New Advertising Metrics: Incremental CPA and ROAS

March 30, 2023 -
By Scott Konopasek

As the macroeconomic environment declines, marketers are being asked for more accountability. It’s easy to get distracted and focus on the wrong metrics for reporting and optimization. Standard metrics like Cost Per View (CPV) and Cost Per Click (CPC) struggle to fully account for the influence advertising has on user behavior. In-Platform metrics work to judge different tactics within the same platform, but are biased and fall short for cross-channel comparison.

The answer is to use incremental metrics that can give more insight into how well channels reach new users and lift the conversion rate of other channels. Incremental CPA and Incremental CPM are two examples of these new media metrics that provide better .

Incremental CPA measures the cost of acquisition for a specific ad channel, not counting the conversions it shares with other channels. Calculating an iCPA requires Bi-Modal Attribution to show which users saw only the channel in question, and which users saw the channel in question as part of a media mix. Incremental CPA makes understanding the efficiency of channels for reaching and converting net new users simpler.

Incremental CPM measures the cost to reach 1000 unique users that aren’t being reached by any channel. iCPM makes it easy to understand how each channel in your media mix does at reaching net new users that aren’t being reached by any of your other efforts.

Agencies and in-house teams need new metrics that give insights into incrementality to prove the impact of their campaigns and find the best ways to optimize ad spend. However, not all traditional metrics make sense to look at through the lens of incrementality.

Why You Shouldn’t Look at an Incremental ROAS

ROAS is a high-level metric that only makes sense to evaluate at the level of your entire media mix. 

“What if I need an ROI/ROAS number for each channel? Would iROAS be good for that?”

iROAS for every channel would be deceptively high because it doesn’t take into account all of the shared conversions that any channel helped to drive.

A much better metric to use would be a Wins-Against-Replacement (WAR) + Incremental Conversions metric that would take into account the channels halo effect + incremental contributions.

Signs You Need New Metrics

If your team is using only platform data to justify ad spend and make optimizations, you’re missing insights around how to optimize cross-channel delivery. Similarly, if your team has big growth goals or incremental budget that you need to allocate, incrementality metrics would be indispensable.

Sometimes you need a different perspective – new data and analysis – to keep improving results.

Another situation where incrementality metrics (like an incremental CPA) would be very useful is when teams are facing budget cuts. If your client/leadership wants to cut ad budgets by 20%, it wouldn’t be obvious to know where to cut without understanding how well each channel drives incremental growth and how it lifts the conversion rate of other channels. We compare this to playing Jenga blindfolded – it’s a pretty safe bet that if you randomly pull that piece out of the mix without being careful, everything will come crashing down.

Proving the Value of Channels with Incremental Metrics

Incremental metrics are most useful to prove the value of specific tactics. Incremental CPA and incremental CPM can be used to quantify the efficacy of each channel. If a client is skeptical of a specific ad channel like Paid Social, you can use incremental metrics to show what role that channel plays and whether or not it’s an efficient use of ad budgets.

Incremental metrics are essential for helping teams make better decisions allocating spend, optimizing campaigns, and proving the value of campaigns. By using incremental CPA and incremental CPM, agency and in-house teams can get better insights into campaign performance and communicate better with clients.