Want to Build a High-Yield Marketing Portfolio? Incrementality Is Your Secret Weapon

Here at IMM, we often think of client’s advertising budgets as an active investment portfolio. Just like you wouldn’t buy random stocks and hope for the best, we help you minimize risk and optimize for financial growth by diversifying tactics, monitoring investments, and adjusting toward goals.

While the analogy between financial planning and advertising budgets is intuitive among marketers, our industry’s measurements for success are unique compared to our finance bros’. Call us quirky, even. Marketing reaches beyond the spreadsheets to face an extra beast: the ever-complex, hard-to-track, aggregate human psyche.

Our industry’s liminality between data, culture, and psychology can cloud what are otherwise straightforward financial decisions. The American advertising pioneer John Wanamaker put it bluntly, saying, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.”

Despite the many 21st-century tech advances currently reshaping the advertising industry, Wanakamer’s sentiment still resonates among even the savviest of growth hackers. Today, marketers still wrestle with ad-spend attribution, often relying on platform-native reports and contradictory signals, rather than hard data, to base their investment decisions.

“Half the money I spend on advertising is wasted; the trouble is I don't know which half.”   John Wanamaker

Whether we agree with it or not, our finance bros don’t hire us just to create cool campaigns. All marketers, in-house or agency, have the fiduciary-style responsibility to prove the best ROI possible. Modern data analytics techniques have highlighted the marketing funnel, exposing previously vague risk-reward profiles.

From IMM's legacy in performance marketing to our high-ROI creative campaigns, we build our agency to understand and innovate these financial strategies better than anyone else. Every attribution method in our toolbox is useful, so we try not to play favorites. But for anyone interested in uncovering which half of their ads are wasted, there’s a proven method in the ad industry that can illuminate every contribution within your digital funnel. Ongoing incremental return on ad-spend (iROAS) testing.

Incrementality: The True Measure of Advertising Impact

If you’ve been around the digital block, you’ve heard “incrementality” thrown around. It isn't another buzzword, it's a game-changing attribution approach that paints a clear picture of how marketing efforts actually impact sales. Boiled down, incrementality uses continuous, automated A/B testing to uncover the impact of every advertising activity. It's like finally getting an X-ray of your marketing portfolio to reveal what investments are healthy, and which are broken.

iROAS, or Incrementality testing for short, reveals the true impact of advertising, going beyond vanity metrics like clicks or impressions. It takes a scientific approach to marketing measurement. It acknowledges that sales are influenced by a complex interplay of factors, not just advertising. Through rigorous A/B testing of various marketing scenarios, it isolates the effect of each element, allowing marketers to pinpoint the causal relationship between their efforts and revenue growth. It can be tremendously helpful for any marketing team who needs to prove their effectiveness. But don’t just take our word for it.

Forrester, a prominent research and advisory firm, has highlighted the growing importance of incrementality in the evolving marketing landscape. They note that traditional attribution models, which often rely on last-touch or other simplistic approaches, fail to capture the full picture, leading to the misallocation of resources. Incrementality, on the other hand, provides a more granular and accurate understanding of marketing's impact, focusing on the difference between what would have happened naturally and what happened as a result of the campaign.

A case study published in Harvard Business Review detailed how a major retailer used incrementality testing to optimize their marketing spend. By identifying the most effective channels and tactics, they were able to achieve a 20% increase in sales while reducing their overall marketing budget.

Simplifying the Complex Doesn’t Require Extra Technology or Costs.

Our proprietary model and solution are built into our media practice. The solution uses a robust statistical framework called the Rubin Causal Model. Here's how it works:

1. Data Collection: Every click, impression, and website visit is meticulously tracked using advanced tools like Adform's ad server and universal pixels. This creates a comprehensive view of user behavior.
2. Matching Groups: The model identifies groups of users with nearly identical online journeys, except for one key difference: exposure to a specific ad or campaign. This ensures any observed differences are likely due to the marketing effort itself, similar to the A/B testing approach described by Adjust.
3. A/B Testing at Scale: These matched groups act like a giant A/B test. By comparing their behaviors, the model isolates the incremental impact of the specific marketing tactic in question. It's like running thousands of mini-experiments simultaneously, aligning with the idea that incrementality involves creating various scenarios to isolate conversion data.
4. Daily Updates: The IMM model doesn't just provide a one-time snapshot. It continuously analyzes your data, providing daily reports that help you track performance, identify trends, and make data-driven decisions in real time.

Why It Matters: More Than Just Numbers

1. Accurate ROI: Forget about vanity metrics. Incrementality cuts through the noise and ties your marketing spend directly to revenue, giving you a crystal-clear understanding of your return on investment. A recent study by Nielsen found that companies using incrementality testing saw an average of 15% improvement in ROI, showcasing its ability to quantify the additional revenue generated from advertising efforts.
2. Optimized Spending: Imagine knowing which channels, platforms, and even specific ads generate the most sales. With incrementality, you can double down on what works and ditch what doesn't. It's like a compass guiding you to the most profitable marketing paths, aiding in optimizing media spend for maximum impact.
3. Strategic Advantage: Incrementality doesn't just tell you what's working; it offers insights into why. This knowledge empowers you to make smarter decisions, craft more effective campaigns, and ultimately, outshine your competition.
4. Credibility Boost: Marketing leaders often struggle to justify their budgets with hard data. Incrementality provides the proof you need, transforming you into a data-backed decision-maker who delivers results. It enables brands to "cut waste in their media budget and measure the true effect of specific paid marketing tactics on consumer purchases."

It's Time to Ditch the Guesswork

The days of throwing marketing spaghetti at the wall and hoping it sticks are over.

In a world overflowing with mixed signals, iROAS testing is your opportunity for clarity. It's the difference between making educated guesses and making informed decisions that lead to real business growth. Ready to see what your marketing investment is really doing? It's time to explore incrementality.