Today, we’re diving into a common challenge in marketing measurement: understanding the true incremental value of your marketing efforts. Let’s look at a real-world scenario to illustrate this issue and explore how to navigate it.

The Scenario

For the past two years, your business has averaged 100 sales per day. Recently, you decided to invest £1,000 per day into marketing. After this investment, your sales increased to 110 per day. According to your platform data, the £1,000 spend results in 50 sales. However, your overall sales have only increased by 10%, from 100 to 110. So, what’s happening here?

Understanding Incremental Conversions

Incremental conversions refer to the additional sales directly attributable to your marketing efforts, over and above what would have happened without any marketing spend. In our scenario, while the platform data shows 50 sales from your marketing spend, your total sales have only increased by 10 (from 100 to 110). This suggests that the actual incremental impact of your £1,000 spend is 10 additional sales per day.

Why This Happens

1. Overlap with Organic Sales: Some of the sales attributed to your marketing efforts might have occurred organically, without any advertising. These customers could have purchased anyway, due to brand loyalty or repeat purchase behavior.

2. Misleading Platform Data: Marketing platforms often report on sales that they can directly attribute to ad clicks or impressions. However, these attributions might not account for organic sales or other influencing factors.

3. Measurement Gaps: There can be discrepancies in how different channels and platforms track and report sales, leading to inflated or inaccurate figures.

Addressing the Measurement Challenge

1. Use Control Groups: Set up control groups that don’t receive any marketing exposure. Comparing their behavior with that of the exposed group helps you understand the true incremental lift caused by your marketing efforts.

2. Incrementality Testing: Regularly conduct incrementality tests to measure the real impact of your marketing spend. This involves turning off marketing spend in certain areas or time periods and comparing the results with periods where spend is active.

3. Attribution Models: Employ advanced attribution models that consider multiple touchpoints in the customer journey. This helps in understanding the collective impact of different channels and avoiding double-counting of conversions.

4. First-Party Data: Leverage first-party data for more accurate insights. Combining your internal sales data with platform data can provide a clearer picture of incremental value.

5. Holistic Measurement Approach: Integrate multiple measurement tools and methodologies to get a comprehensive view. The Measurement 360 framework, as discussed earlier, is a great example of combining various solutions for a holistic understanding.

Practical Steps for Better Measurement

1. Define Clear Metrics: Set clear objectives and KPIs that focus on incremental sales, not just total attributed sales.

2. Regularly Review Data: Continuously analyse your sales data and marketing performance. Look for patterns and discrepancies that could indicate over-attribution by marketing platforms.

3. Experiment and Adjust: Regularly run experiments to test different marketing strategies and their true impact on incremental sales. Adjust your strategies based on these insights.

4. Invest in Attribution Tools: Consider investing in advanced attribution tools that offer more sophisticated measurement capabilities, including multi-touch attribution and incrementality testing.

Conclusion

Measuring the true impact of your marketing efforts is crucial for optimising your strategies and ensuring that your investments are generating real, incremental value. By understanding and addressing the common pitfalls in marketing measurement, you can make more informed decisions and drive better business outcomes. Remember, it’s not just about the number of sales attributed to your marketing spend, but about the additional sales that wouldn’t have happened without it.

Stay tuned for more insights on optimising your marketing strategies and making the most out of your data. Have any questions or thoughts? Drop a comment below and let’s start a conversation!