Incrementality 101: CommerceIQ’s approach to driving efficient retail media spend

    December 4, 2023

    Half the money I spend on advertising is wasted; the trouble is I don’t know which half. 

    John Wanamaker 
    Retail Pioneer

    Its an age old problem in Marketing – how do I calculate the incremental lift from advertising? Was there actually any impact? Over the years, several different techniques have emerged – brand lift surveys, marketing mix modelling, different controlled experiments, incremental attribution and several other techniques to “get to an answer”. 

    Retail media is the growing giant in the room, with Amazon’s advertising business touching $40bn last year. As they say – “the more things change, the more they stay the same”. All the questions that were relevant to traditional media continue to remain true for retail media, with the core being – how do we measure incremental lift? The Path to Purchase Institute partnered with CVS Media Exchange to understand agency professional’s perspectives on retail media, and the focus on demonstrating true ROI using incrementality was top of mind. Instacart, in their S-1 filing, highlighted the incremental sales brands are able to achieve through media spending.

    What is Incrementality in retail media?

    Incrementality refers to sales outcomes that are directly attributable and would not have happened without a specific marketing activity. In simpler terms, it’s the measure of the real difference a marketing effort makes. At the end of the day, dollars spent on advertising should grow overall sales. That can happen in the short run (performance marketing) or long run (brand marketing). But there has to be a clear, measurable impact of investing ad dollars. 

    Why does Incrementality need a fresh approach in retail media?

    Traditional incrementality models in advertising try to measure the impact an ad played in increasing brand consideration, measured through surveys, path to purchase and custom attribution. As both advertising and sales move online, there is a greater opportunity to track signals that lead to purchase. Search advertising is different from traditional advertising, because of how close to the point of purchase the ads are displayed. Benedict Evans, industry analyst, argues that this is almost like a slotting fee. He also points out that it likely doesn’t matter if its an ad, trade dollars, slotting fee or end caps – it is the new reality ecommerce teams have to deal with. As more retailers invest in retail media, the starting point is usually lower funnel search advertising where its easier to demonstrate return on ad spend. Its important to understand how search advertising is fundamentally different.

    The search page has 2 unique characteristics – 

    • Duplication of paid and organic placements 
    • Competitive space: your product is shown alongside multiple other brands


    Search result for: energy drink 24 pack on

    In the above example, V8 has the #2 organic search result, but is promoting the same product. A fair chunk of shoppers who want to buy V8 will likely click on the ad to buy it. That doesn’t mean the ad
    caused all those purchases – it very likely cannibalized organic sales that V8 would have gotten anyway from its strong organic rank.


    In Search Advertising, New to Brand != Incrementality 

    While New to Brand sales (new shoppers who bought via your ad) can be considered a fair proxy in offsite display advertising, where your ads are shown in a non-competitive, non-duplicative space, it simply doesn’t work for search advertising. Search dynamics are different, and deserve a unique approach for measuring the true incremental lift.  

    CommerceIQ’s approach to Incrementality

    In order to create a consistent measure of incrementality across retailers, CommerceIQ takes an outside-in approach to building the only real-time retail media incrementality model.

    Factor 1: Share of Voice

    A brand’s organic share of voice on a keyword determines the incremental value of advertising.

    With 100% organic presence, there is 0 incremental sales from advertising, since all the traffic will convert. On the other end, if a brand has no page 1 presence on a keyword, any sales generated from advertising are 100% incremental, since the shopper wouldn’t have discovered your product without the ad!

    Factor 2: Brand Affinity

    A shopper’s propensity to purchase can be tied to how what they’ve searched for. If they’ve searched for cat treats, it’s likely that they either aren’t aware or don’t have a specific brand in mind to buy from. Winning a sale on these keywords, depending on your baseline SoV, is incremental. If you’re the market leader and have high organic presence, its less incremental. If you’re a challenger brand with low organic presence, it’s more incremental. 

    When shoppers search for a specific brand (think purina cat treats), it’s a different equation. If you’re Purina, spending ad dollars on this search term isn’t very incremental (but could be merited for brand defence). If you’re not Purina, running ads on this keyword could be very expensive, since the shopper has already made up their mind. But if you’re able to convince a shopper to try your brand instead, that is highly incremental and is a sale you wouldn’t have made without the ad!

    Factor 3: Search Relevance

    The third factor that’s important is how relevant a search term is for your product portfolio. Higher the specificity of the search towards the product description, the higher the native intent to buy the specific product – which means the incrementality is lower. An example of this is chile n lime almonds, a flavor carried by Blue Diamond Almonds. Since the search is tailored towards this product, it is less incremental than a more generic search like snack almonds.

    CommerceIQ integrates these factors into a keyword-level incrementality fraction, that’s unique to every brand. By integrating this with traditional media performance data reported by a retailer (ROAS), we’re able to measure the incremental sales or lift from every dollar invested, and reallocate spend based on where the largest efficient opportunity exists. In the example below, for Kellogg, it makes more sense to invest in healthy cereal box because they have mich higher incrementality there!


    Improving organic ranking through paid search

    Successful paid search drives incremental growth largely by improving visibility and organic ranking.

    While retail media ad networks don’t explicitly state that paid search will influence organic growth, factors such as sales velocity, click-through rate, and conversion rate are well known to drive organic placement. 

    By using paid search on retailer sites, brands can essentially compensate for a lack of organic visibility. Over time, better visibility should lead to better conversion and click-through rates, which in turn should result in products being positioned higher and higher organically. Once a higher organic ranking has been achieved, investment in paid search won’t need to be as aggressive. That’s also why its important to track more than just the top 20-50 keywords: you need to track thousands of keywords to find incremental opportunities in real-time and deploy your ad dollars (ideally in an automated fashion) to truly drive incremental sales.

    How do we know it works?

    We’ve run several A/B tests to prove the impact of incremental return on ad spend (iROAS) based optimization to grow overall sales. With an on-off test design, brands that have seen that when they run incrementality-based marketing strategy, total sales go up with the same ad budget! One of our customers saw a 5% lift in overall revenue and 16% lift in ad attributed sales, with the same ad budget. Through this, they were able to scale the impact of their marketing campaigns in real-time and support their sales goals.     


    Curious to find out how iROAS and CommerceIQ’s powerful, unified platform can help boost your paid search strategy? Book a demo with our consultants today!

    Read more about our incrementality approach to retail media –

    CommerceIQ cracks the code of incrementality in retail media

    Measuring Real Incrementality in Retail Media 



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