Ma Dalton wanted to attract people to her ice cream parlor. Although it wasn’t much to her liking, she had to acquire more customers. She told her boys to get going and drive more people to the shop.
“But how will we convince them?” they asked. She gave them coupons for 15% off and promised she would reward each son proportionately to the number of coupons with their name that had been used for a sale. It was to be a fair deal.
Overview: What is marketing attribution?
In digital marketing, every customer touch point is measurable. Marketing attribution is a model for appreciating the contribution of each touch point to the final sale. Ma Dalton’s boys are her marketing machine, and each one will contribute a certain amount to an increase in sales at the ice cream shop. Marking the coupons with each boy’s name will help Ma Dalton identify which of her sons contributed the most — right?
Let’s see how each boy did.
Averell made a big banner stating, “Ma Dalton’s ice cream 15% off” and went to the park on the weekend. When people asked him how to get the discount, he handed out a coupon with his name on it.
Jack went to the nearby school and stood by the fence shouting, “Ice cream discounts at Ma Dalton’s,” at every break. When the school kids looked interested, he handed out his coupons.
William stationed himself daily at the corner of the road the ice cream parlor was on and handed out coupons to passersby to entice them into the store.
As for Joe, he was active on Saturday morning but then seemed to be taking a nap most of the time.
At the end of the week, Ma Dalton counted out the coupons with each son’s name and gathered her boys together. Joe came in first since he had left the coupons on a little table by the ice cream parlor door so they were easy to find.
Everyone who went into the shop was happy to find his coupon. His brothers thought he was a genius.
Marketing attribution in action
In the case of Ma Dalton’s ice cream store, the 15% discount coupons she gave to her sons are data points. So, how can we use them to find out which son brought in the most business? Averell made people aware of the ice cream parlor, Jack targeted a qualified audience of ice cream lovers, and William found people nearby.
Each strategy represents a place on the customer journey map. As for Joe, he hacked the system for his own benefit, so let’s put him aside for now.
Imagine a family in the park had seen Averell’s banner over the weekend. This was the first touch point in Ma Dalton’s marketing setup. Imagine the kids from the same family having a second touch point at school when they heard Jack shouting about the promotion.
Finally, the last touch point was when the family went down the road one sunny day and was interrupted by William on the corner suggesting they drop by the ice cream parlor. The family was exposed to all of the Dalton brothers’ sales tactics, which contributed to the family ending up in the shop.
So, which coupon did they present? Averell made them aware of the existence of the shop, but did they ask for his coupon? Jack made the kids come home from school and beg for ice cream, but they might not have brought his coupon.
William caught the family’s attention at the right moment where they were ready to act and handed them his coupon, but they might have ended up presenting Joe’s coupon at the till.
Such is the challenge of marketing attribution. A marketing attribution model presents the marketing data you collect across the customer life cycle in a way that explains the impact of each act of communication and predicts what will work best in the future.
The 5 types of marketing attribution models
Digital marketing attribution is often explained via one of the five models below. The simplest attribution models are based on one single data point. This is the case for first-touch and last-click attribution. After those, you will find the more complex multi-touch attribution models.
Model 1: Last-click
Last-click attribution is when the last tracked action is considered to have been the source of the conversion. This attribution model is the simplest because the last click before a conversion is a data point which can be easily and reliably collected.
When last-click conversion tracking was first introduced, of course it was much superior to no attribution data. But the model assumes no other acts of communication have been important for conversion.
This is rarely true, and last-click attribution has moved from being considered as best-of-breed to worst-in-class as multi-touch attribution models have emerged.
Model 2: First-touch attribution
First-touch attribution is when you consider the first act of communication a user was exposed to as the one eventually responsible for the conversion regardless of any other subsequent pieces of information or elements of communication the user was exposed to.
First-touch attribution is more difficult to track than last-click despite its reliance on one major data point. It assumes that “seeing is believing,” or “discovering is converting.”
Imagine you are marketing a product which is a revelation to users when they discover it, and that no other communication will influence their decision to acquire it once they have become aware of it. That is your perfect scenario for using the first-touch attribution model.
Model 3: Linear distribution
In a linear attribution model, you will attribute the same importance to each touch point the user has had with your communication in the user journey. This works well for a very structured marketing process in which each user touch point is part of a journey to the conversion.
Since many decision processes are in reality rather chaotic, the linear attribution model falls short of many marketers’ needs, but it can be an excellent basis for starting a multi-touch attribution process.
Model 4: Time decay
The time decay attribution model is another evolution from the last-click model to multi-touch attribution. It considers the last action to be the most important but also rewards other touch points. Earlier actions are discounted proportionally to their distance in time from the conversion.
This model is used in relation with intensive advertising campaigns — for example, to trigger impulse buys — and is one of the more complex models to implement.
Model 5: U-shaped (position-based)
The position-based attribution model considers the first and last action to be the most important: The action that made the user discover the product, and the action that made the user convert. Actions in between are considered to have each contributed in a linear fashion and with the same importance.
It is called “position-based” because each action is rewarded as a function of its order in the line of tracked actions. And as the first and the last actions have a higher importance than the ones in between, they can be seen to form the letter “U.”
3 benefits of marketing attribution
Attribution in marketing is not for everyone. If you don’t have large data sets and you don’t deploy campaigns in various digital marketing channels, don’t bother. It will be a waste of your time.
But if you do manage large data sets, have come to acquire reliable data, and deploy campaigns at various stages in the user journey, the right attribution model can provide a lot of insight and help optimize your marketing tactics. It is an investment which can drive efficiencies and improve your digital strategy.
Let’s look at some of the benefits.
1. Joe doesn’t get to pocket all the money
Joe’s name was on most of the coupons Ma Dalton collected at the end of her marketing campaign, but he hadn’t generated one single sale. If loyal customers walked into the ice cream parlor and picked up his 15% off coupon, he actually caused Ma Dalton to generate a net loss on the ice cream she sold them.
Had Ma Dalton been able to track all the touch points during the customer journey for each sale instead of looking at the coupons, she would have been able to reward Averell, Jack, and William rather than Joe.
It would, however, require her to change the rules of the game, which is one of the major obstacles for implementing marketing attribution in large organizations.
2. Better understand users
Looking at more touch points than simply one action allows marketers to better understand user behavior. Did Averell’s banner in the park eventually drive users to the ice cream parlor? If yes, perhaps a permanent banner, or a billboard close to the park, could be an interesting marketing investment.
For ongoing client relationships, customer relationship management tools can provide a structured solution for customer attribution. These tools register customer touch points and can help identify obstacles in the way your company interacts with clients and eventually attribute value to each action.
3. Improve budgeting for advertising
Marketing attribution helps you comparatively evaluate marketing campaigns. It is being used to improve budgeting between marketing channels.
Discount coupons at the door of your shop was a bad idea. Disinvest. Perhaps William’s actions to divert traffic from bypassers generated sales, and it could make sense to send Joe to the opposite corner of the road to drive more sales. Invest more.
View more information: https://www.fool.com/the-blueprint/marketing-attribution/