Definition
Incremental ROAS estimates how much additional (incremental) revenue you generate per additional dollar of ad spend, rather than attributed revenue per spend.
How to use it
- Use iROAS for budget decisions at the margin (scale up only if incremental value stays above your target).
- Estimate with lift tests (holdouts, geo tests) and reconcile with blended MER over time.
- Translate iROAS into profit impact using contribution margin, not just revenue.
Common mistakes
- Confusing attributed ROAS with incremental ROAS (attribution often over-credits).
- Scaling based on short windows that ignore conversion lag and seasonality.
- Ignoring diminishing returns when spend increases.
Why this matters
This term matters because it affects how you interpret performance and make budget decisions. If you use inconsistent definitions or windows, ROAS/CPA can look "better" while profit gets worse.
Practical checklist
- Write a 1-line definition for "Incremental ROAS (iROAS)" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Use a calculator that references this term (e.g., Incrementality Lift Calculator) to sanity-check assumptions.
- Read the related guide (e.g., Attribution vs incrementality: what to trust, when, and how to test) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- Incrementality Lift Calculator: Estimate incremental conversions, incremental ROAS, and incremental profit from a holdout test.
- Marginal ROAS Calculator: Estimate diminishing returns and find the profit-maximizing ad spend from a simple response curve.
Guides
- Attribution vs incrementality: what to trust, when, and how to test: A practical guide to attribution vs incrementality: common attribution models, window pitfalls, how MER/marginal ROAS fit in, and how to run holdout/geo tests.
- Marginal ROAS: how to scale ads with diminishing returns: A practical guide to marginal ROAS: why average ROAS misleads at scale, how diminishing returns work, and how to pick a profit-maximizing spend level.