More from our FAQ
Does incrementality measure ROAS or ROI?
Return Over Ad Spend (ROAS) is one of the key metrics monitors by marketers everywhere.
The logic is simple: If the revenue gains are higher than the ad spend used to acquire customers - the investment was beneficial.
Most would assume that positive Incremental ROAS means incremental ROI.
But ROAS does not mean incremental ROI. Especially when relying on traditional attribution methods.
The graph and table below show the reported ad spend and revenues from new customers attributed to “new vendor”.
Based on last touch attribution data - this new vendor generates a nice return on investment.
This would mean that while the new vendor’s ROAS looks positive - the total ROI decreased.
When zooming out to see overall results, the user acquisition graph looks as follows:
Return Over Ad Spend ignores total ROI, leading marketers to waste and non incremental results.
Calculating Incremental ROI
Incremental return over investment takes a more holistic approach to measurement, always monitoring the results across the board, while taking into account the results as reported by last-touch attribution and media cost data.
This approach looks at the conversion changes caused by paid marketing, to come up with an understanding of the real incremental sales lift and incremental ROI.
Measuring incrementality requires a continuous layer of prediction analytics overlaid above every comparable combination. Creating a synthetic cohort allows our platform to monitor the difference in difference and come up with digestible insights to marketers.
E.g. “The ROAS for ‘New Vendor’ is cannibalizing Organic traffic. Stopping the activity with ‘New Vendor’ will lead to positive incrementality”