Given the well-documented inadequacies of single-touch attribution models that can lead to poor distribution of budget across channels and partners, there are smarter models that can help marketers increase their ROI through more informed budget allocation, Greg Endean, Managing Director UK, Sociomantic, tells ExchangeWire.
Where is attribution heading?
Given the interactive nature of digital marketing, better tracking and analytic tools have emerged, enabling marketers to more accurately analyse and allocate marketing spends. Today’s more advanced advertisers have moved beyond optimising for the next transaction to refining their attribution models in order to better reflect the Customer Lifetime Value (CLV) of each shopper. With either objective, an intelligent attribution strategy is key to discovering optimal marketing budget allocation, and more and more marketers are acting on it.
Is last click going to be replaced anytime soon?
Outside of a multi-channel approach, there still seems to be this widespread over-reliance on last-click attribution. I can understand the appeal, when all this model requires is assigning credit to only one touchpoint. Though easier than other approaches, it’s very much akin to placing all your eggs in one basket. In designating 100% of the conversion credit to a single action, marketers are fundamentally discrediting efforts they’ve invested in other marketing channels.
And from an equally crucial viewpoint, adopting a multi-click attribution model helps eliminate the tendency for fraudulent ad tech players to bait your customer’s last-click. To be clear, this doesn’t mean the last-click model is responsible for deceptive practices (i.e. manipulating the system to inflate click-through rate (CTR) or driving invalid clicks), but advertisers’ overwhelming reliance on the last-click can perpetuate the shady methods from those taking advantage of the system.
What are some benefits and pitfalls of multi-touch attribution models?
While customer journey attribution models are more complex than their single-click counterparts, they show marketers where value is being generated before the final media interaction – the last click. As digital channels are assigned a weight in how they deliver value, the onus is on the marketer to constantly adapt their spending based on findings from the attribution process. We know this is no walk in the park. From aligning different pricing models across channels to recognising customers across varying devices, from factoring in offline campaigns to implementing and testing an attribution model, to then adjusting online marketing targets every couple of weeks. It may take more internal skillsets and technical infrastructure to better visualise the varying media interactions leading to conversion; but a multi-touch attribution model will ultimately help you make more informed and intelligent budget decisions. Because, if done correctly, you’ll be able to paint a more accurate picture of which channels, or vendors, are generating the most value therefore pointing you in the best direction to apply budget in order to drive sustainable revenue growth.
Can you give us some examples of multi-touch attribution models?
There are several different attribution models that can be applied and, ultimately, the best approach for each business depends on its business objectives. For some marketers, it might make sense to focus on new customer acquisition; whereas others might want to invest more in converting website visitors.
For the former, an ‘inverted bell curve’ model could assign higher value to first and last clicks in the customer journey. The dip down in weighted value (hence, inverted bell curve) are for all the clicks in between. To illustrate, the cost-per-acquisition (CPA) attribution could be broken down as so:
– 40% attributed to SEO (first click)
– 20% attributed to display retargeting (assisting click)
– 40% attributed to email voucher (conversion click)
Other common attribution models are focused on how long it takes for a customer to convert. In time-to-conversion models, marketers need to decide whether increasingly higher values are assigned to clicks over time until conversion, or vice versa (e.g. 50% attributed to SEO, the farthest click from conversion; 30% for the assisting click in between; and 20% for the conversion click via email).
As mentioned earlier, some marketers have taken a more advanced approach with attribution models driven by CLV strategies. These marketers are in it for the long haul as they consider the long-term value of a customer, rather than allocating marketing resources for short-term gains. Unique to data-driven programmatic display, marketers can split sales attribution and CPA targets between new and existing customers, supporting the evolution from CRM group segmentation towards a user-individual approach. The foundation of a successful CLV optimisation strategy rests on a combination of granular analytics and lots of testing. The reward? Marketers can pivot investments towards the channels, segments, and even individual customers that promise to deliver the greatest revenue growth over time.
How should marketers adjust their budget according to their attribution model?
To make sure an attribution model is delivering the highest possible value, marketers must constantly assess possibilities for adjustments in their approach. Setting an appropriate evaluation timeline is key. Because changing an attribution model can lead to major changes in budget allocation, marketers ought to define a sufficiently long evaluation period in which to measure the performance of their channels. At least one month is best practice; and once working with established attribution models, most marketers should adjust their optimal CPA per channel at least every two weeks – although these can depend on the sales cycle length for each advertiser.
Fine-tuning your CPA targets is also essential when applying a multi-channel attribution model that assigns variable weights to different vendors based on their contributions to the sale. Note that the CPA should always be converted into measurable actions per channel. For example, let’s assume the effective CPA (eCPA) for a certain keyword group is £6, and your attribution model shows that it’s too low by 50%. This means you’ll need to adjust the CPA for this channel by 50%, or tweak the CPC or CPM in order to reach the optimal CPA target.
This may all seem daunting, and it can indeed take months to develop and refine a newly adopted model. But, ultimately, a customer-journey- and CLV-based attribution strategy will help marketers derive the greatest possible value from their digital marketing investments.