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The Impact of Incrementality on Retail Media: What You Need to Know

Discover the power of incrementality for optimizing your retail media campaigns. Learn how Ampd & Google Ads can unlock your true potential on Amazon.

The Ampd Team

Nov 21, 2023

When it comes to retail media, most marketers are focused on ROAS (Return on Advertising Spend). But what if there's a more important metric that you're not paying attention to?

Incrementality is the measure of how much additional revenue your advertising is generating. It's the difference between the sales you would have made anyway and the sales that you only made because of your advertising. It asks the question, "How many of the sales we got from paid search ads would we have gotten even if we didn't have our products listed in organic search results?"

In this blog, we'll explore the impact of incrementality on retail media and how it compares to using ROAS as a metric for your advertising campaigns. We'll also share how Ampd and Google Ads can drive incremental revenue to your Amazon store. Let's get started!

Incrementality vs ROAS

A study conducted by Merkle says, 74% of brands prioritize Incrementality as their primary metric to assess the growth of retail media networks.

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Incrementality refers to measuring whether your advertising efforts are actually driving more sales and profits than you would have made without running ads. It's about ensuring that your advertising dollars are well spent and lead to real, additional revenue for your Amazon store.

Let's say a brand runs an ad campaign on Amazon that results in $10,000 in sales. The brand's ROAS would be 2:1, as it generated $2 in sales for every $1 spent on advertising. However, if the brand had generated $5,000 in organic sales without advertising, then its incrementality would be 50%, as the advertising campaign generated an additional $5,000 in sales.

It's common to see ROAS being used as a metric to measure the revenue generated from advertising investments. However, it can be misleading, especially in competitive industries, if not used with other metrics such as cost per acquisition (CPA) and customer lifetime value (CLV). You may have a high ROAS, but this does not necessarily mean that your advertising is generating new sales. It could simply mean that you are taking sales away from your competitors.

ROAS is a simple metric to measure, but it only looks at the direct revenue from your ad campaigns. It doesn't take into account how advertising affects brand awareness or organic search traffic.

Impact on Retail Media and Your Amazon Store

Incrementality considers the long-term and indirect effects of advertising by taking into account the following factors:

  1. Brand Awareness: Advertising can help to increase brand awareness, which can lead to sales in the future, even if the customer does not click on the ad immediately.
  2. Customer Lifetime Value (CLV): Incrementality takes into account the fact that a customer acquired through advertising may be worth more to the business over the long term than a customer acquired through organic channels. 
  3. Expansion of Customer Reach: Advertising can also have indirect effects on sales, such as influencing the purchase decisions of friends and family members.

Incrementality tells you how much new business you're creating. For example, a customer may see your search ad on Amazon, but not click on it immediately. However, the ad may have planted a seed in the customer's mind, and he may decide to buy the product at a later date. He could also recommend your product to his friends and family members.

It provides a more comprehensive view of advertising impact by taking into account the following:

  • All types of sales: Incrementality measures all types of sales, including direct sales, indirect sales, and brand awareness sales. This gives marketers a more complete picture of how their advertising is impacting sales.
  • Long-term effects: It takes into account the long-term effects of advertising, such as increased brand awareness and customer lifetime value. This helps marketers to make more informed decisions about their advertising investments.
  • Indirect effects: Incrementality takes into account the indirect effects of advertising, such as influencing the purchase decisions of friends and family members. This gives marketers a better understanding of the true impact of their advertising.

Measuring incrementality allows you to gain valuable insights and make more informed decisions about your advertising campaigns. A recent study from Skai and BWG Strategy revealed that 37% of retail media decision-makers in North America believe that the inability to prove incrementality could potentially hinder investment growth in retail media.

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To better understand the impact of incrementality on your Amazon store, take a look at Ampd's exclusive Incremental Lift Case Study, which provides compelling evidence of the power of incrementality. In this comprehensive A/B lift study involving 38 brands across 7 product categories, our research demonstrated an impressive 31.5% increase in incremental, organic revenue specifically on Amazon when combining Amazon Sponsored Paid Search with Google Ads Paid Search.

From Google to Amazon

Top brands around the world are strategically harnessing the immense influence of Google to gain a competitive advantage in the retail media landscape. By seamlessly integrating Amazon Sponsored Paid Search with Google Ads Paid Search, these brands experienced a substantial increase in organic revenue, driving their business forward.

This is because Google Ads helps brands reach and engage with potential customers across the entire purchase journey, from awareness to consideration to purchase. When brands combine Google Ads with Amazon Sponsored Paid Search, they are able to create a seamless omnichannel customer experience that drives incremental sales.

These brands are leveraging Google Ads to achieve these goals:

  • Grow market share
  • Capture mid funnel customers
  • Lower PPC cost
  • Higher conversion rates
  • Capture share of voice (SOV)
  • Protect and grow the brand

Gain Incremental Revenue with Google Ads and Ampd

Join thousands of global brands in unlocking the potential of incrementality with Ampd's AI-powered tools. Boost incremental revenue and expand your market share by attracting new-to-brand customers through mid-funnel targeting on Google Ads.

With Ampd Intelligence®, create, automate, and scale your Google Ads to Amazon campaigns. Start measuring incrementality, optimizing your campaigns, and making smarter advertising decisions – Book a demo today!

 

 

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