Practicology consultant, Daniel Romberg, explains attribution models and the difficulty of mapping the customer journey
Every year marketing teams are presented with a budget and expected to maximise their return on investment. Before the internet there was a limited amount of marketing channels with most marketing efforts channelled into pamphlets, billboards and TV commercials. There was also very little insight into the effectiveness of these channels. Marketers either used a marketing mix model to justify their spending or simply assumed that it was working. If sales were on the rise it didn’t matter, right?
Today, the world is slightly more complicated. New technology and increasing internet availability have made customers more elusive by introducing a myriad of new devices and marketing channels. This new technology has made information much more widely available to customers. Suddenly, customers are now able to access reviews, comparing prices and quality. This has created a more competitive market, making it much more difficult for marketers to succeed with their marketing campaigns.
The challenge with attribution
Attribution modelling is essentially an attempt to allocate credit or value to each touchpoint in a customer’s path to conversion.
Imagine looking to purchase a new hat online and a search for “hat” produces millions of results. After clicking a few links, you find a retailer with a suitable hat, but you are looking for the perfect hat and choose not to make a purchase. The following morning, a banner ad for the same retailer appears while online. You click on the banner ad and once again browse for that perfect hat, but you have a meeting to attend and cut your search short. Later that week you notice a Facebook ad featuring your ideal hat, but you decide to wait until payday to make the purchase. When payday arrives, you search for the hat and a paid search ad appears first in the results. You click on the ad and you finally buy the perfect hat. Conversion!
But which marketing channel gets the credit for the conversion? Who gets paid and how much do they get paid? How should we make these decisions? And how should we allocate our budget in the most effective way?
Today, more than half of companies use a Last Click attribution model, apportioning all of the credit for the conversion to the paid search advert at the end of the journey. However, companies are starting to realise that to be successful they need to nurture customers throughout the entire customer journey. If a company fails to invest in top of funnel channels, such as display and social, then it will ultimately fail to introduce new customers to the brand. Similarly, if it doesn’t invest enough at the bottom of the funnel then it will eventually lose their customers to competitors.
Attribution modelling can be complex and is often a daunting task for most companies. Although early attribution models were either too simplistic (Last Click) or too complex and expensive (algorithmic), it should be noted that the tools for implementing multi-touch attribution models have become far more sophisticated since then. Companies that invest in attribution modelling will eventually enjoy the benefits of improved performance and higher ROI as they reallocate funds from inefficient channels to channels with superior potential for growth.
If you have any questions about marketing attribution models and how you can create a model that is right for your business please contact us.
If you are keen to learn more about evolving marketing practices join Practicology at Shoptalk Europe, taking place in Copenhagen from 9-11th October 2017. The Marketing Evolution track will feature discussion of topics including analytics, mobile and social marketing, and the next-generation of marketing utilising Artificial Intelligence. www.shoptalkeurope.com