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Incrementality refers to the concept of how changes in tactics or strategies directly cause business outcomes. A term popularized in marketing contexts, incrementality is "the non-scientist way of saying 'causality.'[1]
Incrementality in marketing measurement
editMarketing measurement is an age-old problem: How do brands know what advertising tactics are working? Nineteenth century Philadelphia retailer John Wanamaker is credited with saying: “Half the money I spend on advertising is wasted; the trouble is I don't know which half.”[2] As both marketing and technology has gotten more sophisticated with time, the financial and business consequences of not knowing what's wasted has risen.
According to PhD economist Joe Wyer, "Attribution and incrementality are two frameworks for understanding marketing impacts. Attribution frames impact as 'crediting' each customer event to some strategy or tactic. Incrementality frames impact as the change in customer events caused by a change in the application of strategy or tactic."[3]
Online advertising platforms have mastered the art of showing ads to people who would have converted anyway, and claiming credit for that conversion[4]. Incrementality helps brands understand which conversions wouldn't have happened without the marketing intervention. Google acknowledges incrementality is "incredibly hard to measure."[5]
Incrementality and randomized control experiments
editGrowth marketing expert Olivia Kory describes incrementality by comparing it to randomized control trials in medicine:
"When you’re rolling out a new drug, you’re going to give one group of people a placebo drug (the control group) and you're gonna give another group of people – statistically indistinguishable from the control group – the drug (the treatment group).
Then, you observe the difference in behavior between those two groups to validate the efficacy of that drug – that’s incrementality testing."[6]
Economist Simeon Minard says, "When you do a true, well-designed randomized control experiment, you end up with data that has variation caused by 1) the true effect of your action (think ad channel) and 2) random noise. It turns out we understand the math of random noise really well, and this makes it possible to get an excellent read of what the true effect was – along with how certain we are about it.”[7]
Incrementality in 2024-2025
editAs marketing and sales platforms, channels, and tactics have grown more complex and interwoven, the desire for incrementality solutions in both the B2C and B2B sectors has grown.[8] As of 2024, there are several SaaS incrementality solutions on the market.
References
edit- ^ "What is Incrementality?". haus.io. Retrieved 2024-12-08.
- ^ Bradt, George. "Wanamaker Was Wrong -- The Vast Majority Of Advertising Is Wasted". Forbes. Retrieved 2024-12-08.
- ^ "What is Incrementality?". haus.io. Retrieved 2024-12-08.
- ^ Fisman, Ray (2013-03-11). "Did eBay Just Prove That Paid Search Ads Don't Work?". Harvard Business Review. ISSN 0017-8012. Retrieved 2024-12-08.
- ^ "Want to improve your measurement? Get a grip on incrementality". Think with Google. Retrieved 2024-12-08.
- ^ Limited Supply (2024-09-20). Incrementality, Data, the Funnel, Oh My! (with Olivia Kory of Haus). Retrieved 2024-12-08 – via YouTube.
- ^ "Incrementality School, E5: Randomized Control Experiments, Conversion Lift Testing, and Natural Experiments". haus.io. Retrieved 2024-12-08.
- ^ "Keith Putnam-Delaney on LinkedIn: Incrementality Testing for B2B Marketing | sayprimer.com | sayprimer.com | 11 comments". www.linkedin.com. Retrieved 2024-12-08.