagram followers).
With incrementality measurement, you’re trying to determine how much additional, non-native demand your marketing creates for your products or services. The difference between the native demand and the non-native demand generated by your campaign is the “incremental lift.”
Make sense so far?
Consider a hypothetical example…
Imagine your marketing team is running a campaign for Dr. Pepper.
In the consumer market, there are a number of shoppers who faithfully purchase Dr. Pepper whenever they crave soda. These “brand loyalists” might be exposed to the messaging of your marketing campaign, but that messaging holds no sway over their buying decision. These people are going to buy Dr. Pepper whether they see your marketing materials or not—they love Dr. Pepper, period.
From an ROI standpoint, marketing to these Dr. Pepper fans (versus trying to attract new customers) will drive less revenue. These consumers don’t need to be persuaded to buy the product because they already have a case of Dr. Pepper in their shopping cart every time they go to the grocery store.
Your marketing team shouldn’t incorporate sales derived from this “loyalist” audience into its campaign evaluation process. What your marketing team wants to do is measure the incremental lift in sales generated by your campaign (the “extra” sales from “non-loyalists” who would not have purchased Dr. Pepper if not for the hard work of your marketing team).
By measuring the background conversion rate of shoppers NOT exposed to any of your marketing (Group A), you can better understand normal consumer purchasing behavior for Dr. Pepper. You can then compare that behavior to the behavior of shoppers who ARE exposed to your marketing (Group B).
The difference in purchases between the marketed-to population (Group B) and the non-marketed-to population (Group A) is the true measure of performance for your marketing campaign.
If you can demonstrate an incremental increase in purchases for the marketed-to population, you’ll know your campaign worked.
But if you can’t demonstrate an incremental increase in purchases for the marketed-to population, you’ll know your campaign had no impact.
Understanding versus execution
Even if you now understand incrementality measurement, there’s no guarantee you’ll use it correctly in your business for the simple fact it’s difficult to do. There are a lot of moving pieces to consider, including:
- Determining what KPI to measure for
- Determining how to measure the control vs the exposed groups
- Running a real-life campaign, exposing the test group to marketing creative
- Measuring the incremental KPI lift that is either created or not created in the test group
To learn more about incrementality measurement and how you can use it successfully for your business, please read our whitepaper: The Costly Mistakes Marketers Make With Incrementality Measurement.
