Incremental Marketing Testing: A Guide

Are you tired of guessing which marketing efforts actually work? Many startup founders, investors, and marketing leaders struggle to pinpoint the true impact of their campaigns. That’s where incremental marketing testing comes in.

It’s about isolating the real impact of your marketing. Understand how those activities contribute to growth, enabling a truly data-driven approach.

Table Of Contents:

• What Exactly is Incremental Marketing Testing?
• Why Bother With Testing For Incrementality?
• Ways That Incrementality Helps Marketing
  • Brands That Can Benefit from Incrementality Testing
  • Avoiding the Pitfalls of Click-Based Attribution
• Actionable Steps For Incremental Testing Marketing
  • 1. Get the Team on the Same Page
  • 2. Make Your Data Ready
  • 3. Combine What is Learned into Current Reporting
• Methods for Incremental Testing
  • Platform Conversion Lift Studies
  • Geo-Testing
  • Testing using Observation
• Incremental Testing Versus A/B Testing
• Marketing Mix Modeling (MMM) and Incrementality Testing
• How to Calculate Incrementality
• Conclusion

What Exactly is Incremental Marketing Testing?

Think of incremental marketing testing as a detective, revealing the true impact of your marketing campaigns. This method goes beyond simple attribution models. Incrementality shows you the additional revenue directly caused by a specific campaign.

Let’s say you run a social media ad. Instead of looking at last-click attribution, you measure conversions with incrementality testing. This helps determine how many customers would have *still* converted even without that ad.

Why Bother With Testing For Incrementality?

In today’s competitive landscape, knowing the true impact of different marketing channels is crucial for resource optimization.

This helps you identify wasted budget and potential investment areas with incremental marketing testing. 

Ways That Incrementality Helps Marketing

Traditional attribution models tend to overvalue specific touchpoints. This leads to overestimating their influence on sales.

It shows marketers that paid search may seem like a great option, using attribution. People find it by clicking and think it provides an excellent return on investment (ROI), when reality may differ.

Brands That Can Benefit from Incrementality Testing

Well-known brands often have customers finding their website organically. Here, incrementality testing becomes a guide. These tests show if specific campaigns provide real value or just benefit from brand recognition.

Businesses using various online channels (social media, display ads, email marketing) need incremental marketing testing. It aids in smart resource allocation by identifying high-impact channels for strong ROI.

Avoiding the Pitfalls of Click-Based Attribution

Traditional click-based models can be misleading. Here’s why:

• Brand search campaigns may appear excellent initially. However, this includes people already intending to visit your business.
• Retargeting: Assessing an ad’s impact based on prior clicks might suggest great performance. Although this might just indicate pre-existing brand awareness.

This method identifies sales generated by marketing activities. Incrementality separates these from sales that would have occurred naturally, providing clearer insights.

Actionable Steps For Incremental Testing Marketing

Here’s a practical guide to get you started with incrementality. Testing doesn’t have to be a complex or overly technical project.

1. Get the Team on the Same Page

Begin by educating your team. Explain the concept of this marketing approach, demonstrating how testing can influence more effective decisions.

Often, misunderstanding causes incrementality to be overlooked. Secure buy-in early and set clear expectations.

2. Make Your Data Ready

You’ll typically need about 6 to 12 months of reliable data. Verify the accuracy of your data.

Centralize your spending, sales figures, conversions, etc. Make sure sales data aligns with your goals for reliable information.

3. Combine What is Learned into Current Reporting

Integrate findings from incremental tests into your daily operations. For instance, if a platform reports more conversions than a test indicates, not all may be new.

Consider adjusting the figures accordingly. Test and retest, as conditions and seasons change, adapt your testing and metrics.

Methods for Incremental Testing

There are several common approaches to integrate it into your strategy.

Platform Conversion Lift Studies

This quick-start testing method helps measure impact efficiently.

Here’s how it works: Platforms like Google and Meta create two groups: treatment and control. They compare changes, with the treatment group exposed to ads, promotions, or content, while the control group receives none.

Geo-Testing

This method divides areas (e.g., one region vs. another). Marketing is directed to a specific group and not the other, to compare sales data and isolate external factors like geography and seasonality.

GeoLift experiments apply incremental testing principles at a localized level. Comparing campaign results in a specific test location against a control location provides more effective measurements of differences in reach and conversions.

Statistical models are there to be used for comparing. Using demographics, location, and market comparisons that mirror each other is most effective.

Testing using Observation

Observational testing can offer insights for marketers with limited budgets. Smaller groups can show significant lift when substantial changes are made. However, companies with large annual marketing spends might need to explore other options.

It’s more basic but still effective for gauging campaign or promotion results.

Incremental Testing Versus A/B Testing

While these tests share similarities, they aren’t identical.

An incrementality test provides insight into marketing reach using two comparison groups, A and B. By withholding marketing from Group B, it reveals whether an idea can generate incremental growth and ROI. A/B testing, however, presents slightly altered items or ads to the entire audience to compare performance, like changing wording or visuals.

Marketing Mix Modeling (MMM) and Incrementality Testing

These models offer valuable insights into what’s effective. These models also give additional support for ideas of marketing ROI.

Marketing Mix Models (MMM) provide a comprehensive view of ROI across various business outreach efforts. Marketing Mix Modeling (MMM) gives you the bigger overall picture by analyzing multiple campaigns. From this, it can identify the overall highest contributors.

Multi-touch attribution (MTA) distributes importance across each customer interaction. It identifies multiple areas that support business growth. However, it doesn’t differentiate between incremental conversions and those that might have happened organically.

How to Calculate Incrementality

The primary goal is to determine the value of a marketing plan.

Here’s a simple formula:

Test Group Profit – Control Group Profit = Incremental Profit

Here’s another helpful metric to support the ROI calculation:

This metric indicates whether the test group responded positively, providing marketers with insights into effectiveness.

Conclusion

Incremental testing marketing might seem complex initially. However, this powerful approach can transform how you allocate resources, improve marketing campaigns, and refine your overall marketing strategy.

This practice leads to better-informed decisions and improved marketing performance. This powerful strategy emphasizes long-term success, focusing not only on marketing reach but also overall business return.