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What is incrementality and how is it measured?

Published on January 12, 2024

Incrementality is a measurement of the additional impact or value generated by a specific marketing effort that would not have occurred otherwise. It quantifies how much a campaign or channel contributes to achieving a desired outcome — like sales, clicks, or conversions — beyond what would have happened naturally or through other influences.

For instance, in advertising, incrementality might measure whether a particular ad campaign led to increased purchases or if those purchases would have happened regardless due to brand loyalty or organic traffic.

Key features of incrementality

  1. Causal analysis: Incrementality helps determine causation, not just correlation, by isolating the effect of a specific marketing activity.
  2. Optimization: Marketers use incrementality to assess which strategies provide the best ROI and to allocate budgets more effectively.
  3. Testing: Often measured through experiments like A/B tests or holdout groups (where a segment is excluded from seeing the campaign).

Example of incrementality

Suppose you run a paid social media campaign. Incrementality testing would compare results between users exposed to the campaign and those who weren’t (a control group). If the exposed group significantly outperforms the control group, the difference is the incremental lift attributed to your campaign.

How to measure incrementality

Incrementality can be measured through various methods that help isolate the direct impact of a marketing campaign or effort on key business outcomes. Here are some common ways to measure incrementality:

1. A/B testing (split testing)

A/B testing is one of the most direct ways to measure incrementality. You divide your audience into two groups: one group is exposed to the campaign (the test group), and the other is not (the control group). By comparing the results of both groups — such as conversions or sales — you can determine the incremental impact of your campaign. The difference in outcomes between the groups can be attributed to the campaign itself, helping you measure its true effect​.

2. Holdout groups

Holdout groups involve isolating a portion of your audience from your marketing efforts entirely. This control group is not exposed to any campaign, and the results from this group are compared with the group that was exposed to the campaign. The difference in performance helps to estimate the incremental lift generated by the campaign. This method is particularly useful for digital and multi-channel campaigns​.

3. Lift analysis

Lift analysis is a statistical approach where you analyze the difference in performance between customers who saw your marketing messages and those who did not. The “lift” refers to the additional impact your campaign had on the exposed group. By measuring the incremental increase in sales, conversions, or other KPIs, you can determine how effective the campaign was in driving new outcomes​.

4. Marketing mix modeling (MMM)

Marketing mix modeling involves analyzing historical data and using statistical techniques to understand how various marketing activities contribute to overall business performance. By isolating the effect of each marketing channel and considering external factors (like seasonality or economic changes), marketers can estimate the incremental contribution of each channel or campaign. MMM is often used to measure the long-term effect of marketing efforts across multiple channels.

5. Regression analysis

Regression analysis is used to model the relationship between marketing efforts and business outcomes. By analyzing historical data, this method helps identify the specific incremental impact of each marketing channel or campaign. It can account for other variables that influence outcomes, such as seasonality or market trends, ensuring the measurement is focused on the true effect of the marketing activity.

By employing one​ or more of these methods, marketers can more accurately determine how much of the observed effect — whether that’s increased sales, website traffic, or other KPIs — can be attributed to their marketing efforts.