The synthetic control method for marketing measurement, explained

The synthetic control method for marketing measurement, explained in plain English: how the blend is built, a worked example, placebo checks and when it fails.

By The Countlift team · · 10 min read

Synthetic control answers one question: what would this market have done if we hadn’t changed the advertising? It answers it by building a stand-in for the market out of other markets, weighted so the stand-in moved in lockstep with the real one before anything changed. Afterwards, any gap between the two is the effect.

That is the whole idea. The rest of this guide is the detail that decides whether you can trust a particular read: how the weights are chosen, a worked example with every number shown, the checks that catch bad fits, and the situations where the method simply doesn’t work.

Synthetic control in plain English

Suppose you raise paid social in Charlotte. Comparing Charlotte with last month is useless, because last month had different weather, a different season and different paydays. Comparing Charlotte with Raleigh is better, but Raleigh is its own place with its own quirks. Comparing Charlotte with 40% Raleigh, 35% Nashville and 25% Richmond, a blend that tracked Charlotte week for week over the past six months, is better still. That blend is the synthetic control.

The method comes from economics. Alberto Abadie and Javier Gardeazabal introduced it in 2003 to estimate the economic cost of conflict in the Basque Country, and Abadie, Diamond and Hainmueller used it in 2010 to measure California’s 1988 tobacco-control program against a blend of 38 other states (Source: Cunningham, Causal Inference: The Mixtape, 2021). Susan Athey and Guido Imbens later called it “arguably the most important innovation in the policy evaluation literature in the last 15 years” (Source: Athey & Imbens, Journal of Economic Perspectives, 2017).

Swap “state” for “market” and “tobacco law” for “spend change” and you have a tool shaped almost perfectly for a multi-location brand.

How the synthetic control is built, step by step

  1. Pick the treated market and the moment. The market where spend changed, and the week it changed.
  2. Assemble the donor pool. Markets where spend held steady over the whole window, with no openings, closures or local promotions. These are the only markets allowed into the blend.
  3. Line up a pre-period. Ideally 26 to 52 weeks of the same outcome (weekly guests, members, jobs) for the treated market and every donor.
  4. Find the weights. Choose non-negative weights that add up to 100% and make the weighted blend track the treated market as closely as possible through the pre-period. Most donors end up at zero; a handful carry the blend.
  5. Project forward. Apply the same weights to the donors’ actual numbers after the change. That line is what the treated market would have done without it.
  6. Read the gap, then test it. Actual minus blend, week by week, summed over the test. Then run the checks in the next sections before believing it.
How the synthetic control weights are chosenSeven donor markets with grey weight bars: Donor A 50 percent, Donor B 30 percent, Donor C 20 percent and the rest zero. Their weighted blend, a grey dashed line, tracks the green treated market within a few guests a week across twelve pre-period weeks.DONOR POOL · STEADY SPENDDonor A50%Donor B30%Donor C20%Donor D0%Donor E0%Donor F0%Donor G0%Weights ≥ 0 and add up to 100%PRE-PERIOD: 12 WEEKS1,2001,280Treated marketBlendTypical miss: about 6 guests a week (under 0.5%)
Illustrative. The weights come from the pre-period: three donor markets carry the blend and the rest get zero. The blend then tracks the treated market closely before the change.

The “non-negative, adds to 100%” rule matters more than it looks. It means the blend is an average of real markets, so it can’t invent a market that behaves in ways none of your markets do. That keeps the method honest, and it is also why it breaks for outliers (more on that below).

A worked example with every number shown

Illustrative numbers. A burger chain raises Meta spend by $6,000 a week in one market with 5 restaurants. The weights came out at 50% Donor A, 30% Donor B and 20% Donor C. To keep the table readable it shows 4 of the pre-period weeks; a real fit would use 26 or more. Figures are average weekly guests per restaurant.

