Getting ready for the cookieless future: Attribution modelling
With so many choices, channels, and types of customers, it can be hard to know exactly where to focus your efforts. That's why nowadays using marketing attribution became so important.
At this moment, there are so many different channels to engage with customers online and offline. This rapid evolution triggered a strong fragmentation of the digital marketing landscape, which is now more visible than ever.
Not to mention that the buyer’s journey is clearly far from linear. Consumers engage with brands via multiple, often more than ten, different touchpoints before they ever make a purchase. Of course, it may sound like a great engagement opportunity for marketers. But it’s also a major challenge that businesses are trying to overcome.
Getting visibility into such complex buyer journeys is tough. Wading through data cobbled together from different sources, and spending hours crunching numbers in spreadsheets sounds no fun.
This is when attribution steps in and saves the day.
What exactly is attribution?
According to the CMO Spend Survey, about 1 out of every 4 marketing dollars (26% of the marketing budget) is spent on paid media. Wouldn’t it be nice to know that these dollars are not wasted?
Attribution refers to a set of methods whose purpose is to reconstruct the customer journey that has led a client to conversion. This process aims to assess the efficiency of each of the channels used during a marketing campaign.
But let’s go a little deeper.
At one point, maybe you’ll want to see how a blog post or a social media strategy impacted your sales. In this case, you’ll probably find attribution analytics extremely useful. Maybe you’re spending lots of money on PPC search marketing and you want to see how this strategy impacted customer conversions. The only way to know for sure is through detailed attribution analytics.
Why is attribution so important in digital marketing?
Attribution may not always be as easy to handle as it sounds. Advanced attribution models can be time and resource-intensive to get right. However, when done effectively, attribution brings many benefits and we are ready to discuss some of the most important ones:
1. Reducing costs by cutting ineffective marketing
Experienced marketers are always looking for ways to economise. With a comprehensive and accurately tuned attribution model, you can tell which parts of your budget are being spent to drive conversions. And, of course, which are not.
Reducing spending on ineffective placement and reallocating those financial resources to more impactful channels it’s essential. It can actually help to reduce your overall spending while maintaining your results. In other words, identifying low-performing channels will be a great way to right-size your costs without losing the gains you’ve made so far.
2. Maximise marketing ROI
You have probably heard of ROI (Return on Investment) and its vital importance when it comes to measuring marketing results. Understanding which channels positively impact ROI the most can help you spend money to boost those valuable results. This way, you will improve the long-term health of your organisation.
A well-tuned attribution model can determine if some of the early consumer interactions lead to a subsequent purchase, often credited to a lower-funnel channel such as branded paid search or direct navigation. For example, your performance reports might be crediting a lot of revenue to PPC by using a default last non-direct click rule. But without attribution, you have no insight on the channels customers are engaging with before they finally convert through PPC.
3. Understanding and optimising prospective customer interactions
And last, but not least, attribution modelling allows you to visualise how clients interact with your messages and move through the funnel. However, in a world with a rapidly expanding number of platforms, channels, and tools, a strong attribution model can also reveal how these channels interact to impact conversion. This will help you build the most efficient and effective path-to-purchase for the maximum number of prospects
As a result, you will be able to tailor all of your marketing efforts to the kind of customers you need. Understanding these needs ensures that you can meet your customers at the points where they are most likely to be influenced. This will allow you to build a stronger connection, boost brand loyalty, and increase customer lifetime value. In other words, attribution will help you be more consistent with your marketing messaging, if you know what channels your customers will engage with at different points in the buying journey.
Introduce them to the brand through discovery channels, nurture them through mid-funnel channels and ultimately get them to buy through converting channels!
What are the different types of attribution models?
If you managed to understand everything so far, you are ready to dive with us into the world of attribution models.
We’ll tackle Multi-touch Attribution Modelling and its various subtypes. Then, we’ll move to Marketing Mix Modelling to find out which one works best for you.
What you should keep in mind is that, unlike other models, data-driven attribution models give you precise results. That is possible by analysing all of the relevant data about the marketing moments that led up to a conversion. The other non-data-driven models are not accurate and are largely outdated in terms of tracking true ad response.
1. Multi-touch attribution model
Multi-touch attribution models evaluate the impact that each touchpoint has in driving a conversion, thereby determining the value of that specific touchpoint.
Let’s take a deeper look at its traditional heuristic attribution models:
- Last-click: Gives all credit for the conversion to the last-clicked ad and corresponding keyword.
- First-click: Gives all credit for the conversion to the first-clicked ad and corresponding keyword.
- Linear: Distributes the credit for the conversion equally across all ad interactions on the path.
- Time-decay: Gives more credit to ad interactions that happened closer in time to the conversion. Credit is distributed using a 7-day half-life. In other words, an ad interaction 8 days before a conversion gets half as much credit as an ad interaction 1 day before a conversion.
- Position-based: Gives 40% of the credit to both the first and last ad interactions and corresponding keywords, with the remaining 20% spread out across the other ad interactions on the path.
The data-driven approach, however, is different from the other models. It uses your account’s data to calculate the actual contribution of each interaction across the conversion path. So, this is currently far and away the most truthful picture of marketing attribution.
This type of attribution is really important for marketing managers and team leads.
2. Marketing mix modelling
MMM is a technique that helps you understand how much each marketing input contributes to sales, and how much to spend on each marketing input. It’s also used to optimize the spending budget over these different marketing inputs.
OK, but what does that mean exactly?
By looking at how much each of your campaigns has historically impacted your sales over a given period, MMM can calculate the likely impact of future campaigns on any given channel.
However, since there are numerous factors that will influence sales and channel performance, MMM calculations need to also include a wide variety of variables. Things like promotions, market conditions, competitor activity – even seasonality and now especially, pandemic-related factors such as social restrictions. Basically, you need to focus on anything that might affect user behaviour.
The type of attribution really appeals to C-suite executives and senior decision-makers.
Attribution has now become crucial to centring your entire marketing organisation around a common goal of revenue generation.
When choosing an attribution model, focus on the one that is the most adapted to your business strategy. If you’re looking to evaluate the effectiveness of your marketing channels then multi-touch attribution is worth considering. If you’re seeking to understand the most optimal mix of marketing activities to drive incremental revenue then MMM is your route there.
Every business has its unique characteristics. You may see that a model that is a perfect fit for one company might be totally inadequate for another. You can choose whatever suits you best. Just make sure you keep up with the latest trends that can lead your business towards success!
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