The Evolving Attribution Model
Date Posted: 3/24/15
Original URL: http://www.tradeglobal.com/blog/the-evolving-attribution-model/
Give credit where credit is due. It’s an age-old adage, but when it comes to making the most of your marketing budget, it couldn’t be more true. After all, if you don’t know which sources your conversions are coming from, how will you know where to allocate funds to get the best return? That’s where attribution modeling comes in.
What is Attribution Modeling?
By Google’s definition, an attribution model is the rule, or set of rules, that determines how credit for sales and conversions is assigned to touch points in conversion paths. By strategically putting together a model that distributes credit appropriately, these models help marketers best analyze how their marketing efforts are doing, what’s working, and what isn’t working.
Out with the Old, In with the New
In the past, analytics tools most commonly attributed 100% of every sale or conversion to the marketing channel that the customer last touched. As technology evolves and customers become more and more connected – through an increasing array of digital technologies, like smartphones, tablets and laptops – this method of giving credit to marketing channels (also known as a baseline attribution model) no longer paints an accurate picture.
Let’s say, for example, that a customer finds your site after clicking on a non-branded paid ad from your SEM campaign. During this initial visit, the customer browses several products but decides that it might be best to wait for a sale to come along to make a purchase. After leaving your site, the customer decides to follow your company on social media to stay close to your brand. When your company posts a coupon on social media a week later, the customer clicks the promotion, which directs him or her back to your site to make the purchase.
With baseline attribution models, the social media post (being the marketing channel the customer last touched) would be credited with 100% of this customer’s purchase. When you look at the customer’s entire journey to their purchase, the non-branded paid ad that initially drew the customer to the site should receive a portion of the credit as well. By giving that non-branded paid ad a portion of the credit, you can fund those campaigns in a proper way.
As site tracking and technology advance in the realm of analytics, popular analytics platforms are rolling out new tools to help marketers with this analysis. By mapping out every single marketing effort and how it influences customer behavior, these tools can be used to strategically attribute revenue and conversions. Strategic and accurate attribution can result in proper funding for digital marketing and traditional marketing efforts alike.
Equal Attribution vs. Fractional Attribution
So, we agree that giving credit to multiple touch points along the customer’s journey is a better strategy than simply giving all of the credit to the last channel touched – but should each of these channels receive equal credit? There are a couple types of attribution models that divide credit among multiple touch points: Equal attribution and fractional attribution models.
Not surprisingly, equal attribution models assume all touch points are equal, so an equal value is assigned to each channel. The downside here: You won’t know which touch points perform best, which will leave you questioning where you should allocate the most funds to have the greatest impact.
Fractional attribution models assign a calculated weight to each marketing touch point throughout your customer’s shopping journey. The most complex of attribution models, this is also the most accurate because it takes into account the fact that purchasing decisions are not always linear; it’s often a combination of touch points that influence behavior. It also requires a deeper understanding of the statistical implication of various touch points in order to fully measure their effectiveness.
Increase Customer Retention
Attribution models can also help you increase the lifetime value of your customers, resulting in repeat purchases and better customer retention. Attribution modeling provides us with a better understanding of which marketing channels and campaigns encourage the most repeat purchases. Basically, it allows us to analyze the purchasing behavior of customers – why they purchase, what leads them to make a purchase and what prompts them to complete their purchase. We can use that information to tailor content specifically to those customers.
Consistency is Key
Managing attribution models is similar to SEO in that it’s an ongoing process. As your website changes, you add new content or launch new campaigns, your attribution models must also change. There are several analytics tools out there, such as Google Analytics, to help manage your attribution models. Before even getting started, it’s absolutely crucial that you have an understanding of the complexities involved.
Whether you’re up to the challenge but in need of a little guidance or you’d rather leave the work in the hands of the experts, we’re here to help. At TradeGlobal, our e-commerce analytics team, which has extensive experience with attribution modeling, can create a custom attribution model aligned with your current marketing efforts. We’ll also provide valuable analysis and insight into what the resulting number mean. If you’re ready to get started, get in touch with us!