Even an imperfect model can improve your decision making
For many marketers finding creative ways to advertise their brand is not an issue. The trouble comes when trying to decide what marketing efforts are resulting in sales.
While on the surface it may seem easy to track where a sale originated from, in reality that sale was most likely the result of several different marketing efforts. That is where marketing attribution comes into play. Marketing attribution is the system where partial credit for a sale is given to all the marketing touchpoints that resulted in the final sale.
How is this valuable?
Consider a simplified example:
Say you have a Facebook ad that is receiving clickthroughs but not many sales. However according to your Google Analytics, your website is being reached via organic searches and is resulting in sales. Based off this information you start to feel like your Facebook ad is not worth the money and decide to pull it.
Then, unexpectedly your sales go down. What went wrong? Well upon further inspection you discover your organic leads were coming from people who had previously seen the Facebook ad and Google searched your company name. Your Facebook ad was creating interest and name recognition which were later translated to Google searches where customers once again saw your name and remembered the Facebook ad. Because of that name recognition, they clicked your listing in the SERP and proceeded to purchase.
By removing the seemingly unproductive Facebook ad, you unwittingly took out an important piece of the marketing puzzle. Attribution allows you to give credit to every part that plays a role leading to a sale. Thus, optimizing your marketing dollars and enhancing your ability to make informed decisions.
As stated, the above example is an extremely simplified version of the need for marketing attribution. In reality, most brands have tens to hundreds of marketing channels, all of which may or may not have played a role in the final sale. Even with today’s amazing analytics software options, discovering how to attribute the right percentage of credit to each marketing channel can be an overwhelming puzzle that is seemingly impossible to solve.
What are the different attribution models?
So how do you get started in implementing an attribution strategy for your brand? Here are seven different attribution models, all of which have their own pros and cons:
- Last Click: Gives all the credit to the channel that was the last click before the sale. While this model is easy to track, it can hide the value of other channels, resulting in poor decisions on future marketing efforts.
- First Click: Gives all the credit to the first customer click. Like the Last Click model, it is easy to track but does not give credit to subsequent customer interactions that may play in the decision to purchase.
- Linear: Gives equal credit to all channels used. While this model does improve knowledge of what marketing sources the customer is utilizing, it does not properly attribute credit to some channels that may be producing the majority of the sales.
- Time Decay: Assigns more credit the closer the methods get to the point-of-sale. This model allows marketers to get a good understanding of the journey of the customer, but it can underestimate the importance of the initial customer interactions.
- Position Based: Assigns equal and highest value to the first and last customer clicks. This can lend insight to where customers are starting their interest and where the final decision to purchase is happening, but the values assigned to the channels between these points are arbitrary and can be misleading.
- Regression: Assigns a value to channels based on their historical performance. If there is not enough historical data in all of the areas it can produce misleading results that are biased to longer standing marketing approaches.
- Algorithmic: Assigns value based on previously tracked converting and non-converting stages. Like the Regression Model, if there is insufficient data, it can produce misleading results.
How does one implement marketing attribution?
With so many options it can be hard to understand where to start in your own marketing attribution analysis. What is often surprising is that many companies already have tools in place thanks to Google Analytics. So if you are already tracking Key Performance Indicators (KPI) then you are also able to analyze where customers start, where they go, and how long they stay in different areas of your site before purchasing.
If your business is a B2B model, then, with the use of your CRM (customer relationship management software), you can assign values based on revenue and can quickly dive even deeper into analyzing what channels are producing and at what rate for your business.
What are the difficulties faced today in implementing marketing attribution?
As you can see from the list of the seven marketing attribution models, it is extremely hard to implement a perfect plan that will always show a complete picture of the marketing cycle. That doesn’t mean that the incomplete picture is of no value. Having any amount of insight can help guide the decision-making process for your marketing spend and can help to drive the willingness to try new channels for your brand.
That being said, it is important to have clearly defined goals so that you will not be overwhelmed by the volume of information that will be presented. It can be easy to be deterred from your original plan as different data comes in and you can find yourself bouncing from one thing to the next. It is vital that you learn to filter out the unimportant information and stay the course. When long-term relevant data reveals that changes need to take place, then and only then is it time to rethink your strategy while keeping the original goal in mind.
In marketing, nothing says “Closing the Loop” like attribution, and that’s our theme at this year’s Art of Marketing conference. Join us November 3 as we’ll be discussing ways to assess the value (and ROI) of all your strategies, tactics and channels. Register by September 30 for early bird pricing.
Want to save even more? Members save $180 on registration, and you can save $30 on a professional membership through November 4. That’s right! Join now and save more than $200 combined on an annual membership and Art of Marketing registration!
Jacob Dayan is partner and co-founder of Community Tax, a tax resolution company with clients located throughout the United States. Currently marketing through a multitude of channels, including but not limited to radio, PPC, SEO, and Facebook paid ads, attribution is currently a core focus within his business initiatives.