The Importance of Incrementality in Retail Media
Introduction
Retail media is a rapidly growing market, with brands spending billions of dollars each year to reach consumers on a growing number of retailers websites and apps (see the list of retail media networks). However, the lack of a standardized approach to retail media measurement makes it difficult to determine the true impact of these campaigns.
What is incrementality?
Incrementality is the additional sales or engagement that can be attributed to a specific marketing campaign. In other words, it is the difference between the number of sales or engagements that would have occurred without the campaign and the number of sales or engagements that actually occurred with the campaign.
Why is incrementality important?
Incrementality is important because it allows brands to measure the true impact of their retail media campaigns. ROAS (return on ad spend) is a common metric for measuring the success of marketing campaigns, but it can be misleading. ROAS only measures the total sales or engagement generated by a campaign, not the incremental sales or engagement. This means that a campaign with a high ROAS may not actually be generating any incremental sales or engagement.
How to measure incrementality
There are a number of ways to measure incrementality. One common method is to use a control group. A control group is a group of consumers who are not exposed to the marketing campaign. By comparing the sales or engagement of the control group to the sales or engagement of the group that is exposed to the campaign, brands can estimate the incremental impact of the campaign.
Another method for measuring incrementality is to use attribution models. Attribution models are statistical models that attempt to estimate the impact of different marketing channels on sales or engagement. By using an attribution model, brands can estimate the incremental impact of their retail media campaigns.
The challenges of measuring incrementality in retail media
The challenges of measuring incrementality in retail media are manifold. First, retail media is a complex ecosystem (see how it is evolving according to the IAB), with many different channels and touchpoints. This makes it difficult to isolate the impact of any one campaign.
Second, retail media is often measured using attribution models. However, these models can be inaccurate, especially in the case of retail media, where there are so many different factors that can influence purchase decisions.
Third, there is no single standard for measuring incrementality in retail media. This makes it difficult to compare the results of different studies.
New methods for measuring incrementality in retail media
There are a number of new methods for measuring incrementality in retail media that are being developed. These methods include:
- Closed-loop measurement
Closed-loop measurement is a method of measuring the impact of a campaign by tracking the entire customer journey from awareness to purchase. This is a more accurate way to measure incrementality than traditional attribution models.
- Econometrics
Econometrics is a statistical method that can be used to estimate the impact of a campaign on sales. Econometrics is a more complex method than closed-loop measurement, but it can be more accurate in some cases.
- Machine learning
Machine learning is a type of artificial intelligence that can be used to predict the impact of a campaign on sales. Machine learning is a relatively new method, but it has the potential to be very accurate.
The future of incrementality measurement in retail media
The future of incrementality measurement in retail media is bright. The new methods that are being developed are more accurate and can be used to measure the impact of campaigns across multiple channels and touchpoints. This will make it easier for brands to understand the true value of retail media and make better investment decisions.
Conclusion
Incrementality is an important metric for measuring the success of retail media campaigns. By measuring incrementality, brands can ensure that their campaigns are actually generating sales or engagement. There are a number of ways to measure incrementality, and brands should choose the method that is best suited for their needs and their organization. The future of incrementality measurement in retail media is bright, as new methods are being developed that are more accurate and can be used to measure the impact of campaigns across multiple channels and touchpoints.
Resources you may find useful:
- The Importance of Incrementality in Retail Media: https://momentumcommerce.com/momentum-commerce-bayers-top-four-retail-media-metrics/
- Retail Media Incrementality Testing: A Guide for Brands: https://skai.io/blog/retail-media-roundtable-april-2022-measurement-challenges/
- How to Measure Incrementality in Retail Media: https://www.themarsagency.com/post/a-quick-look-at-retail-media-measurement
