How incremental revenue can prove the real value of your marketing activities in dollars, not clicks
by Jon Carder
Aug 27, 2018 5:14:27 PM / by Jon Carder
Marketing is always about chasing that next dollar, which leads to a lot of pressure on professionals like you to prove ROI with your efforts. If you’re feeling the crunch, it might be time to reframe the way you talk about ROI.
One of the top ways to discuss returns while demonstrating value is to discuss the incremental revenue that your marketing can create. We like it because it speaks the language of most organizational leadership: money. Focusing on dollars instead of clicks allows you to address a wide range of solutions and needs, such as the online-to-offline impact of your marketing.
If that’s the conversation you’d like to have during your next campaign review, or when you’re asking for an increase in your budget, then keep reading.
Incremental revenue is a way to think about marketing in terms of dollars, not clicks. It turns traditional digital efforts — those that often push sign-ups and interactions — on their head to care about one of the most important business metrics: revenue.
Think of it this way: incremental revenue is the additional revenue you generate as a result of paid marketing.
Measuring incremental revenue is designed to give marketers a straightforward way to understand the business value of advertising’s impact. It compares results between audiences that see the campaign (your “Test Group”) and those that don’t (your “Control Group”).
Perhaps best is that it’ll allow you to easily review the results of your marketing effort, including online-to-offline links.
Remember, about 90% of sales still occur in physical stores.
Understanding the success of marketing in terms of incremental revenue requires a bit of data, but it isn’t as difficult as other forms of attribution for many marketers. Because you’re focusing on an end — total revenue — and not clicks, page views, or other metrics that tell part of a customer’s journey to that revenue.
Measuring incremental revenue involves a comparison of the purchases or spending that the Test Group makes compared to your Control Group. The higher your Test Group spends, the better the value of your campaign.
If you’re interested in starting with the offline impact of online marketing, you can look at the increase in sales your store had for the products you advertised.
When you first try this methodology, it’s best to limit other changes as much as possible. If you’re able to control for sales, other marketing, or seasonal differences between store locations, then you’ll be better able to determine that these changes are due to your new campaign.
The longer you use this methodology, the more insight you can gain from it. Tracking incremental revenue can also teach a business about its seasonality, recurring trends, and customer habits that will help it make smarter advertising decisions in the future.
Sometimes, with the right marketing dashboards and tools or with a powerful new type of campaign, you can understand the specific incremental revenue because these tools let you isolate new revenue.
Now, here’s what you’re really after: how do you implement a new campaign that makes tracking incremental revenue easy?
Empyr has a solution that can help you understand the lift of a new campaign based on incremental value, because we create a clear path from ad to sale. Our card linked advertising model allows you to tie spend to a specific sale, removing the guesswork around attribution.
Here’s the whole platform in just five steps:
The Empyr model is designed to track incremental revenue for digital marketing pushing brick-and-mortar sales. Some other systems or efforts may support you with online only, which can be tracked through targeting pixels and more.
Incremental revenue is a terrific way to do a quick check on the health of your business and marketing. It’ll show if you’re performing better through your new efforts and is a simple process to understanding how much incremental revenue each $1 of marketing returns.
We believe that return on ad spend should be straight-forward, especially when you’ve got to use it to justify new efforts to leadership. Incremental revenue calculations are a top way to make a case for your spending and demonstrate your value.
Not sure where to start or want to see how your current efforts stack up? We’ve put together this free calculator to help you understand your return in under 1 minute. Discover wins and gaps you didn’t know you had.