31. What is Incrementality?
The most important idea for profitable growth.
Today, the most critical business question is: How do we drive profitable growth?
Understanding incrementality is the marketing answer.
This newsletter is inspired by Avinash Kaushik’s extensive writing on incrementality.
To scale any campaign profitably, one needs a deep understanding of which marketing channels are most effective, to what extent, and how to allocate budgets optimally.
Marketers must deal with privacy regulations and the need to provide attribution.
Incrementality helps us understand the true causal impact of marketing activity in a privacy-first way.
Attribution is often confused with incrementality, and I love how Avinash defines these two ideas here.
Measuring incrementality is one of the most complex tasks of marketing analytics.
This is usually done through incrementally tests that compare the key business metric for a group of people exposed to activity, with those not.
The results enable marketers to quantify the incremental revenue generated by a specific campaign, determining the revenue your business would have missed out on had the campaign not been active.
Avinash mentions another data-driven approach here. If you want to dive deep into this, here are the other good newsletters from Occam'’s Razor
Got Low Incrementality? Six Causal Factors.
Solving Incrementality: Hurdles & Distractions. P1.
Incrementality is the most crucial idea for marketers to master. It allows them to understand the actual contribution of campaigns to business outcomes, allocate budgets more efficiently, and justify marketing spending.