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Why is Incrementality Measurement so Difficult to Achieve ?
(Hint: It's Not)
The role of Advertising within the Marketing space is to attract customers, especially new customers, to engage with a brand, leading them within a 4 stage funnel: Awareness > Interest > Desire > Action.
Advertising is most effective when it produces incremental results – i.e. Sales that would not have happened if it was not for the Advertising activities.
During the LUMA Digital Marketing Summit keynote presentation, LUMA presented the following slide saying: True Attribution Focuses on Incrementality
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While the above example shows a clear picture of cannibalization, the reality for most marketing campaigns is more subtle.
An alternative solution to “Stop all Advertising” is available, by utilizing difference in difference algorithms and examining the traffic mix on a narrow signal level. Utilizing algorithms allows a platform to continuously compare signals to signals on a combination level and point out opportunities for optimization to increase incrementality while reducing cannibalization.
(Image credit: LUMA Partners)
Marketing is a broad term describing a company’s activities to promote the sales of a product.
Each element in the 4 Marketing Ps may influence a successful marketing strategy:
- Product – the item being marketed
- Price – the price point (and model) for the product/service
- Place – access customers have to reach the product
- Promotion – Advertising activities to create awareness leading to action
In this article, we wanted to focus on the promotion part (Advertising), but that is not to say that the 3 other Ps do not matter!
In today’s globally competitive world, Advertising activities are a necessary part of almost every product in market. If you are a mobile app developer, you are competing against thousands of app companies from around the world.
Media vendors have made Advertising lucrative by offering Performance Pricing schemes where Advertisers can sit back and pay conversions rather than risk the costs of media which may not lead to any conversions.
While it’s tempting to Advertisers – Performance Pricing has one big caveat – it incentivizes media vendors to optimize their own media strategy towards the low hanging fruit: Targeting users that may likely would have converted , thus reducing the media inventory that is required to be used.
The following graph shows that an Advertiser may launch campaign activities with a new vendor. Based reporting – the new vendor is providing great value and a positive ROI.
However, zooming out to see the bigger picture, shows that this new vendor does not contribute to the total volume of conversions, but is receiving credit away from the organic traffic.
This vendor may have a high overlap with organic users.
Understanding incrementality can be very simple, but may require a marketer to make a drastic move – Stop All Advertising Activities for a while, to see what happens…. 😬
You may be surprised that large companies who stopped all advertising activities found that up to 80% of their advertising activities was redundant, sometimes included fraudulent publisher activities, and this was while using the latest mobile measurement and analytics technologies available.
Most marketers are unwilling to perform such a drastic step – as while saving is important – most marketers would rather unlock the value of their spend rather than “save it”.