Illustrative synthetic control read (average weekly guests per restaurant)
WeekDonor ADonor BDonor CBlendMarketGap
Pre 11,1801,4209601,2081,212+4
Pre 21,1501,3901,0001,1921,186−6
Pre 31,2101,4609901,2411,247+6
Pre 41,2401,4801,0201,2681,262−6
Test 11,2601,5001,0301,2861,338+52
Test 21,3001,5301,0501,3191,392+73
Test 31,2801,5101,0401,3011,381+80
Test 41,3201,5601,0701,3421,419+77

Check one row yourself. Test 1: 0.5 × 1,260 + 0.3 × 1,500 + 0.2 × 1,030 = 630 + 450 + 206 = 1,286. The market served 1,338, so the gap is 52 guests per restaurant that week.

  • Pre-period fit: gaps of +4, −6, +6, −6. The root mean square is √31 ≈ 5.6 guests, under half a percent. Good.
  • Extra guests: 52 + 73 + 80 + 77 = 282 per restaurant over 4 weeks, × 5 restaurants = 1,410.
  • Lift: average gap 70.5 ÷ average blend 1,312 ≈ 5.4%.
  • Cost per extra guest: $24,000 added spend ÷ 1,410 ≈ $17.

Now the punchline. A simple before-and-after comparison of the market’s own numbers (1,227 a week before, 1,383 after) says +12.7%. More than half of that was the season, which the donors felt too. The synthetic control strips it out.

Worked example: the market against its synthetic controlOver four pre-period weeks the green market line and its grey dashed blend differ by four to six guests. After spend rises the gap, shaded green, opens to between 52 and 80 guests a week. A before-and-after comparison would claim a 12.7 percent lift; the synthetic control shows 5.4 percent.1,2001,3001,400SPEND +$6K / WEEKPRE 1PRE 2PRE 3PRE 4TEST 1TEST 2TEST 3TEST 4+5.4%vs the blend+12.7%before vs afterAVG WEEKLY GUESTS PER RESTAURANTMarketSynthetic control (50% A + 30% B + 20% C)Lift
Illustrative. The market and its blend from the worked example. Before the change the gap is a few guests; afterwards it opens to 52–80 a week. A before-and-after read would have more than doubled the lift.

How to tell if a synthetic control read is trustworthy

Check 1: pre-period fit

If the blend didn’t track the market before the change, there’s no reason to believe it tracks what the market would have done after. Look at the pre-period gap chart, not just a summary statistic. A blend that’s right on average but misses every holiday spike is a bad blend for a test that runs through December.

Check 2: placebo runs

Pretend each donor market was the one that changed. Build its own synthetic control from the others and measure its “lift.” None of them had a real change, so their gaps show what noise looks like. If your real market’s gap is far bigger than every placebo, you have something. In the California tobacco study, the real gap ranked first against every placebo state, a permutation p-value of about 0.026 (Source: Cunningham, 2021).

Placebo test: the treated market against fourteen untouched marketsEach dot is a market's post-period gap divided by its pre-period fit error. Fourteen grey placebo markets fall between 0.8 and 3.1. The green treated market sits at 12.8, far to the right of all of them.WHAT NOISE LOOKS LIKE12.8×Treated market02468101214POST-PERIOD GAP ÷ PRE-PERIOD FIT ERROR →ILLUSTRATIVE · 14 PLACEBO MARKETSRAN THE SAME ANALYSIS ON MARKETS WHERE NOTHING CHANGED
Illustrative. Each dot is a market’s post-period gap divided by its pre-period fit error. The fourteen placebo markets had no spend change; the treated market sits far to the right of all of them.

One subtlety for brands with few markets: placebo tests can only be so precise. With 15 markets in total, the best possible rank-based p-value is 1 in 15, about 0.067, however huge the effect. That is why a good read combines placebo results with the pre-period fit error rather than leaning on either alone.

