How We Exponantially Increase Your Incrementality No AMC or Algorithms Required

How We Exponentially Increase Your Incrementality: No AMC or Algorithms Required

Why does everyone focus so heavily, and sometimes solely, on RoAS (Return on Ad Spend), or ACoS (Average Cost of Sale), as Amazon calls it? Because that’s what everyone else is doing, so they guess they should, too? 

Hmm… what happens if we ask: why is everyone else doing it? Crickets…

At best, it’s due to being a very simple and narrow focused equation that worked in the good old days. Unfortunately, and especially with Amazon’s increasing pay-to-play stance, it’s neither fair nor accurate to only credit ad sales from the results of ad spend. 

Enter TACoS (Total Advertising Cost of Sales) or TRoAS (Total Return on Ad Spend). While this is certainly better than just ACoS or RoAS it can often mask causality due to introducing many more drivers behind the changes in Total Revenues.

Instead, we must look at the flywheel impact from ad spend by accounting for incrementality. The goal is to uncover as close to causation (impact) as possible while understanding that correlation isn’t everything.

What is Incrementality?

Most advertisers still don’t even consider incrementality. Then, many of the few that account for incrementality commonly tell us that you have to add A+D^27-A^72… plus another 332 lines of formulas, or worse, “algorithms,” in order to truly understand if your sales are incremental. It’s confusing at best. 

If that’s not enough to get you going, the most sophisticated advertisers commonly tout that you can only measure incrementality by leveraging AMC (Amazon Marketing Cloud). SMH. While it can certainly help with the upper most funnel tactics of larger 8-9 figure brands, it’s not required, and that’s a huge relief because the vast majority of Amazon Sellers are not able to leverage AMC.

No need to fear, we’ve made it so simple that you can do it with a few keystrokes. If you’re itching to know how and want to skip over the juicy bits, then scroll down to download our done-with-you incrementality tool.

At its basic level, incrementality typically refers to the increase in Sales, Revenue, or GMV (Gross Merchandise Value), and can be used to measure other business metrics, directly caused by a specific marketing effort. Incrementality zooms in on the unique impact of each marketing campaign or tactic above and beyond what would have happened had you never run that campaign or tactic.

Sales and Ad Spend Directionality

Total Sales flat + Ad Sales increasing = Cannibalization of Organic Sales, thus the most expensive and most anti-incrementality scenario. If this is you, then increased profitability awaits you(!) When total sales remain the same while advertising sales increase, it suggests that the growth in ad sales is not adding to the overall revenue but is rather replacing the organic sales. This is often considered an expensive and less desirable outcome. It implies that the advertising spend is not generating new sales but rather shifting the source of existing sales.

Ad Spend increasing + Ad Sales Increase + Organic Sales remain flat = Ad Sales are incremental

This scenario suggests that the increase in ad sales is truly incremental because it adds to the existing sales base without negatively impacting organic sales. The definition of incrementality here is accurate as long as the additional ad sales add to the total sales without decreasing organic sales, they can be considered incremental.

Total Sales increase + % of Attributed flat + Organic Sales increases = Flywheel Incrementality

This describes a situation where both total sales and organic sales are increasing, while the proportion of total sales attributed to advertising and organic sales remains consistent.

The concept of “flywheel” in business usually implies that improvements in one area lead to benefits in others.This scenario could indeed reflect a flywheel effect if the increase in organic sales is both a cause and effect of total sales increasing.

For example, through improved brand recognition and reputation, product quality, or customer experience. 

However, for a true flywheel incrementality, it’s crucial to apply strategies in such a way that each improvement enhances the next, leading to sustainable growth.

Understanding Incrementality: Beyond Directionality

Incrementality is not just another number we look at… Instead of just looking at total ad sales and how much money we spent on those paid sales, incrementality focuses specifically on the sales that occurred because of our 1:1 ads.

To understand this better, let’s look at an example.

Let’s imagine that you ran an ad campaign for funny crazy dog t-shirts on your preferred, Amazon marketplace last month. You sold a total of  500 awesome shirts about St. Patrick’s Day. Now, you need to determine how many of those shirts were sold to people who found you because of the ad campaign, and would not have bought from you otherwise.

