CPG marketers need to be able to anticipate and respond to market changes to drive growth and stay ahead of the competition. This means developing ad creative, messaging and offers that resonate with your audience—usually on a tight timeframe.
You need to drive sales and set the stage for future growth. But how do you know which tactic, channel or message will reach and motivate buyers? The CPG industry spends $225B in advertising annually. But marketers only report sales lift 42% of the time. That means the impact of most ad spending is unknown.
Before you invest, you need data to inform your strategy. You have two options, depending on what kind of insights you need: to test the effectiveness of a campaign in general, launch on a smaller scale before rolling out more broadly. Or, to test how a campaign resonates with specific buyers, launch a short-term campaign across audience segments.
Either way, you validate your hunch before investing in an unproven message, channel or tactic. By making a direct connection between your advertising efforts and actual sales, you’ll have the proof to win over leadership and get the resources you need to scale up or extend a campaign.
Use Incremental Lift to Prove Your Value
Marketers have a variety of solutions to measure their efforts, but much of the focus is devoted to measurement across multiple campaigns and programs - either to determine where and how much to invest, or to optimize the creative or channels of campaigns in flight.
Marketing mix models, for example, can help you understand past trends, predict the future effect of marketing tactics on sales, and optimize budget allocation across channels, brands and regions. Once allocated, multi-touch attribution solutions can be used to track the performance and spend of addressable channels in near real-time, so tactical optimizations can be made to in-market campaigns.
While marketing mix modeling and multi-touch attribution provide critical capabilities for any marketing department, much of managing a business day-to-day is answering specific questions or supporting targeted initiatives, such as: “Did our rebranding campaign work?” “Did the Halloween shopper campaign make us money?” “Did our campaign targeted at millennials actually get them into the store?”
To maintain a seat at the table, you need to shed light on what’s working. Measuring incremental lift can help marketers put their sales impact in the spotlight.
Measuring Incremental Lift
Your marketing efforts are designed to increase two things: the number of people aware of a product and the number of units sold. The difference between native demand and ad-driven sales represents incremental lift — the increase in sales that’s attributable to your marketing efforts.
Measuring incremental lift helps marketers understand and prove the real impact of advertising across a wide array of campaign tactics and platforms: TV, digital, radio, OOH, and cross-platform.
There are many methods for measuring incrementality, including looking at conversions before and after your marketing efforts. But the only true way to measure causality is to use a more sophisticated approach.
Incremental testing involves two factors: a defined start date and a known group of consumers who were exposed to your marketing. A test can measure the impact on a brand and/or an entire category.
Comparing the sales metrics based on actual response or purchase data for two groups of your buyers—those who saw your ads and those who did not—will give you the most accurate view of the incremental sales lift.
Here are two different types of tests to measure lift and gain insight into performance drivers:
Option 1: Market Test
- Run a targeted national or local campaign and learn market impact.
- Use store-level data.
- Isolate the sales impact of a specific campaign.
- Measure total market lift and ROAS.
- Diagnose drivers of campaign performance by tactic.
- Optimize campaign for local, national or global rollout.
Option 2: Buyer Test
- Run a short-term campaign and gather insights on media, audience and buyers.
- Use person-level data.
- Assess the sales impact on your target audiences.
- Measure granular lift and ROAS.
- Diagnose drivers of campaign performance by segment.
- Optimize campaign for future rollout.
Use a market test when you want to measure offline sales lift for new marketing strategies with point of sale (POS) data. For example, did our back-to-school discount bring more buyers in-store?
Run a buyer test when you want to assess the impact of a campaign with specific buyers or households. For example, did our two-for-one offer convert new moms?
Either approach will help you prove that marketing efforts help the company drive more revenue. You can demonstrate that your tactics motivated buyers to take some action and, ultimately, purchase your product.
Benefits of Measuring Incrementality
For marketing research analysts, brand managers and channel managers, measuring lift provides powerful insights into the consumer segments and campaign elements that are driving the greatest response, so you can make smarter decisions going forward.
Once you can quantify the incremental sales impact driven by your advertising, you’ll be able to optimize your future media buys in the most impactful way possible. Most importantly, you’ll get the proof you need to end the debate over marketing value and return on advertising spend (ROAS).
An additional benefit of measuring incrementality is that you can see which audience segments are responding to your messages, and which should receive increased spend (or not).
Segments with higher incremental lift are those that were more influenced by your marketing. Those that have lower incremental lift were less influenced. For instance, if you’re trying to reach a certain audience (for example, a competitor’s customers) and there isn’t a strong lift with that group, you can change your messaging (or offer) to reach them more effectively. By understanding this customer journey, marketers can better optimize where they spend their dollars.
Understanding Incremental Lift
Understanding incrementality is a new way of viewing performance for those accustomed to less sophisticated measurement approaches. When implemented correctly, incremental testing can help marketers prove the value of short-term tactics so you can launch larger initiatives. It also gives you the insights you need to grow revenue.
When it comes to understanding how your advertising impacts purchase behavior, don’t settle for educated guesses. Test and learn to get the actionable intelligence you need to close the loop between advertising and sales, increase the effectiveness and efficiency of your campaigns, and make informed optimizations that generate more sales.
To learn how you can be a better marketer in the digital era, download our ebook: How Lift Helps Prove the Value of Your Marketing
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