Four ways incrementality supports app retargeting measurement

Despite all the uncertainty around the future of app retargeting, the effects of the iOS 14.5 rollout were not as catastrophic as the ad tech industry had expected. While some app marketers are on the fence about this marketing strategy, ID-traffic remains high, while mobile app usage and revenues are still on the rise. Retargeting continues to function as a high-performing marketing channel that encourages users to move along the purchase funnel, nurturing them to become loyal customers.

App marketers who are hesitant to start or continue running retention campaigns can rely on data for reassurance. Incrementality testing offers a scientific approach to uncovering whether marketing activities are truly contributing to any incremental value.

Although incrementality measurement isn’t a new concept, it has only been adopted in mobile advertising in the past few years. We’ve written a complete guide to incrementality measurement for app retargeting and prepared four reasons why it is the best way to measure your marketing activities. Learn more below.

Incrementality measurement is based on medical experiment models for testing drug efficacy. Medicines are tested for their potential cause-and-effect reaction through clinical trials. Trials are performed by randomly assigning patients into one of two groups: either in the treatment or in the control group. The treatment group receives the drug that’s being tested while the control group does not. The difference in their outcomes, if any, is measured as the effect of the treatment. The effect is measured as positive, negative, or non-existent.

Incrementality measurement in mobile app retargeting takes after this concept. Mobile users are also divided and randomly assigned into treatment and control groups, where the treatment group receives the ads that are being tested so that marketers can methodically measure their effect on campaign performance.

In app retargeting, there are many ways of attributing conversions to the right ad. The last-touch and mutli-touch attribution methods are the most commonly known in the industry. Last-touch attribution credits a conversion and all of its revenue to the last channel that has driven the last click or impression up to the point of conversion. On the other hand, multi-touch attribution credits the conversion to all of the touchpoints that the customer engaged with prior to a conversion event.

While these attribution models are valuable and provide simplicity and standardization, most, if not all, models are over-simplified representations of reality. Therefore, there are several problems that arise, namely last-click stealing, fraud, organic cannibalization, and re-attribution. Since these problems stem from their KPI incentives, such as winning the last click, the results of each marketing campaign are affected and are not entirely reliable. Incrementality measurement alleviates these problems by using a scientific-based measurement system of recording the difference in the behavior of the treatment and of the control group.

Attributed KPIs however, are more standardized and provide a common ground for all marketing activities, whereas incrementality methodologies are not standardized across demand side partners. Consequently, many mobile app marketers prefer to continue using attributed KPIs.

While attribution and incrementality are completely independent concepts, some app companies use incrementality measurement to calibrate their attribution settings in order to validate that their measurement models are as accurate as can be. Even though the two methodologies and their respective KPIs remain somewhat independent, the results can be compared to validate attribution models. For example, if your incremental conversions are higher than your attributed conversions, then you’re tracking fewer conversions than the ones your partner is actually delivering.

Incrementality measurement KPIs are also useful in measuring the contribution of each campaign to each business’ bottom line and choosing the right KPI is essential in measuring the effectiveness of each campaign.

The right one depends on the industry and business goals of your app. Incremental Revenue, incremental ROAS (iROAS), incremental conversions or incremental Cost per Action (iCPA) are the most-commonly used metrics.

For clients where the business model is not reflected by tracked revenue or if real revenue is not available through the data stream, it makes most sense to look at the cost per incremental conversion (iCPA) for goal setting and performance evaluation. An example would be a food delivery app, where the client has a fixed profit of $2.00, regardless of the order amount. In this case the iCPA goal should match the profit per conversion event.