Black Friday, Cyber Monday, and Cyber 5 of 2024 are behind us, but the work is far from over. Now is an ideal time to use incrementality to measure the retail media effectiveness of your holiday ad strategy. Which campaigns truly delivered? And what can you learn to inform smarter decisions for future campaigns?
Traditionally, ROAS (Return on Ad Spend) has been the go-to metric for measuring ad performance. However, ROAS only considers total revenue attributed to a campaign and doesn’t account for other critical touchpoints along the shopper’s journey that led to the sale.
This is where incrementality comes in. Incremental return on ad spend (iROAS) measures the sales that wouldn’t have happened without the influence of your advertising, providing a much clearer picture of campaign impact. By conducting a post-holiday incrementality analysis, you can pinpoint which ad formats, channels, and strategies delivered the greatest incremental lift — actionable insights that are essential for optimizing your future campaigns.
In this step-by-step guide, we’ll explain how to conduct an incrementality analysis. We’ll cover how to:
- Gather and analyze your campaign data to separate incremental revenue from advertising from baseline sales (sales that would have happened anyway).
- Calculate iROAS (Incremental Return on Ad Spend) and assess performance across audience segments and ad formats.
- Use these insights to drive eCommerce profitability in Q1 2025 and set the stage for the next Cyber 5.
Why should brands care about the incremental sales impact of their holiday retail media campaigns?
Measuring incremental sales impact offers a deeper perspective on your retail media effectiveness and can help insulate your brand from threats to your eCommerce profitability. Specifically, incrementality in retail media helps you:
Overcome the rising CPCs of eCommerce advertising
The holiday season brings increased competition from brands and a growing number of B2B marketers, driving up ad costs. Without an incrementality analysis, you might overspend on ads that fail to deliver meaningful lift.
Understand the holiday halo effect on total sales
Ads during the holiday season don’t just drive immediate sales. They can also boost organic sales and amplify your brand’s Share of Voice, which measures your visibility relative to competitors. Identifying this halo effect helps clarify the full value of your campaigns and inform your strategy for Cyber 5 2025.
Optimize your budget allocation in 2025 based on Cyber 5 data
Insights from a Cyber 5 incrementality analysis allow you to redistribute your Q1 ad spend, cutting waste and doubling down on high-performing strategies.
How to conduct a post-holiday incrementality analysis in 5 steps with Pacvue’s Incrementality Console
Step 1: Gather your data, the foundation of retail media incrementality measurement
The foundation of any incrementality analysis is comprehensive, high-quality data. This includes:
- Ad spend, impressions, clicks, and conversions.
- Organic sales data to evaluate the “halo effect.”
- Share of Voice metrics, which capture your brand’s presence compared to competitors.
Remember, data quality is key. Pacvue’s iROAS model leverages dozens of inputs, data sources, and data models to ensure the insights gained from your incrementality analysis are totally reliable.
Step 2: Identify Incremental Sales
Not all sales are created equal. Incrementality analysis helps you separate:
- Incremental sales: Purchases directly influenced by your ads.
- Baseline sales: Sales that would have occurred regardless of advertising efforts.
Incrementality lets you answer questions like:
- How many of these sales were ad-driven?
- Did my ads help increase organic visibility or Share of Voice?
Pacvue’s integrated AMC and DSP tools include path-to-purchase reports that make it easier to pinpoint which ads contributed to these results.
Step 3: Calculate iROAS channel-wide
When it comes to ROAS vs incrementality, the latter has some compelling advantages. While ROAS includes all sales, iROAS focuses only on the additional revenue generated. It’s the ultimate measure of eCommerce advertising efficiency. (Learn more about why ROAS falls short when measuring retail media.)
How do you calculate incremental return on ad spend? Simply put, iROAS = Incremental Revenue ÷ Ad Spend. Here’s a quick example to illustrate. Suppose:
- Ad spend: $10,000
- Total revenue attributed to ads = $100,000
- Baseline revenue (sales without ads) = $70,000
- Incremental revenue = $100,000 – $70,000 = $30,000
Then your iROAS is $30,000 / $10,000 = 3.0. This means that for every dollar spent on advertising, the campaign generated $3 of incremental revenue.
In most cases it would be onerous to calculate incremental revenue in advertising across all the channels that you work with. This is why we developed Pacvue’s Incrementality Console to be the most comprehensive iROAS model in the industry. We calculate iROAS using machine learning models, trained multiple times, and unify the results in a comprehensive dashboard. This allows you to discover your incremental sales impact across multiple retailers and platforms all in one place.
Step 4: Analyze ad format performance and incremental sales impact
Not all ads perform equally. Use your incrementality insights to evaluate how each format contributed to your success:
- Which formats (e.g., Display, Video, Sponsored Products) delivered the highest incremental lift?
- How did different formats resonate with audience segments?
Pacvue provides granular incremental sales impact insights, helping you identify high-performing ad formats to prioritize for future campaigns.
Step 5: Plan for Q1 and beyond with data-driven strategies backed by iROAS
Incrementality in retail media is a powerful way to inform your new year strategy. Use iROAS insights to:
- Redistribute budget: Scale back spending on underperforming formats and invest more in ads that deliver strong incremental sales.
- Plan future campaigns: Use Pacvue’s path-to-purchase analysis to develop an ad sequencing strategy for Cyber 5 2025.
- Identify cost-cutting opportunities: Trim inefficient ad formats to maximize eCommerce profitability and avoid common pitfalls when measuring holiday campaigns.
This ensures that your 2024 campaigns not only recover costs but also set a solid foundation for sustainable growth.
Conclusion: Use post-holiday retail media incrementality measurement to secure your eCommerce profitability in 2025
As the holiday season winds down, now is the perfect time to take a deeper dive into your campaign performance beyond traditional ROAS. Use iROAS to uncover the broader impact of your advertising efforts so you can optimize ad spend and improve profitability in the year ahead.
To learn more about how Pacvue’s Incrementality Console can transform your post-holiday strategy, reach out for a demo.
