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BizReport : Advertising archives : October 12, 2018

Brands: Why you should measure increments not return

Return on Ad Spend (ROAS) has long been a key guide for marketers, but with more data becoming available every day, one expert believes ROAS should no longer be the go-to measurement for advertisers and brands. Instead, he believes incrementality is now key. Here's why.

by Kristina Knight

Kristina: Brands have been using Return on Ad Spend (ROAS) to determine the success of their campaigns for years. Why is this metric not, perhaps, what brands should be looking at?

Alexei Chemenda, CRO for Apps & Managing Director - US, Adikteev: ROAS gives you an overview of the revenue attributed to a given partner. What ROAS doesn't show you is whether that action would have happened without that partner or not.

Imagine putting up a sign at the entrance of a restaurant stating, "free dessert today." If you were just looking at ROAS, you would only be looking at how many people entered the restaurant. But the real question is, "how many people entered the restaurant as a result of the sign?"

Kristina: You've said that incrementality is a better metric - what is incrementality?

Alexei: Incrementality is comparing the behavior of users targeted by the ads to the users in a control group (or holdout sample). It is measuring the difference between the two groups to determine if there was a revenue lift (or not). 

Kristina: Why is it a more powerful tool for marketers?

Alexei: The question should not be why incrementality is a more powerful tool, but rather, why ROAS is the wrong metric.

The answer to both questions is that incrementality is a powerful tool because it shows the true value of every marketing channel, whereas ROAS does not.  

Kristina: How can brands begin using incrementality within their campaigns?

Alexei: Brands who have a finite number of users should start by creating a holdout group that they don't target and begin discussing incrementality with every partner they run a campaign with.

Tags: ad metrics, Adikteev, advertising, advertising data, advertising measurement, campaign ROI, return on ad spend

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