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Incrementality

What does incrementality mean

Incrementality represents the added value a traffic source, campaign, or even an individual keyword brings. Incrementality is often expressed as a percentage. The percentage of incremental value helps marketers get an immediate insight into the performance of different marketing activities, as it’s represented in a KPI. That way, incrementality enables marketers to compare the performance of paid and organic campaigns.

When incrementality is used to assess the performance of paid campaigns, it can also be expressed as the following:

“A traffic source’s incrementality is the percentage of the customer journey that should be attributed to this traffic source in case this traffic source was part of a customer journey, based on the analysed, historical data.”

How does incrementality relate to marketing attribution?

Incrementality and marketing attribution are very much related to each other. In order to explain the relationship between attribution and incrementality we can best look at an example:

Let’s say we are responsible for the affiliate marketing channel at a sneaker store. Internally, we’ve been discussing about the added value of voucher code websites, but we haven’t been able to truly measure the incremental value of these discount driven publishers.

A common example of this debate is the scenario in which a customer places products in the basket, prepares to check-out but then sees a field in which they can enter a voucher code. This gives the customer an incentive to seek for a voucher code, instead of finalizing the order. The customer proceeds by opening a new tab in their browser and the do a search on Google. The search query is: “brand” + discount code. The customer finds a discount code, enters this and finalizes the order.

In this particular example we can all agree that the incremental value of the voucher code website is relatively low. However, as a sneaker company we don’t know the incentives of the customer neither can we look at individual customer journey to determine this.

To get an incrementality score, we need to apply (multi-touch) attribution to the data. This works as follows:

  • Data about the customer journeys is collected.
  • The collected data is processed and analysed through the attribution software
  • Based on the attribution model, an incrementality score/index can be calculated for different touchpoints. Including the respective voucher code website.

Click here for a video on how we calculate the incremental value at Odyssey, based on three KPIs.

In conclusion: attribution is the process of giving credit to different touchpoints in a customer journey. Incrementality shows the amount of credit that should be given to a touchpoint, based on the attribution data.

How to use incrementality in marketing attribution

When applying marketing attribution and incrementality, the performance of different channels and different marketing activities becomes visible / comparable. Getting attribution and incrementality insights are one thing, but turning them into actions is the vital next step. As discussed above, incrementality is needed to determine the value of a touchpoint. So what should we do once we have that information?

Transforming the information on incrementality into actions should be done just like many other marketing activities are done. By small and measurable steps. The following steps can be used

  1. Low hanging fruit When it comes to incrementality, we first need to identify the low hanging fruit. We can do this in two ways:
  • Seek for traffic sources with a high incrementality and look for opportunities to increase the traffic for that source.
  • Seek for traffic sources with a low incrementality and look for opportunities to save costs on that source.
  1. Testing Once the opportunities are identified, the next step is to set up a testing model. Therefore we need to identify what we want to change and how we will measure this. This is basically nothing more then a regular A/B test which is used often in the marketing field.

Which channels drive incrementality?

There is no single answer when it comes to determining what channels drive incrementality. Incremental value is calculated based on different KPIs. This can differ per attribution software provider or even differ per chosen attribution model. Therefore, there is not one channel which by definition brings more incrementality than any other channel.

However, in general there is one factor that is most often crucial in the determination of the incremental value of a campaign. The attribution model. Based on the chosen attribution modelling, the position (besides other factors), has a huge impact in the determination of the incremental value of a traffic source.

When the chosen attribution model is first click, touchpoints that drive more new visits to your website, are rewarded more. The same applies to other attribution models. When the attribution model is last click, the touchpoints closer to the conversion are rewarded more.