Driving Smarter Spend Through Marketing Incrementality

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Lauren Leone: Hey everyone, welcome back to Ignite Healthcare Marketing Podcast. I’m here with Rich Briddock, our Chief Strategy Officer and probably our most popular guest on Ignite. We recently did an episode on media mix modeling and we wanted to follow that up with really diving into the topic of measuring incrementality and marginal ROI. It’s the foundation for why you would engage media mix modeling and how we think about testing in general in the digital world. Rich, welcome back.

Rich Briddock: Thanks for having me again.

Lauren: When we think about, deploying things like testing roadmaps and potentially engaging with a media mix modeling solution algorithm, I think it’s important to first understand, well, when I look at this data, what does incrementality even mean? There’s different ways of thinking about the success of your channels. You’ve got the last click attribution dollars in dollars out, but there’s other ways to define success. Can you talk a little bit at the highest possible level about what incrementality means and how to go about looking for it?

Rich: I think the typical approach of most marketers is to look at their blended cost per acquisition when they’re running media. If you are running paid search, as an example, spending $10,000 on search every month and you’re getting a hundred conversions, you’re looking at a blended CPA of $100. That’s how most people look at the performance of their channel. That’s how they report up to internal stakeholders or external stakeholders. It’s typically what on a dashboard. It’s typically what on a monthly report from an agency.

What it doesn’t tell you unless it’s broken down is what the effectiveness of the last dollar spent is. What was the most expensive conversion that was driven that marginal economics, because we’re always looking at the blended. When you start to look at the marginal economics, when you start to look at what my least effective spend is doing, suddenly it completely changes the picture. For an example, we have a client who was pushing for volume. We were able to show them by looking at the incremental investment, as opposed to the blended investment.

While their blended investment was only going up by a marginal amount, I think about 5%, the incremental investment that they were investing in weeks where they were pushing on paid search, that CPA was roughly 500% higher than the blended CPA of when they were spending less at a more regular amount, because they were just hitting a diminishing return curve where they were spending, spending, spending and getting nothing for it. The blended CPA, because they were driving so many conversions in that market masks that when they spent more, it was only going up a fractional amount. They weren’t seeing it.

Lauren: You can choose to live with that. You can say, I can tolerate that. I need volume over efficiency. I think that tends to be the mindset. The thing that type of data should indicate to you though, is am I sure that this is the best place to put that dollar? Are there other places, and this is where testing and diversification come into play. You’ve identified for this client that the incrementality of the dollars that they’re investing is just absolutely worth nothing.

Rich: Correct.

Lauren: The question becomes, can I invest those dollars elsewhere in a more efficient manner?

Rich: Yes, that’s right. It’s when you’re looking at, should I go into paid social when my blended CPA on paid search is $250? You might say, no, I’m not going to get a lower CPA on social. I’m not going to get as competitive a CPA on social. When you’re looking at the incremental is actually $1,500, then that changes the equation because you can take the most inefficient spend from search, or it’s not as easy to just cut that out. In general, some of the least efficient spend on search, and you can invest that in social and maybe on social, you’re getting a $350 CPA, but that’s still way cheaper than what you would have got for that incremental least efficient spend on search.

You’re winning overall, even though in a blended CPA lens, social still doesn’t look as good as search. When you look at it through the marginal economic lens, it’s actually way better and you’re getting holistically more conversions.

Lauren: Why do you think groups and us included, why historically have we always looked at it blended and not really thought about the incremental ROI?

Rich: I think it’s more difficult to look at an incremental ROI. More analysis is required. It’s not just a simple division of cost divided by conversions. I think also there is some wariness around determining how to back out your least efficient spend. It’s not as simple on paid search as an example of just saying, especially now with smart bidding and algorithms, it’s not as simple as now just saying, “Okay, these keywords don’t work. I’m just going to pause all these keywords, save the money that I was previously spending on those keywords, reinvest that into another channel, and I’m going to get this lift.”

Because those keywords, while they might themselves not have been driving a ton of conversion activity, they may have been driving assists, they may have been helping to drive awareness, they may have been priming the funnel for other channels down the road. I think if you are going to go the incrementality approach, you also should invest in more of a universal measurement framework to understand the totality of leads that are being driven as you shift your media mix, which is what we were talking about with MMM and RevRx. It’s how is the bottom line being impacted as I shift dollars away from paid search towards paid social or towards display or billboards or direct mail, whatever I’m doing.

