How is the estimated incremental revenue calculated?
The campaign`s estimated incremental performance is an AI calculation to provide evidence that a campaign was beneficial compared to doing nothing.
To estimate it, a machine learning algorithm uses historical data of all promoted products to approximate baseline (expected) sales and contrast them with actual sales during the campaign period.
Like all statistical estimates, it includes uncertainty reflected in the provided confidence level (Low, Medium, High).
How do we calculate incremental sales value?
We use advanced predictive algorithms that forecast the orders the campaign's promoted products will have creating this way our forecasted sales for the campaign.
Then, by analyzing the average units sold per order and price per unit, we calculate the forecasted sales value.
By the completion of each campaign we know exactly the sales value for the promoted products, and we are able to calculate Incremental sales value, as depicted below:
For the calculation of iROAS we divide the incremental sales value by the campaign's cost.
How to understand how important incremental revenue is?
The aforementioned estimated expected sales value and estimated incremental sales value can be easily understood by checking our visual chart on the Marketing Impact's results page.
For the example we analyze, we can see that the incremental revenue is 19% of the campaign's total revenue created during the campaign from the promoted products.
That means that €1.097,71 out of the total €5.673,03 sales value came thanks to the marketing activation and wouldn't have happened otherwise.