What is Incremental ROAS (iROAS)?

Understanding iROAS

Standard ROAS can overstate value when ads capture revenue that would have arrived organically. Incremental ROAS corrects this by estimating the counterfactual—what would have happened without ads. Experiments with geo/time holdouts provide the cleanest estimate when feasible. Platform lift studies and MMM can supplement when tests aren’t possible. Read iROAS by product set and audience to see where ads truly add value.

Clarity on methodology is critical so stakeholders trust results. Define KPIs (revenue, new customers), windows, and statistical thresholds before testing. Keep creative and budgets stable during tests to avoid confounding. Ensure control regions don’t leak exposure from nearby markets. Compare iROAS alongside POAS to reflect margin truth. Repeat periodically as market conditions change.

Why iROAS (Incremental ROAS) matters

iROAS matters because it reveals the truth about which conversions were actually caused by your ads versus those that would have happened anyway. Understanding true incrementality prevents overpaying for non-incremental conversions and helps you fund channels and creative approaches that create real growth. Measuring iROAS across different periods also reveals how lift varies during promotions versus evergreen campaigns, guiding smarter seasonal planning.

• Truth: Avoid overpaying for non-incremental conversions
• Planning: Fund channels and creatives that create real growth
• Seasonality: Understand lift during promos vs. evergreen

How iROAS works

iROAS works by estimating the incremental revenue attributable to ads and dividing by spend. The most reliable method is randomized or quasi‑randomized experiments: split regions/time into test and control, run ads in test, measure the difference. Where experiments are impractical, use MMM or platform lift studies with careful validation. Keep tests simple and long enough to detect lift with confidence. Read results by product set and audience to target investment. Pair with POAS to ensure incremental revenue is profitable.

Key Takeaways

• iROAS (incremental ROAS) measures revenue lift caused by ads, not just correlated revenue.
• Use holdout tests, geo splits, or matched-market studies to measure true incrementality.
• iROAS is typically lower than platform-reported ROAS because it isolates true causal impact.
• Use iROAS to validate efficiency, inform budget allocation, and avoid overspending on non-incremental reach.