Magic backs incrementality as the answer to omnichannel commerce in new whitepaper

Omnichannel retailers need to move away from flawed traditional attribution models, in favour of an incrementality-first approach if they want to optimise their marketing spend, a new whitepaper released by independent media agency Magic has revealed.

The whitepaper, entitled ‘The Retail Attribution Illusion – how Incrementality is the Answer to Omnichannel Commerce’, explores the limitations of current attribution models in measuring offline sales driven by digital efforts, and the need to embrace incrementality for more accurate and actionable sales data.

An incrementality-first approach measures the additional sales or conversions that result directly from a marketing campaign, compared to a baseline scenario where no campaign was run. This model focuses on understanding the true lift generated by marketing activities by determining how much of the observed sales are attributable to the media spend itself, compared to those that would have occurred naturally.

According to the whitepaper, incrementality is becoming a key metric for measuring not just online conversions, but also offline sales influenced by digital media – a critical metric for in-person and omnichannel retailers.

Magic Head of Signal and the whitepaper’s author, Edward McMutrie, said: “Incrementality is all about looking at the incremental value driven by marketing efforts. It accounts for non-linear and complex customer journeys, making it ideal for measuring the impact of digital media on in-store sales.

“By using this approach, marketers have a much clearer understanding of how their media efforts impact total sales, both online and offline, allowing them to make more informed decisions on where to allocate budgets for maximum return.”

The whitepaper comes at a time when many businesses are facing critical challenges in accurately attributing offline store sales to digital marketing efforts, as customers continue to interact across multiple, fragmented touchpoints.

According to the report, traditional attribution models that rely on ‘vanity metrics’ such as impressions, clicks and likes to gauge success are flawed, particularly when it comes to measuring offline sales.

“We’re already seeing a shift away from legacy attribution models, as marketers realise many of them don’t measure meaningful business outcomes like sales or acquisitions” McMutrie said.

“Businesses, particularly those with bricks-and-mortar stores, need to shift away from simplistic tracking methods and embrace incrementality to truly understand the impact of digital media efforts. The need to measure both online and offline conversions is no longer a nice to have, but a fundamental part of understanding performance, and having the ability to measure changes to media and marketing strategies based on data.

“The focus now for marketers should be on testing different media tactics across audience, content and creative, and treatment, to identify what drives the highest incremental lift in both online and offline sales, including leading metrics such as foot traffic and store visits.”

To view the whitepaper, visit https://www.magic.com.au/blog/the-retail-attribution-illusion