Consumer behaviour is constantly changing, driving advertisers to explore new mediums and new ways to interact with and engage their audiences. To deliver results, marketers need to reach the right audiences on the right channel and device at the right time. But getting budget approval on untested tactics doesn’t come easy.
Securing buy-in means marketers have to prove that a new initiative or campaign will increase sales and deliver a return on investment. But how? Marketers have two options: launch on a smaller scale before rolling out more broadly, or prove that a campaign worked after the fact.
Either way, relying on assumptions isn’t the answer. Marketers need to confirm their decisions are well-founded before investing too much budget in a new and untested message, channel or tactic. By proving a direct correlation between marketing efforts and sales, marketers can galvanise support from the team, and secure the resources needed to scale up.
Demonstrating Impact with Incrementality
The goal of marketing is simple: generate sales by promoting a product or service to consumers via ads, emails, events, in-store promotions, or any other viable channel. But proving how marketing activity impacts actual sales is a much harder task.
Many marketers are adopting advanced models to measure the impact of their efforts, such as multi-touch attribution and marketing mix modelling. While these tools are a powerful weapon in any marketer’s arsenal, they are designed for measurement across multiple campaigns and programs—either to determine where and how much to invest across all channels, or to make tactical optimizations while campaigns in flight. Yet so much of a marketer’s day-to-day is focused on answering specific questions: “Did our Boxing Day campaign work?”, “Did the Back-to-School shopper campaign reach the right segment?”, “Did our mobile campaign targeted at millennials actually get them to convert?”
One effective way to answer these questions is by measuring incrementality. Incremental lift is the increase in sales that can be attributed to marketing efforts above baseline demand (sales that would have occurred anyway, without marketing influence). Staple items such as light bulbs, napkins, and socks are good examples of products that generate sales due to baseline demand. By measuring incremental lift, marketers can evaluate the difference between baseline demand and marketing-driven sales.
Linking Media Activity to Sales
Measuring incremental lift helps marketers understand and prove the real impact of their efforts across online and offline campaigns and tactics. When executed correctly, it enables marketers to improve the performance of their campaigns and focus on those initiatives that drive sales.
In the past, incrementality was calculated simply by comparing sales before and after the campaign. Since this approach doesn’t account for the impact of collateral factors, such as weather, seasonality, pricing, promotion and more, it can lead marketers astray. For example, winter coat sales will naturally peak during colder months. Merely comparing June sales to November sales would lead to inaccurate conclusions, since there is naturally less demand for winter coats during the summer.
The only effective way to measure incrementality is by comparing the sales metrics based on actual response or purchase data for two groups—those who were exposed to an ad or campaign, and those who were not. This type of analysis provides valuable insight into which audiences segments are more receptive, and which campaign elements are driving the greatest response. For instance, marketers can answer important questions such as:
- Is my campaign driving more buyers?
- Did my TV advert have a positive impact on online sales?
- Which markets and buyer groups were the most responsive?
With this level of insight, marketers can optimise their budgets and campaigns in the most impactful way possible, and get the evidence they need to secure budget approval and executive support.
An Accurate Picture of Performance
Understanding incrementality can help marketers ascertain the true value of their efforts and better optimise their budget. However, there are a number of critical factors that can impact the accuracy of results. For example, if marketers have access to store or user-level data, the results will be more accurate than if they only have information at the geographic or national level. Other factors, such as lack of time, resources and analytic ability can also make it difficult to pinpoint what’s really driving sales, leading to incorrect assumptions and disappointing results.
Fortunately, there are more advanced solutions available that can help ensure the accuracy and actionability of the findings. These solutions combine extensive buyer-based data sets and a rigorous methodology to analyse the impact of marketing activities on sales. The result: a powerful and unbiased understanding of campaign performance and purchase behaviour that drives better decisions, and better business outcomes.
Marketers everywhere are pressed to demonstrate the impact of their initiatives to make the case for future investments. What marketers need is an accurate view of whether their campaigns is fuelling conversions, as well as which tactics were the most effective. Measuring incremental lift is the best way for marketers to zero-in on the sales impact of their individual campaigns, and get the proof of performance they need to scale their campaigns more broadly.