That is incrementality – it shows the individual impact of that specific ad campaign.  

Incrementality helps us figure out which parts of our advertising generated new conversions, versus people who likely would have found you through other means that you didn’t have to pay for.  It’s about separating results each ad campaign uniquely contributed. 

This is the real deal.  It tells us exactly where we are making a difference with each dollar spent via our marketing budget. Seriously, it should be illegal to define RoAS as Ad Sales / Ad Spend. Maybe that would get the gurus to pipe down and stop spreading fallacies. I digress.

Predation vs Cannibalization, without Lecter-ing

Since I promised not to lecture, I’ll keep this simple:

Non-tactical Search Cannibalization, sometimes referred to as mirroring, eats profits hand over fist. The critical differentiator is being “non-tactical,” and this is significantly different from IP protection strategies. I’ll save that debate for another day.

Tactical Predation is where the incrementality winners congregate. Predation is necessary for survival in the “Amazon” and refers to conquering other brands’ lack of tactical marketing. 

Every auction has a winner and a loser, which one will you be?

How to Increase Incrementality

Incrementality by Targeting Type: Branded vs. Competitor vs. Category

To further grasp the concept of incremental sales, aka: ‘woulda never sold sales’, let’s explore three primary types of search traffic and their place on the spectrum of incrementality:

  • Branded Search Traffic  – These shoppers are already familiar with your brand and products. They are searching for your brand names or product IDs specifically. While important for branding, the incremental value here is typically lower, as these customers are likely to purchase regardless of an ad. You simply do NOT want the majority of your sales coming from this segment. I know, there’s a big debate that’ll ensue over the decision to run ads for your own intellectual property. I’m happy to do that later, but let’s not derail this flow. Mmmk, thanks.
  • Category Search Traffic – This group is still exploring options. They are typically brand agnostic and neither loyal to other brands nor your brand, yet ;). They represent a golden opportunity for incremental sales, as your ads can directly influence their brand choice and purchase decisions.  If the majority of your sales are coming from this group, then you can rest assured that you’re taking market share order by order.
  • Competitor Search Traffic – These are the shoppers who are already familiar with your competitors’ brands and products. They are searching for their company or product names specifically. Oh buddy, this is where the highest incrementality sales are hiding. I absolutely love seeing sales > 0 for search queries that contain our competitors’ names and product IDs. Booyah(!)

If the majority of your sales are coming from competitor search, then you have some of them “deep pockets”. Hit me up and I’ll show you how to make more while spending the same amount, or less if that’s your thing.

Levels of Incremenality by type of search:

Type of Search Incrementality Cannibalization
Brand Specific Lowest Highest
Category – Brand Agnostic Medium Medium
Competitor Brand Highest Lowest

Scrolliness + Conversion > Frequency

When it comes to pay-per-click search advertising, choosing the right keywords to target is key. With tools like Amazon’s Search Query Performance and Search Term Reports, you can analyze search behaviors and zero in on terms with strong incremental sales potential.

Focus on the Highest Conversion Searches, not the highest search volumesLook for keywords that attract a large number of CONVERSIONS and SEARCH CONVERSION RATE, not just the frequency of searches, on a regular basis. Popular BUYING terms, not search terms, present significant opportunities to reach highly motivated shoppers at the exact point of consideration.

Be sure to account for Scrolliness and Market Availability – Evaluate how deep shoppers will scroll through results pages for different search queries. Terms where people research multiple listings indicate they’re still comparing options. Your ads have a chance to influence an undecided buyer even if you’re further down the page. Sellerise is one of, if not, the only tool that does this inherently.

On the flip side, if most of the conversions happen within the top few placements, then it’ll be more costly to steal market share. But if you can, then you should(!) and that’s where our QRYIQ can instantly find those golden nuggets for you.

You need growth, improvement, and sales. 

Growth comes at the cost of your efforts to plan.

The second part of generating success is building out your plan and taking action on it. 

If you are ready to start taking action to see results now, incrementality with Adverio is your next step.

So, what are you waiting for? 

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