October 2, 2020 - Brittany Garlin
Wondering how to improve your ad spend with incrementality? Then you’ve come to the right place! Social media managers today are well-equipped to calculate common digital marketing KPI’s but often find themselves wondering why their overall ROI isn’t good when they’re allocating ad spend to the best ROI channels. The solution? Not looking at paid marketing ROI in isolation, but rather in combination with the notion of incrementality.
Said Digital is a team of digital marketing and growth specialists. They’re not a ‘one-size-fits-all’ agency – their team builds tailored marketing plans for their clients that can help foster growth by reaching the right people efficiently and utilizing smart tactics that maximize ROI.
Let’s dive into some of the insights they provided us on how to improve your ad spend with incrementality.
How can you be sure that spending on ads is working? Incrementality helps advertisers find the true value of their ad campaigns. By measuring the lift in conversion rate and resulting value that ads provide, you can accurately assess and optimize the impact of your advertising tactics in order to improve ROI.
Using incrementality, we can find whether ads drive actual value, or just claim credit for an action that would naturally occur.
Incrementality will answer questions about the value of different advertising tactics, like what the value of retargeting ads actually is, or the value of different channels in the overall conversion journey. It allows advertisers to see the effectiveness of their advertising spend in detail.
Incrementality is not standard A/B testing of 2 pieces of content or audiences. It’s more concerned with the difference that the presence (or absence) of an advertising tactic will have on the conversion, and on the conversion journey.
Traditional optimization is based on performance by obvious attribution, relying on actions that clearly indicate a direct link to a conversion. This can often result in advertisers overloading ads towards the end of the conversion journey because that’s where they see the most return.
However, just because ads were retargeted to a specific customer, doesn’t mean the ads are responsible for the conversion. The user might have returned and converted regardless of seeing the retargeting ads. So, attributing this sale to your retargeting ad campaign doesn’t tell the whole story.
What’s more – aggressive advertising at the end of the conversion journey could lead to overexposure and damage brand reputation. It could actually have a negative effect on the conversion journey.
Incrementality helps us delve deeper and aims to measure the value of the different advertising tactics that are involved in affecting the conversion.
It’s important to clearly differentiate between the presence and absence of advertising tactics. A control group needs to have all of the same characteristics as the incrementality test group but held completely separate in a holdout group that does not experience the tested advertising tactics. For example, to measure the incrementality of retargeting ads, the control would need to have all the same characteristics as the tested audience and be at the same stage of the conversion journey, but would not be shown the retargeting ads.
Incrementality is important to advertisers because it forces us to rethink the entire conversion journey and locate the factors that are truly allowing users to have a better experience. The move away from traditional optimization and towards incrementality means that we can understand the value of advertising tactics in greater detail.
With traditional measurement and optimization, advertisers may be dissociating a vital part of the conversion journey to campaign performance. By using incrementality, advertisers can measure the success of tactics individually, find the true value of each step, and use the insights to make better decisions.
Good ROAS ultimately depends on the business’s goals. But one thing is certain – a good ROAS needs to be consistent!
At Said Digital, we’ve seen figures as high as 2300% ROAS ($23 for every $1 spent) for one of our clients’ 3-month campaigns, and for another client, a six-month campaign saw 600% ROAS ($6 for every $1). While these results are excellent, many industry experts claim the ideal ROAS figure is closer to 400% (or $4 for every $1 spent).
But ultimately, a good ROAS is a figure that a business is able to feasibly maintain and afford – especially after factoring in business expenses, overheads, and the need for scalability. It’s important to strive for realistic figures that are both manageable, and that prepare your business for continued growth.
Test, test, and test again.
Make sure you have a structured but dynamic testing strategy that isolates different content, audience attributes, and advertising tactics. This will allow you to understand which areas are most effective at driving value for your business. And once you have your proven results and insights, be prepared to change your strategy so that your ad campaigns can be continually optimized.
We’d love to hear your thoughts about #FeatureFriday and the topics discussed above. If you work at an agency and are interested in being a guest on our #FeatureFriday please reach out to firstname.lastname@example.org.
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