How to Calculate Incrementality

What is Incrementality?

Incrementality refers to the additional value, sales, conversions, or engagement generated by a marketing campaign beyond what would have occurred without it. In other words, incrementality measures the incremental lift—the new outcomes directly attributable to a marketing effort. This metric helps marketers determine the true effectiveness of their campaigns by isolating the impact of marketing from organic growth or other external factors.

By calculating incrementality, brands can understand how much of their success is driven by marketing activities and make more informed decisions about where to invest their budgets for optimal returns.

At Rockerbox, we help brands calculate incrementality as part of our unified marketing measurement solution. We ensure that brands have accurate insights into the effectiveness of their marketing efforts, helping them optimize for better performance.

Why is Calculating Incrementality Important?

Calculating incrementality is important because it allows marketers to:

Identify True Growth Drivers: By isolating the incremental impact of a campaign, brands can determine which efforts are driving new growth and which are capturing existing demand.
Optimize Marketing Spend: Incrementality helps ensure that marketing budgets are spent on campaigns that generate new value, reducing wasted spend.
Make Data-Driven Decisions: With clear, data-driven insights, marketers can adjust their strategies based on what’s truly working.

How to Calculate Incrementality: Step-by-Step Guide

Here is a step-by-step guide on how to calculate incrementality for your marketing campaigns:

1. Define the Goal and Metrics to Measure

The first step in calculating incrementality is to define what you want to measure. This could be sales, conversions, sign-ups, or any other key performance indicator (KPI) that reflects the success of your campaign. By clearly defining your goal, you can better understand how to measure the impact of your marketing efforts.

Example: A brand launching a new product may want to calculate the incremental sales generated by a paid social media campaign.

2. Set Up Test and Control Groups

To accurately calculate incrementality, you need to create two groups: the test group (those exposed to the marketing campaign) and the control group (those not exposed). The test group will see the campaign, while the control group will serve as the baseline for comparison.

These groups should be as similar as possible in terms of demographics, behavior, and other characteristics to ensure accurate comparisons.

Example: A company may select two similar geographic regions to compare the results of a campaign. One region (test group) will be shown the campaign ads, while the other (control group) will not.

3. Run the Marketing Campaign

Once the groups are defined, you launch the campaign in the test group. This could be through digital ads, email marketing, TV spots, or any other medium. The control group should not be exposed to the campaign to ensure that any differences in performance are due to the marketing effort.

Pro Tip: Use geo-targeting tools or audience segmentation in your digital ad platforms to control who sees your campaign.

4. Track Key Performance Metrics

During the campaign, track key metrics in both the test and control groups. These metrics could include sales, conversions, website traffic, or other KPIs that align with the goal of the campaign. By monitoring performance in real time, you can ensure that the data is accurate and relevant.

Example: If you are running a campaign to drive sales, track the number of purchases in both the test and control groups during the campaign period.

5. Calculate Incremental Lift

Once the campaign is complete, it’s time to calculate the incremental lift—the additional outcomes generated by the campaign. To calculate incremental lift, use the following formula:

Incremental Lift Formula:

Incremental Lift=(Test Group Performance−Control Group PerformanceControl Group Performance)×100\text{Incremental Lift} = \left( \frac{\text{Test Group Performance} - \text{Control Group Performance}}{\text{Control Group Performance}} \right) \times 100Incremental Lift=(Control Group PerformanceTest Group Performance−Control Group Performance)×100

This formula provides the percentage increase in performance driven by the marketing campaign.

Example:

Test Group Sales: 1,200 units
Control Group Sales: 1,000 units

Incremental Lift = (1,200−1,0001,000)×100=20%(\frac{1,200 - 1,000}{1,000}) \times 100 = 20\%(1,0001,200−1,000)×100=20%

In this example, the campaign generated a 20% increase in sales, meaning that 20% of the sales in the test group can be attributed to the marketing campaign.

6. Integrate Results with Broader Marketing Models

While calculating incremental lift provides valuable insights into the campaign’s performance, it’s even more effective when combined with broader marketing measurement models like Marketing Mix Modeling (MMM) and Multi-Touch Attribution (MTA). By integrating incrementality results with these models, you can get a unified view of how your campaign performs across all channels and how it contributes to overall business goals.

At Rockerbox, we combine incrementality insights with MMM and MTA to give brands a complete understanding of their marketing performance.

How Rockerbox Helps You Calculate Incrementality

Rockerbox offers a comprehensive solution for calculating incrementality, ensuring that your marketing efforts are accurately measured and optimized for better performance. Here’s how we help:

1. Expert Test Design

Rockerbox’s professional services team helps you design incrementality tests that align with your marketing goals. We work with you to define the test and control groups, set up the experiment, and ensure that the analysis is accurate and actionable.

2. Campaign Execution and Data Collection

We manage the entire process, from launching the campaign to collecting data from both the test and control groups. Rockerbox ensures that all data is captured accurately, so you can confidently measure the incremental impact of your marketing efforts.

3. In-Depth Data Analysis

Once the campaign is complete, Rockerbox’s experts analyze the data to calculate incremental lift and other key metrics. We provide detailed insights into how much additional value your campaign generated, helping you optimize your marketing strategy.

4. Unified Measurement Integration

Rockerbox integrates the results of your incrementality calculations with other marketing measurement models like MMM and MTA, giving you a holistic view of your campaign performance across all channels and tactics.

5. Ongoing Optimization

Incrementality measurement is not a one-time process. Rockerbox helps you continuously optimize your marketing campaigns by regularly measuring incremental lift, analyzing the results, and refining your approach for better performance over time.

Benefits of Calculating Incrementality

More Effective Budget Allocation
By calculating incrementality, marketers can allocate their budgets more effectively by focusing on campaigns and channels that drive new growth, reducing wasted spend.
Clear Understanding of Campaign Impact
Incrementality helps marketers identify which campaigns are driving the most value, providing clear insights into what’s working and what’s not.
Data-Driven Decision Making
With accurate data on incremental lift, marketers can make more informed decisions about their future campaigns, ensuring that resources are spent on activities that deliver the best results.
Continuous Campaign Improvement
Incrementality measurement allows for ongoing optimization of marketing campaigns, leading to improved performance over time.

FAQs About Calculating Incrementality

What is incrementality in marketing?
Incrementality refers to the additional value or outcomes generated by a marketing campaign that would not have occurred without it. It measures the true impact of marketing efforts.

How do you calculate incremental lift?
Incremental lift is calculated by comparing the performance of a test group exposed to a marketing campaign with that of a control group not exposed. The difference in performance between the two groups represents the incremental lift.

Why is calculating incrementality important?
Calculating incrementality is important because it helps marketers determine the true effectiveness of their campaigns and optimize their marketing spend by focusing on activities that generate new growth.