Incremental revenue represents the additional income generated from a specific marketing campaign. channel. or initiative that wouldn’t have occurred without that particular activity. This metric is crucial for measuring true marketing effectiveness by isolating the net new revenue directly attributable to specific marketing efforts.
The concept centers on establishing causality rather than correlation between marketing actions and business results. To properly measure incremental revenue. marketers use controlled experiments like A/B tests where a randomly selected test group is exposed to a marketing treatment while a control group is not. The difference in conversion rate or revenue between these groups reveals the incremental impact.
Sophisticated measurement approaches include lift studies. geo-experiments. holdout tests. and media mix modeling. These methodologies help distinguish between sales that would have happened organically versus those directly caused by marketing investments. Multi-touch attribution models further refine understanding by allocating appropriate credit across customer journey touchpoints.
Calculating return on ad spend (ROAS) or return on investment (ROI) based on incremental revenue provides a much more accurate picture of marketing effectiveness than using gross revenue figures. This precision allows marketers to optimize budget allocation toward activities that genuinely drive new business rather than those that merely coincide with existing customer actions.
Michael Smith
-