It also just requires more work. I think that’s why people haven’t adopted it as much as– and certainly from an agency point of view, it’s just easier to say, yes, you give me this much spend, I get you this many conversions. It’s also easier to put money just into the same channel that you’re already doing than diversifying and setting up a whole new channel, new creative, new audience targeting, et cetera.

Lauren: I think who this story and this theme should and probably will resonate with the most are the marketers out there listening who are struggling to make a case in their organization to diversify outside of a channel that’s easier to see the dollars in and the leads out. A good place to start if you’re feeling like you’re constantly being asked to just churn more and more and more out of the same channel would be to look at the incremental lift that you’re getting from maybe the most recent bucket of spend that you’ve had to pump into it. Then take that story back to your leadership and suggest that those dollars might be better spent elsewhere.

Rich: Yes, and I think, something that’s interesting too about incrementality, and we have been thinking about incrementality for a long time, but in a different way. I think this is an interesting use case. Incrementality can also work with organic. We talk all the time about how much is the right amount of branded paid search. Yes. If you’re in a market where it’s not highly competitive and you turn down branded search and organic gets an incremental lift because now paid search isn’t cannibalizing that traffic. That’s incrementality.

Lauren: It’s one of my favorite ones. I love it. It’s the free. It’s the free incrementality.

Rich: It’s why pay for this one? I get it for free. Then you can take those dollars that you were spending on paid search on the branded side and you can invest it in the non-branded side. You can invest in social and display to reach a new audience that isn’t already aware of the brand. Who isn’t going to just convert through organic. I think there’s a ton of applications for this, even outside of just media mixed modeling.

Lauren: Speaking of the marketers that might be interested in this topic and this line of thinking, I know we recently had a case study with a client where we looked at the incrementality of their least efficient dollars and used it to make a case for some diversification. Can you talk us through that?

Rich: They were hitting a point of diminishing return on search. They were a business that traditionally would be considered very search centric in terms of it’s a need-based business.

Lauren: Low acuity healthcare.

Rich: Low acuity healthcare, but a relative immediate need. Your typical audience is searching for it. That being said, because the inefficiencies that they were hitting were quite severe, we recommended that they diversify into social to see what the lift of adding social would be and taking those dollars out of search that weren’t doing any work for them anyway. What is interesting, and again, why I come back to the point around having a universal measurement framework is that we saw very little conversion lift directly attributed to social when we ran the test. What we saw is locations that had social support running from a holistic appointment volume saw a significant increase in their appointment volume.

I think a 43% lift in their appointment volume across all channels and all methods of booking an appointment versus a set of control locations or a similar set of locations with similar attributes that only saw a 5% lift in their appointment volume. What that told us is while social wasn’t getting a lot of direct attribution, exposure to social impressions and video engagement on social platforms was creating awareness that then drove to downstream activity in terms of booking appointments and showing up as a new patient and obviously generating incremental revenue.

Again, this approach is also contingent on the ability to correlate your media efforts with the downstream impact on the business as opposed to what am I seeing through a pixel or what am I seeing through a conversion action with direct attribution?

Lauren: Yes, you’ve got to step back and take a wider view. Doesn’t mean to abandon those metrics, but you’ve got to think about it both ways. I think for anyone listening who’s wondering, how do I even go about starting this? I think an interesting place to start is when you’re going to maybe add more dollars into your search campaigns or location A needs more, let me just throw more money at you because it’s efficient right now. When you put those dollars in, do you have impression share loss to budget available in that campaign? If you don’t, but you’re still only capturing 70%, what that means is the rest is lost to a rank and that rank means you’re just going to have to bid more and higher and higher and higher. Just a quick little tip takeaway for anybody who’s wondering, where do I even begin to think about this topic?

Rich: I think also think about budget levels as a test in and of itself. We’ve ran tests with other clients in the past, actually very systematic tests where we said for these two weeks, we’re going to spend an X. Then for the next two weeks, we’re going to spend an X plus 10%. Then the next two weeks, X plus 20. Then the next X minus 20 or minus 30. We’ve actually run up and down the range of spend levels to determine what the right level of efficiency is for that business in terms of the economics that work for that business now.

Lauren: It’s hard to predict. You can do some forecasting, but the best way to know is to do it.

Rich: Is to do it, yes. Also to try and normalize when you’re doing it. I wouldn’t do different spend tests at times when you’re suddenly going into peak season or you’re suddenly going into a trough. I would focus on times when it’s pretty steady.

Lauren: Thank you guys for listening. Wherever you’ve been listening today, please like, comment, share, tell your friends, tag us on LinkedIn. Rich, thanks for joining us and

Rich: we’ll see you again soon.

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