What is Incremental ROAS?

Incremental ROAS (Return on Ad Spend) is a key metric that helps brands understand the impact of their marketing campaigns by measuring the additional revenue generated that would not have occurred without the campaign. While traditional ROAS calculates the overall revenue generated from advertising, incremental ROAS isolates the revenue directly attributed to the marketing efforts, giving a clearer picture of the true return on your marketing investments.

Unlike standard ROAS, which can sometimes overestimate the effectiveness of a campaign by including revenue that might have occurred naturally, incremental ROAS focuses only on the incremental value generated through your marketing activity. This distinction is critical for brands looking to allocate their ad budgets effectively and optimize their campaigns based on accurate performance data.

Why is Incremental ROAS Important?

Identify Real Growth Drivers
Incremental ROAS allows you to distinguish between marketing activities that are truly driving new revenue and those that are simply capturing demand that would have occurred regardless of your campaign. This level of precision ensures that your marketing budget is being spent on activities that genuinely contribute to business growth.
Avoid Misattribution
Standard ROAS can often be misleading because it attributes all revenue to a campaign, regardless of whether that revenue was incremental or not. By focusing on incremental ROAS, marketers can avoid misattributing success to campaigns that may not have actually driven additional sales.
Optimize Marketing Spend
With incremental ROAS, you can pinpoint which campaigns and channels are delivering the highest incremental returns and shift your budget to those efforts. This ensures that every dollar spent on advertising is generating real, measurable value for your business.
Enhance Campaign Testing and Validation
Incremental ROAS is an essential metric for validating A/B tests, geo-lift tests, and other forms of incrementality testing. It helps ensure that your experimental results reflect the true impact of your marketing efforts, allowing you to refine your campaigns based on accurate data.

How to Calculate Incremental ROAS

Calculating incremental ROAS involves determining the revenue directly attributed to a marketing campaign, comparing it to the control group where no campaign was running, and dividing the incremental revenue by the amount spent on the campaign.

The formula is:

Incremental ROAS = (Incremental Revenue from Campaign - Control Group Revenue) / Ad Spend

Here's how it works in practice:

Ad Spend: The total amount spent on your advertising efforts.
Incremental Revenue: The additional revenue that is directly attributable to your campaign, typically measured through controlled experiments like A/B tests or geo-lift tests.
Control Group: The group of customers or regions where no marketing campaign was run, used as a baseline to measure the natural revenue without marketing intervention.

By comparing the revenue from the test group (where the campaign was active) with the control group, marketers can isolate the revenue generated solely by the campaign, providing a more accurate picture of its performance.

How Rockerbox Helps You Measure Incremental ROAS

At Rockerbox, we specialize in helping brands measure incremental ROAS as part of our broader unified measurement solution, which includes Marketing Mix Modeling (MMM) and Multi-Touch Attribution (MTA). Our approach ensures that you have a complete understanding of your marketing performance, with incremental ROAS serving as a key metric for optimizing your campaigns and improving your return on ad spend.

Here’s how we help you measure and optimize incremental ROAS:

Designing Controlled Experiments
Our team collaborates with you to define the right experiments, whether it’s through A/B testing, geo-lift tests, or difference-in-differences methodologies. These tests are essential for accurately measuring incremental ROAS by isolating the impact of your marketing activities.
Managing the Testing Process
Rockerbox manages every aspect of the testing process, ensuring that your experiments are set up correctly and executed with precision. We handle the selection of control groups, randomization, and the setup of test environments to minimize bias and maximize accuracy.
Analyzing Results and Measuring Incremental Lift
Once the test is complete, our experts analyze the results to calculate the incremental lift and incremental ROAS. We provide detailed insights into how much revenue your marketing campaign has driven beyond what would have occurred naturally.
Integrating Results with MMM and MTA
Rockerbox integrates the results of your incrementality testing with your existing MMM and MTA models to ensure you have a unified, data-driven view of your marketing performance. This comprehensive approach allows you to refine your strategies based on the real drivers of growth.
Providing Expert Guidance
Beyond just the technology, Rockerbox offers a layer of expert guidance through our professional services team. We work with you to interpret the results, offering recommendations on how to adjust your marketing strategies to maximize incremental ROAS and improve overall efficiency.

How Incremental ROAS Improves Marketing Efficiency

Measuring incremental ROAS helps brands improve their marketing efficiency in several ways:

Better Budget Allocation: Incremental ROAS allows you to focus your budget on the campaigns and channels that are driving the most incremental revenue. This ensures that your marketing dollars are spent on activities that generate real value.
Refined Channel Strategy: With incremental ROAS insights, you can better understand which channels are delivering the highest returns and optimize your channel strategy accordingly. Channels with high incremental ROAS should be prioritized for future campaigns.
Validation of Marketing Tactics: Incremental ROAS provides a clear way to validate the success of various marketing tactics. By isolating the revenue directly tied to specific tactics, you can refine your approach and ensure that you’re only investing in strategies that deliver real growth.
Ongoing Optimization: Rockerbox’s professional services team works with you to continuously optimize your campaigns based on incremental ROAS insights. We help you scale successful efforts, refine underperforming campaigns, and ensure that your marketing remains as efficient as possible.

Why Choose Rockerbox for Incremental ROAS Measurement?

At Rockerbox, we believe that accurate measurement is the foundation of successful marketing. Here’s why brands choose Rockerbox for their incremental ROAS analysis:

Unified Measurement: Our incremental ROAS measurement is part of a broader unified measurement solution, combining MMM, MTA, and testing results to provide a complete view of your marketing performance.
Expert-Led Testing: Our professional services team works with you to design, execute, and analyze controlled experiments that accurately measure incremental ROAS.
Actionable Insights: We don’t just provide data; we provide actionable insights that help you optimize your campaigns and improve your marketing efficiency.
Comprehensive Support: From test setup to strategy refinement, Rockerbox supports you every step of the way, ensuring that your marketing efforts are always delivering the highest possible return.

FAQs About Incremental ROAS

How is incremental ROAS different from traditional ROAS?
Traditional ROAS measures the overall revenue generated from ad spend, while incremental ROAS focuses specifically on the revenue that was generated directly because of the campaign, beyond what would have occurred naturally. Incremental ROAS provides a more accurate view of your campaign’s true effectiveness.

How can I measure incremental ROAS with Rockerbox?
Rockerbox offers a suite of tools and expert services to help you run controlled experiments that accurately measure incremental ROAS. Our team works with you to design the right test, execute the experiment, and analyze the results, integrating the data with your MMM and MTA models for a comprehensive view of your marketing performance.

What is a good incremental ROAS?
A good incremental ROAS depends on your business goals and industry benchmarks, but generally, any positive incremental ROAS indicates that your campaign is generating more revenue than it’s costing. Rockerbox helps you define success based on your unique objectives and provides insights to continuously improve your ROAS.