Geo-Experiment¶
What It Is¶
A geo-experiment measures causal ad effect by randomizing geographic regions rather than users — the practical answer when privacy walls, offline conversions, or whole-funnel channels make user-level randomization impossible. Non-overlapping geos are split into control and treatment; treatment geos get the spend change; the difference, modeled against a counterfactual, is the incremental effect.
Design & Method (geo-based regression)¶
- Group formation: stratified randomization (strata of similar-size geos), or matching geos that are predictive of each other when geos are few/heterogeneous. Rule of thumb: ≥30 geos.
- Phases: pretest (4–8 wks, identical campaigns) → test (3–5 wks, treatment gets the change) → optional cool-down for delayed conversions.
- Model:
y₁,ᵢ = β₀ + β₁·y₀,ᵢ + β₂·δᵢ + εᵢ, wherey₀is pretest response (controls trend/seasonality),δᵢis incremental spend (observed − counterfactual), and β₂ = iROAS read directly. Weights1/y₀,ᵢhandle size heteroscedasticity. Precision reported as a CI on iROAS.
(Method: Vaver & Koehler, Google Research; operational detail from Google's "Estimating causal effects using geo experiments.")
How It Applies to Marketing Factory¶
Geo-experiments are platform-agnostic incrementality the factory can run without a walled-garden lift product — agent-ownable in the mechanics (form matched geo groups, apply geo-targeted spend, fit the regression, report the iROAS CI). Because a test has ~30–200 units over a few weeks, it is a small-N experiment: apply the minimum-detectable-effect gate to check the spend change is detectable, and avoid peeking via sequential-testing or a Bayesian decision. It is one method of incrementality-testing and yields incremental-roas.
Related Concepts¶
- incrementality-testing — geo-experiments are one method on the ladder
- incremental-roas — the coefficient (β₂) a geo-test estimates
- minimum-detectable-effect — few geos → only large effects are detectable
- sequential-testing — how to monitor a running geo-test validly
Referenced from: incrementality-and-geo-experiments