Stella Case Study: The Absolute Easiest Way to Scale a $17m Dollar Ecommerce Brand Profitably in 2025

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Introduction

In the competitive landscape of online retail, understanding the true impact of advertising spend is crucial for sustainable growth. For a leading athletic apparel brand, optimizing advertising channels to drive incremental revenue was a top priority. In July 2024, the brand partnered with Stella to leverage its incrementality tool, aiming to uncover hidden opportunities within their Google Ads campaigns. This case study explores how Stella's incrementality tool enabled the brand to scale its most profitable channel, resulting in a significant increase in total revenue and overall marketing efficiency.

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Background

The Challenge

The athletic apparel brand had a robust online presence, with Google Ads playing a significant role in their marketing mix. At the outset:

• Google Ads Contribution:
  • Accounted for 25% of total revenue.
  • Consumed 50% of their total ad spend.
• Performance Metrics:
  • Platform ROAS (Return on Ad Spend): Consistently achieving a 6:1 ratio, meeting their internal targets.

Despite meeting their ROAS goals, the brand suspected that Google Ads might be underreporting its true incremental impact on revenue. They sought to validate this hypothesis and explore opportunities to scale their advertising spend effectively.

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The Incrementality Study

Implementing Stella's Incrementality Tool

To uncover the true incremental value of their Google Ads spend, the brand conducted an incrementality experiment using Stella's advanced analytics tool. The objective was to measure the incremental ROAS (iROAS)—the additional revenue generated solely due to the Google Ads campaigns, beyond what would have occurred organically.

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Key Findings

• Incremental ROAS (iROAS): Discovered to be 10:1, significantly higher than the platform-reported ROAS.
• Incrementality Factor:
  • Calculated as iROAS / Platform ROAS: (10 / 6) = 1.6610 ​=1.6 or 160%.
  • This factor indicates that for every dollar reported by Google Ads, the actual incremental revenue was 1.6 times higher.

Strategic Insights

The study revealed a substantial underestimation of Google Ads' impact. By adjusting for the incrementality factor, the brand could afford to lower their in-platform ROAS targets to 3.75 without compromising profitability:

Adjusted Platform ROAS= (6 / 1.60) ​= 3.75

This adjustment provided room to increase ad spend while maintaining an incremental ROAS close to their original target of 6:1.

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Strategy Implementation

Scaling Ad Spend

Based on the insights:

• Ad Spend Increase: Gradually increased by approximately 20% per week.
• Target ROAS Adjustment: Lowered by about 10% each week in Google Ads settings.

Monitoring Performance Metrics

As spend increased:

• In-Platform ROAS: Began to decline, which was anticipated due to the scaling strategy.
• Marketing Efficiency Ratio (MER):
  • Defined as Total Revenue / Total Ad Spend.
  • Used as a holistic measure of overall marketing efficiency.
  • Became the primary metric for assessing the impact of increased ad spend.

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Results

Performance Over Time

An analysis of the data from June to October 2024 demonstrates the impact of the implemented strategy:

Key Observations

• Total Revenue Growth: Increased significantly despite the drop in platform-reported ROAS.
• MER Improvement: Rose steadily, indicating enhanced overall marketing efficiency.
• Google Reported Conversion Value: Remained relatively flat, highlighting the underreporting issue.

Data Highlights

• Weekly Ad Spend:
  • Increased from $18,702.30 in early June to $29,553.20 by late October.
• Weekly Total Revenue:
  • Grew from $341,129.95 to $497,114.38 in the same period.
• MER:
  • Improved from 3.00 to 4.45, a 48% increase.

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Conclusion

Stella's incrementality tool enabled the athletic apparel brand to:

• Uncover Underreported Value: Identified that Google Ads' incremental impact was 1.6 times higher than reported.
• Optimize Ad Spend: Provided the confidence to scale ad spend while adjusting ROAS targets.
• Enhance Marketing Efficiency: Achieved a substantial increase in total revenue and MER.

By focusing on incrementality and holistic metrics like MER, the brand successfully scaled its most profitable channel, driving significant growth and outperforming initial expectations.

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Insights and Learnings

• Importance of Incrementality: Measuring the true incremental impact provides a more accurate assessment of advertising effectiveness.
• Holistic Metrics Matter: Relying solely on platform-reported metrics can be misleading; MER offers a broader view of marketing performance.
• Strategic Scaling: Gradual increases in ad spend, coupled with adjusted performance targets, can lead to sustainable growth.
• Data-Driven Decisions: Utilizing advanced analytics tools like Stella's incrementality tool empowers brands to make informed decisions that align with business objectives.

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Application to Other Brands

This case study underscores the potential benefits for other brands considering a similar approach:

• Assessing True Value: Brands can uncover hidden opportunities by measuring incrementality.
• Optimizing Budgets: Adjusting spend based on incremental impact can lead to more efficient budget allocation.
• Driving Growth: A strategic focus on incrementality can facilitate profitable scaling of advertising channels.

Stella's incrementality tool proved instrumental in transforming the brand's advertising strategy, leading to enhanced profitability and growth. By redefining performance metrics and embracing data-driven insights, the children's apparel brand set a precedent for how incrementality testing can unlock new avenues for success in digital marketing.

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Raw Data:

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