What is marketing attribution & why it matters to your business
Imagine that you launched a new retargeting campaign yesterday that serves website visitors a mobile Facebook ad after they browsed items in your e-commerce platform on their laptop. Now imagine that today you emailed your newsletter database a 20% off coupon code to kick off the spring season. When a customer comes into your store to purchase that product and use their 20% off code, do you credit the website for educating them about their purchase, the Facebook ad for reminding them to buy, the email marketing campaign that served them the discount, or the store for their point of sale support? The answer to this question is important when planning where to invest your marketing dollars.
According to research, 90% of consumers switch channels and devices — such as cell phone to tablet, or online to offline — to “accomplish a conversion goal, with 67% of people using multiple devices to subsequently shop online.” Marketing attribution allows you to understand the impact each of these devices, and their corresponding channels, have had on the customer journey. And understanding this impact allows you to optimize your marketing spend around the channels and tactics that are most beneficial and cost effective.
Single source attribution marketing:
Most marketers use what is called “single touch” attribution modeling, which gives full credit to either the first or last channel a customer “touched” before purchase. In our example, that would be either the website or the physical store venue, with no credit going to the Facebook ad or email campaign. Yet, it is unlikely that the brick and mortar location, or any other single channel really, deserves full credit for this purchase when assessing their return on investment.
Single source attribution marketing is commonly used because it is simple and easy to track. Stitching together how customers move between devices and marketing assets is difficult and sometimes limited, so we — as marketers — settle. The problem with settling is that many of us wrongfully believe that the data will normalize across channels because customers are always entering and exiting the purchase flow differently. Unfortunately, single touch attribution often leads us to believe that one marketing source is more valuable than others and doesn’t inform you about your most valuable marketing channels. This makes it difficult to accurately assign marketing spend and can lead to over or under investments in a certain channel.
Multi-source attribution modeling:
A common solution to the single touch dilemma is to systematically weight each channel in the customer journey. There are lots of ways this can be done: linear attribution, time decay, u-shaped, and full-path attribution are just a few of the models striving to systematize omni-channel marketing. Bizible provides a detailed overview of some of these models in their blog post, here. Depending on your sales cycle, each multi-source model has pros and cons. Multi source attribution marketing is certainly more accurate than single source attribution, but still has blind spots. Namely, the difficulty of tracking users across and between devices or accurately standardizing which channel has the most impact on customers when using a “one size fits all model.” If you are just dipping your toe into the attribution world, this is a great place to start. You can easily test and compare weighted attribution models to see which one is the most accurate for your business and use that as long as it suits your needs. While it may not be perfect, it will provide directional insight into where to scale your spend in a way single touch attribution cannot.
Algorithmic and fractional attribution:
The last, and most nuanced, form of attribution modeling is algorithm-based attribution. The goal here is to leverage big data from a variety of sources such as your CMS system, web analytics platform, social metrics, traditional campaign ROI, and even physical POS information when it’s available, to create a living, breathing attribution model that adapts based on how your customers are actually shopping.
Agencies in particular have the power to do this because they can partner with large data organizations that help paint a complete picture of how, when, and where customers are switching between devices. This model assigns weight intelligently based on the amount of time customers spend on each channel, the frequency at which they use a platform or device, as well as where the sale and lead starts and ends. We firmly believe that as attribution modeling becomes a more standardized part of the budgeting process, this model (and the tools that support it) will become more prevalent.
Even with the most comprehensive algorithmic attribution system, we are still learning about and adapting to the shifting nature of consumer purchase behavior. Realize that perfection is not the goal — yet. In our recent blog post debunking myths about attribution, we shed light on why this methodology is so important regardless of its inherent limitations. This new and critical level of insight into your customer journey lets you serve your clients while doing right by your business at the same time. Get in touch today and we’ll show you how.