If you have spent any time in advertising, you are probably familiar with the term “Optimization”, the process of improving advertising results. Logically, improving the process involves reviewing data and drawing conclusions. But how the data is interpreted affects the optimization. Are all clicks created equal or are some more valuable than others? Are site visits driven by TV ads better than social media traffic? That is where attribution modeling comes in. How clicks are valued greatly affects optimization. We explain Attribution modeling and how it works.
What is attribution modeling
Most paths to purchase are not a straight line. There are lots of ways for customers to discover your brand, engage with it, and move further down the sales funnel. Marketing attribution is a process designed to determine which marketing channels lead to client conversion, and then assign a specific percentage of attribution to each contributing touchpoint. Over time, this approach enables marketers to optimize their programs toward the channels and touchpoints that drive the most value.
The real benefit of marketing attribution is that it helps you understand the customer journey and what makes them convert. Underperforming channels are discarded while top performers get a boost. But how do you weight each touchpoint.? There are a number of models to choose from.
One-Touch Attribution Models
Originally, marketers used One-Touch attribution systems, either First Touch or Last Touch attribution. First Touch clearly helps with top-of the funnel, and Last Touch the bottom. Both are simple to implement and useful if you are just starting out with attribution. However, if you are in a business where many contacts are needed to move someone over the line, they don’t provide a clear picture.
For more complex buyer journeys multi-touch attribution models are necessary. There are many attribution models. One of the early models is the Linear Attribution model. As the name suggests, it counts all touch points to conversion. The Linear model does not make a distinction between any customer interaction. All are valued the same. This allows you to see the customer path but does not help to prioritize marketing channels.
Time Decay Attribution
Another popular model is Time Decay. A time decay attribution model distributes credit across multiple events, but assigns more credit to those closest to the time of conversion. The idea is that events happening closer to sale are most important. The top of the funnel is less important. This may concern some marketers. But, for businesses with a clear “sale,” like e-commerce, knowing the marketing channels that drive conversions is critical.
Position Based Attribution
An attribution method with two names is the U Shaped or Position Based model. Like the other two models it counts all touchpoints. Position based assumes the most important encounters a customer has with a business are the first and last. In other words, the marketing channel that introduced the company and the marketing channel that converted the business. Each gets 40% of the credit, and the remaining contact points share the credit equally. This model is good for businesses that are relatively unknown or have a long sales cycle.
Each of these attribution models can be modified. No two businesses are the same, so the customer journey is likely to differ for each. As such, there is no perfect attribution model. Before you decide on a model do your research. Understand your target audience and market. If you already know both you may find a model that looks right for you.
If you use traditional advertising platforms, you will need to account for them. Utilize unique phone numbers and url’s for TV, Radio and Outdoor. You will also need to pay careful attention to website data for correlation between web traffic and commercial air times.
Attribution Modeling – How it Works
Attribution is not a set it and forget it exercise. Much like the optimizations it enables you to make, it needs to be refined as well. And, as your marketing evolves, it will need to evolve too. Look at the various tools available to work with. The most readily available is Google Analytics. There are many others. Be prepared to take actionable steps once you have enough data to make conclusions. And, each time you make optimizations, test them in your attribution model. Rinse, repeat. The better you know attribution modeling and how it works, the more efficient and successful your marketing efforts will be.