Incrementality explained on “The Lowdown”
Digital ad spend is set to reach $333.25 billion globally in 2019, with mobile marketing accounting for one third. As app companies and marketers increase their investment to acquire new users, they’re at risk of spending money on users they already owned — also known as cannibalizing organics. This happens when marketers rely on view and click-based metrics to calculate ROAS, which leads to over-attributing paid efforts.
Given the risks of wasted ad spend and inaccurate data, it’s no wonder that incrementality is a hot topic for mobile marketers. In simple terms, incrementality is the measure of the lift that the advertising spend gives to the conversion rate. By distinguishing between paid installs and organic traffic you can avoid miscalculating your ad spend and paying for installs that would have been free. Incrementality testing gives you a clear picture of organic vs paid traffic, enabling you to discover the real cost of each incremental conversion (or an install from paid marketing spend) so you can scale your marketing strategically.
In Episode One of our web series The Lowdown, Adjust Global Product Communications Manager Michael Paxman takes on the tricky topic of incrementality, and breaks it down into three steps, to help you stop cannibalizing your organics.
1. Hit the breaks
An effective way to understand your organic, unpaid traffic is to press pause on all marketing temporarily. Doing so will give you a baseline for organic installs, which is the first step to knowing how much you're paying for new users.
While incrementality testing is a complex process, a simple example of how it works is A/B testing, where you can measure the incremental lift between organic (baseline) and paid results. Imagine Group A is a controlled group without any exposure to ads, and you expose Group B to ads. Any increase from Group A to Group B in number of installs is the lift, while the percentage of Group B that converted due to ad spend is incrementality. Knowing this incrementality percentage will help you calculate whether the ad spend was worth the additional installs, and if you should dial up or down your ad spend.
2. Think regional
Internal research has shown that MENA drives significant traffic from paid sources, while organics still dominate in Asia Pacific. A multitude of factors combine to create such regional differences — from seasonal trends to cultural nuances to brand awareness. To get a more accurate read on incrementality Michael recommends marketers stay vigilant and look at their baseline often and on a region-by-region basis. “It’s important to understand ads that cannibalize your organics in one region may not do so in another,” he says, “so you need to build a strategy for each region you are testing.”
3. Switch it up
Once you've performed incrementality testing and determined which ads are cannibalizing your organics, it's time to take this newfound knowledge and act on it. Moshi Blum, Head of User Acquisition at Viber, shared his insights on this topic at a recent Adjust Mobile Spree. He suggests designating a UA team member to focus on organic installs, who isn’t “incentivized by their paid results, and this method can prompt managers to cannibalize organics." This team member, he says, must be given authority to halt spend on cannibalizing ads, which is the first step in refining your paid strategy towards ads that lead to substantial growth. Whether this means going back to the drawing board on creative or rethinking your campaigns from a strategic standpoint, incrementality testing arms you with actionable insights that allow you to refine your campaign in a data-driven way.
And remember, user behavior will change over time, so it's crucial to not only continue your incrementality testing periodically but to ensure that your strategy — and marketing mindset — is agile and adaptable.
Stay tuned for the next episode of “The Lowdown,” where we take on another challenge facing mobile marketers today, break it down, and give you tips on how to manage it.