Synthetic control vs other marketing measurement methods

Where synthetic control fits among common methods
MethodComparison it usesMain weakness
Before and afterThe market’s own pastSeason and trend get counted as lift
Difference-in-differencesAverage of control marketsAssumes controls moved in parallel; often they didn’t
Matched market testOne or a few look-alike marketsA single twin can drift for its own reasons
Randomized geo experimentRandomly assigned control marketsNeeds many markets and planning; noisy with few
Synthetic controlWeighted blend fitted on the pre-periodFails when no blend can match the market
Media mix modelingStatistical model across all spend and timeNeeds years of data; brand-level, not per location

In practice these aren’t rivals. A planned geo test is often read with a synthetic control, which gives you randomization’s protection against bias plus the blend’s tighter fit. Our guide to matched market testing vs geo holdout covers that pairing.

When not to use synthetic control

  • Your treated market is an outlier. If your flagship metro is twice the size of anything else, or growing three times faster, no average of other markets can reach it. Index outcomes per location or as growth rates, or accept that this market can’t be read this way.
  • The donors aren’t clean. If spend also changed in donor markets, or one of them had a new store, the blend absorbs that change and the lift is wrong. Exclude them.
  • The pre-period is short or broken. Eight weeks of history can be fitted by almost anything. A POS migration or a remodel in the middle of the pre-period breaks the series.
  • Spillover between markets. If ads in the treated market reach donor-market customers, the donors rise too and the effect shrinks. Keep neighbors out of the pool.
  • You need a creative or keyword answer. Synthetic control reads markets. For “which headline won,” use the platform’s own A/B tests.
Which markets a synthetic control can reachFourteen grey donor markets plotted by average weekly guests per location and year-on-year growth form a cloud. Market A, in green, sits inside the cloud and can be matched by a blend. The flagship market, in amber, larger and faster-growing than every donor, sits outside and cannot.0%+4%+8%8001,2001,6002,000Donor markets: any blend lands inside the dashed lineMarket Acan be matchedFlagship marketoutside every blend: can’t be read this wayGROWTH, YEAR ON YEARAVG WEEKLY GUESTS PER LOCATION →ILLUSTRATIVE
Illustrative. A blend can only reach markets that sit inside the cloud of donors. Market A can be matched; the flagship, larger and faster-growing than every donor, cannot.

Questions people ask about synthetic control

What is the synthetic control method in simple terms?

It estimates what would have happened to one market without a change by building a weighted average of similar markets that didn’t change. The weights are chosen so the average matched the market’s history beforehand. After the change, the difference between the market and that average is the estimated effect of the change.

How is synthetic control different from difference-in-differences?

Difference-in-differences compares the treated market with a simple average of controls and assumes they would have moved in parallel. Synthetic control chooses weights so the comparison actually did move in parallel before the change. When controls differ a lot from each other, synthetic control usually gives a closer, more believable comparison.

How many markets do you need for synthetic control?

Enough steady markets to build a blend that fits. In practice that’s roughly 8 to 10 clean donor markets at minimum, and more is better. With very few markets the fit gets loose, placebo tests lose precision, and ranges widen. It still beats before-and-after, but say how uncertain it is.

Is synthetic control the same as Google’s CausalImpact?

No, though they are cousins. Both build a counterfactual from other series. CausalImpact fits a statistical time-series model that uses the control series as regressors. Synthetic control uses a constrained weighted average of real markets, with weights that add to 100%, and judges uncertainty with pre-period fit error and placebo runs.

Can synthetic control measure a single location?

Only if that location has other comparable units to blend from. A brand with one store doesn’t, so it needs an on/off test over time or, for service businesses that know customer ZIP codes, a ZIP-level test. A single location inside a multi-location brand can be read, though its range will be wider than a market’s.

If you remember one thing: the read is only as good as the pre-period fit. Look at that chart first, every time.

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Written by The Countlift team at First Byte in The Woodlands, Texas. Questions or corrections? Email hello@countlift.com.

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