As privacy concerns rise, marketers must innovate to stay ahead. Growth marketers need solutions that respect privacy and still deliver tangible results.
Incrementality measurement helps us gauge the real impact of our marketing strategies. It measures the difference between the results of a campaign and the results if it hadn't occurred. Geo-testing is an approach for measuring incrementality that is privacy-safe, doesn’t rely on user-level data, and measures the causal impact of marketing. It is increasingly being used by sophisticated marketers to improve efficiency - for example, GOAT, used geo-testing to drive a 12% increase in sales.
Why do Geo-Tests?
Geo-tests are great for four key reasons:
- True value identification: geo-tests help identify the true incremental value of your marketing spend. This way, you can understand the real impact of your ads, which might be overlooked if you only focus on the easily measurable aspects of your marketing strategy.
- They work on most channels: some ad types, like branded search, don’t allow you to run incrementality tests in the platform. Also, it is hard to run user-level tests on iOS following Apple’s privacy changes as well as other traditional hard-to-measure channels such as TV, ‘Over the top’, and ‘Above the line’. As geo-testing is completed at a region level, it does not rely on user level tracking and is not subject to platform restrictions, making it applicable for a range of channels
- Privacy-safe: Geo-tests use aggregated, market-level data, making them resilient to signal loss. This focus on privacy makes geo-tests a future-ready solution worth exploring, especially considering the ongoing changes in privacy regulations. Geo-tests can also reduce brands’ reliance on user-level tracking, which can protect brands from privacy risks.
- Transparent and open source: GeoLift is an open-source library from Meta (formerly Facebook) that helps make this process significantly easier - as long as you have the right data! As an open-source tool, GeoLift's workings are fully available for scrutiny, ensuring there's no "black box" effect.
Without geo-testing, your marketing approach might be biased towards easily quantifiable, bottom-of-the-funnel campaigns, like search ads. This could lead to underestimating the impact of top-of-the-funnel campaigns, such as those on Meta, which are crucial for driving awareness and initial interest. By providing a more comprehensive view of marketing performance, geo-tests help brands allocate budgets more effectively and make better decisions driven by data.
Geo-Tests in Action: Real-World Case Studies
Leading brands across industries have successfully harnessed GeoLift for their marketing campaigns. Fashion retailer Missguided used GeoLift to measure the incremental impact of their Facebook and Instagram campaigns, leading to a 4X return on ad spend and a significant increase in sales.
Similarly, MercardoLibre ran over 20 geo-tests to calibrate their attribution model and discover the real impact of their paid media efforts across multiple regions in South America.
Understanding Geo-Testing and GeoLift
Geo-testing involves turning off advertising in certain geographic regions (test regions) while keeping it on in other regions (control regions), and then measuring the difference in sales in the control regions versus the test regions. This process will help marketers understand the true impact of marketing in driving sales (i.e. the incrementality of the marketing campaign).
A common pushback we hear from marketers is that “our regions act differently to one another so it is hard to compare the two”. Instead of comparing your ad's performance with just one place where you didn't show any ads, GeoLift creates a "synthetic" bucket.
This synthetic bucket tries to match the ‘test geography’ as closely as possible in terms of impact on the final output (e.g. sales). This method, known as the Synthetic Control Method, makes the comparison more accurate and reliable. The GeoLift package does this process for you - identifying the correct basket of markets that are similar to your test group.
How to Get the Most Value from Geo-Testing
To maximize the benefits of geo-testing, consider the following best practices:
- Use the most granular geography possible in your campaigns, such as zip codes or cities.
- The test should be run for a minimum of 15 days if you are using daily data, and a minimum of 4-6 weeks if you are using weekly data to ensure enough data points are available to assess market impact. However, you should always use the tools in the GeoLift package to understand how long you need to run your specific test to get a valid result.
- Make sure you have ample historical data before starting the test. Ideally, this should be over the last 52 weeks to account for seasonal variations that may impact how successful the GeoLift package is at selecting your control groups.
- When creating your test and synthetic control groups, do it based on variables such as sales and other brand-specific factors that you care about (e.g. seasonal variations across geographies).
- Account for local and national marketing efforts to prevent any unbalancing factors when comparing results across control and test markets (e.g. running local TV ads in your test or control regions may skew results).
Geo-Testing: An Underrated Tool for Growth Marketers
Geo-testing is a flexible way to test for incrementality in a privacy-safe way. It is a must-use tool for app marketers on iOS (following recent privacy changes) and for any marketers who market on hard-to-measure channels - TV, OTT, ATL. Whilst the GeoLift package from Meta makes this process significantly easier than it was before, testing still requires clean data, some data science skills, and an understanding of geo-testing best practices.
As traditional digital tracking becomes less reliable and privacy concerns mount, growth marketers have an opportunity to match their tools with their ambition. See how you can make the most of geo-testing and other techniques to deliver a great experience for your audience. Get in touch with us today.