Marketing Analytics Confidential: Stop Spending on Non-Incremental Conversions

You run an ad. A user clicks on the ad and purchases whatever you’re selling. Hey, good job, Mr. Ad, and thank you for the revenue. This association with ad spend and subsequent revenue is the core premise of digital marketing. 

Of course, it’s not that easy. Just because someone clicked an ad does not mean that the ad is responsible for the conversion. Understanding that nuance can save you a lot of budget in a world where agencies, in-house teams and platforms are heavily incentivized to show ad revenue, whether or not they truly earned the attribution. 

To help you understand the stakes, let’s start by defining non-incremental conversions: they are conversions that would have happened even if you had not run any marketing campaigns.

For instance, if you have a loyal customer base who regularly purchases your products, then some of the conversions that you generate from your marketing campaigns would have happened even if you had not run the campaigns. The same is true of many direct-response marketing campaigns for brands that have built positive awareness with upper-funnel marketing: many customers would have purchased at some point even without seeing the DR ads.

So how do you assess which conversions are incremental and which aren’t – in other words, where you’re wasting your ad budget? At Blackbird, we conduct location-based holdout tests to measure the impact of the ads we manage in those locations where we run ads vs. locations where we don’t. You just need to make sure the locations in focus are similar in demographics and behavior, and you need to have confidence in your back-end data to measure the true impact of the active campaigns.

If you don’t have the time to test right now, some ClifsNotes: be especially skeptical of over-valued results from brand search, retargeting, Facebook prospecting without visitor exclusions, email, and campaigns that include view-through conversions in optimization targets like YouTube and majority of CTV.

And if you want more concrete answers, hit us up to talk about testing structures.