You're Paying for Customers Who Were Already Going to Call

A service business spends $5,000 a month on Google Ads. The dashboard shows 50 leads at $100 each. The owner bumps the budget to $7,000. Leads go to 65. Everything scales beautifully.

Then one month, they go on holiday. Ads pause for two weeks. Leads drop... but only by 15%. Not 50%. Fifteen.

That gap between "what the dashboard credits to your ads" and "what actually happened because of your ads" has a name in marketing science. It's called incrementality. And for most Australian SMEs, understanding it is worth more than any campaign optimisation you'll do this year.

The Experiment That Shook Digital Advertising

In 2013, three economists at eBay and UC Berkeley ran the most rigorous paid search experiment ever conducted. Thomas Blake, Chris Nosko, and Steven Tadelis published their findings in Econometrica, one of the most prestigious economics journals in the world. What they found should make every business owner running brand search ads deeply uncomfortable.

eBay stopped bidding on its own brand name in Google Ads across a sample of US cities. The result: 99.5% of the traffic that had been coming through paid brand ads showed up anyway through organic search results. The paid ads were doing almost nothing. The measured return on brand search was negative 63%.

eBay was paying Google millions of dollars a year for clicks from people who were typing "eBay" into the search bar. Those people were already coming. The ads just intercepted them on the way in.

For non-brand keywords, the picture was more nuanced. New and infrequent users showed genuine incremental response. But frequent users, who accounted for most of the spend, showed no incremental impact. The researchers' conclusion was blunt: brand search advertising showed "no measurable short-term benefits."

Google Says 89% Incremental. Independent Data Says 6%.

Here's where it gets interesting.

Google conducted their own study in 2011, analysing over 400 advertiser accounts. Their finding: 89% of paid search clicks are incremental. Even with a #1 organic ranking, they claimed 50% of ad clicks were incremental.

The independent data tells a starkly different story.

This doesn't mean Google Ads don't work. It means a specific type of Google Ads, brand search, is the most expensive way to buy customers you already have.

The Second Ghost in Your Dashboard

Brand search isn't the only culprit.

Retargeting, the practice of showing ads to people who've already visited your website, is one of the most widely praised tactics in digital marketing. The logic seems airtight: this person already showed interest, show them another ad to bring them back.

The data is less flattering. Across multiple studies using "ghost ad" methodology (where a control group sees a dummy ad instead of the real one), retargeting produces genuine incremental lifts of between 4% and 29% of attributed conversions. In one experiment by adequate.digital, remarketing showed less than 1% difference between test and control groups.

If your retargeting campaign attributes 100 conversions to itself, somewhere between 71 and 96 of those people were going to convert anyway. Your dashboard says "retargeting works." The counterfactual says "barely."

Why Your Dashboard Can't Tell You This

Every ad platform uses last-click or last-touch attribution by default. The final ad a customer interacted with before converting gets 100% of the credit. It's the equivalent of giving the last person who touched the football before it crossed the goal line credit for the entire play.

Brand search and retargeting are perfectly positioned to claim that credit. They sit at the bottom of the funnel. By definition, they reach people who are already close to converting. That's what makes them look brilliant in dashboards. And that's exactly what makes their incrementality suspect.

His provocation for anyone unsure about their marketing's real impact: "If you fire everybody in marketing, how long until the company misses the team?" If the answer is "a while," your marketing is capturing existing demand, not creating new demand.

The Structural Problem Most SMEs Can't See

Here's where this gets strategically critical.

Les Binet and Peter Field, whose analysis of 996 IPA effectiveness campaigns remains the largest study of advertising effectiveness ever conducted, demonstrated that marketing activities fall into two fundamentally different categories.

The problem: attribution models systematically overvalue activation and undervalue brand. Every time you check your ROAS and increase spend on "what's working," you're shifting budget toward the lowest-incrementality activities and away from the highest-incrementality ones.

Byron Sharp's research at the Ehrenberg-Bass Institute, the world's largest centre for evidence-based marketing research, explains why this matters. His central finding across 130+ brands in 13+ product categories: brands grow primarily through penetration (acquiring new buyers), not through loyalty (getting existing buyers to purchase more). Brand search and retargeting, by definition, don't reach new buyers. They reach people who already know you. They're loyalty tools disguised as growth tools. And the dashboard can't tell the difference.

Where Genuine Incrementality Lives

Not everything is wasted. Some channels genuinely create demand that wouldn't otherwise exist.

Stella's 2025 benchmarks reveal a clear pattern:

Measured.com's analysis across 150 enterprise brands confirms it: 64% of Meta's incremental conversions were new or reactivated customers. Meta's incremental ROAS for new customer acquisition was 2.3x higher than search. The platform many SME owners consider "less reliable" than Google Ads is delivering significantly more genuine growth per dollar.

This maps directly onto Sharp's growth model. Penetration drives growth. The channels that find new buyers are the ones genuinely growing your business. The channels that recapture existing demand just move the same revenue between attribution columns in your dashboard.

How to Find Your Wasted Half

You don't need an enterprise incrementality platform to start testing. Here are three approaches any small business can run.

Pick a channel you suspect has low incrementality. Brand search is a good candidate. Turn it off for two weeks. Measure total conversions across ALL channels during that period, not just the channel you paused.

If total conversions barely change, that channel was capturing demand, not creating it. If they drop meaningfully, it was genuinely incremental. The key is measuring the total business result, not the individual channel.

You probably already have this data. Look at what happened to your business the last time you went on holiday and paused everything. Did enquiries drop to zero? Or did they continue at 60-70% of normal?

That 60-70% baseline represents organic demand: people finding you through word of mouth, organic search, Google Business Profile, and accumulated brand memory. Everything above that baseline is what your marketing genuinely adds. That gap is your incrementality.

If you advertise across multiple regions, stop advertising in one region for 4-8 weeks while keeping everything else identical. Compare results between the "dark" region and the regions still running ads. Australia's clean state-by-state geography makes this particularly practical for businesses running national campaigns.

What This Means for Your Business

The answer is not to stop advertising. Research from the Ehrenberg-Bass Institute, based right here in Adelaide, tracked 70 Australian consumer goods brands and found that brands which stopped advertising saw sales fall 16% after one year and 25% after two years.

Advertising works. But not all of it works equally, and a meaningful chunk of what your dashboard credits to your ads would have happened without them.

Three specific actions:

The famous line attributed to John Wanamaker, "Half the money I spend on advertising is wasted; the trouble is I don't know which half," was a confession of ignorance. We're past that now. The data exists. The tools exist. The question is whether you're willing to look at the numbers that your ad platforms don't want you to see.

Further Reading

• Kaushik: Attribution Is Not Incrementality - The definitive breakdown of why attribution models overstate ad effectiveness
• Blake, Nosko, Tadelis: Consumer Heterogeneity and Paid Search Effectiveness - The eBay experiment proving brand search ads deliver near-zero incremental value for established brands
• Stella 2025 DTC Digital Advertising Incrementality Benchmarks - The largest published dataset of incremental ROAS by channel, across 225 geo-based tests
• Binet & Field: The Long and the Short of It - 996 campaigns showing why attribution-driven budgets systematically underinvest in growth
• Ehrenberg-Bass: How Brands Grow - Adelaide-based research on penetration, mental availability, and why reaching new buyers is the primary growth driver