Lessons brands can learn from high-growth companies measuring incrementality
This post is sponsored by Epsilon.
E-commerce has changed dramatically over the last five years, but the way we measure marketing effectiveness remains the same. By continuing to use outdated attribution methods, marketing teams are inaccurately tracking progress and wasting money chasing customers who are already considering a purchase.
Why is this important now?
Marketers face real budget challenges in the year ahead, with significant cost headwinds. Instead of increasing post-pandemic marketing spend over the past 12 months, it has actually decreased, and this could get worse.
A recent study conducted by Epsilon revealed that 78% of businesses are spending more money on digital marketing, a sign that the digital pressure to get results is even higher. means
Epsilon commercial director Ben Foulkes recently explained that it’s time for brands to move away from measuring attribution. Instead, follow the example of high-growth companies that rely on incremental performance measurements.
“Attribution is a great way to measure marketing success for a startup. I do,” he said.
“Marketing teams can gain credibility if an individual progresses down the sales funnel if they can prove that a campaign impacted a customer. As we attract and operate across offline and online channels, it becomes much more difficult to measure accurately.”
Rather than encouraging actual marketing success, attribution only encourages teams to prove they were on the customer journey path as close to conversion as possible, he said. .
This kind of last-touch metric looks great in Google Analytics and might be applauded by your finance team, but ultimately your marketing team will invest in current cash flow instead of investing in new customers. encourage you to do so.
Why Incrementality is the Answer
Instead of focusing on attribution, high-growth brands such as fashion retailer Pretty Little Thing are now switching their attention to using incrementality to measure marketing effectiveness and growth. This metric is ideal for revealing which marketing levers have the greatest impact on the customer journey, rather than just proving the customer touchpoints.
After measuring and identifying the most effective actions in driving customers to purchase, marketing teams can have the confidence to invest more budget in the same areas.
Incremental may involve analyzing a cross-section of a larger audience, and while the techniques may be more complex, the return on investment is higher and the results much stronger.
For example, Pretty Little Thing first approached Epsilon in 2019. This was because brands leveraged his CRM data and wanted to move away from retargeting because they didn’t think retargeting was effective.
But by leveraging customer recognition technology and always-on testing and control technology, Epsilon transforms retargeting into a channel that more effectively interacts across a brand’s sales funnel and drives strong incremental sales. I was able to. This gave Pretty Little Thing the confidence to invest 20x more in retargeting than he did and achieve a significant return on investment.
Once the marketing team has achieved a fully valid table and a transparent view of incremental growth, they will be able to understand the exact return on ad spend.
For Pretty Little Thing, this was backed up by rigorous testing and management checks. This level of progressiveness allows the sales team to work higher up the sales funnel, identifying and targeting key customers using his personalized one-on-one conversations.