Why Multi-Touch Attribution is the Most Undervalued Marketing Metric
The Mary Meeker, Internet Trends 2018 report has landed. It had many great take-aways for the digital marketing sector but, to my mind, the most shocking statistics were around metrics. Specifically, only 8% of marketers consider multi-touch attribution to be an important ad spending optimization metric.
By comparison, in the same survey, the golden winner was Customer Lifetime Value (with 27% of marketers considering it important). And yet, these two metrics should never have been pitted against each other – one (multi-touch attribution) is an enabler to boost the other (customer lifetime value). That they were signifies how much of a mess marketing analytics is today.
Marketing Analytics: A Still Largely Untapped Opportunity
With continuing strong growth online, we live in an era of unprecedented amounts of data and an opportunity to understand customers better than ever before. However, most marketers are drowning in information and the vast bulk of it is poorly analyzed to provide actionable insights. A recent article by McKinsey suggested that only a small percentage of the value that could be unlocked by advanced-analytics approaches has been unlocked – as little as 10% in some sectors.
This is despite increasing investment. The CMO Survey by Duke University’s Fuqua School of Business (sponsored by Deloitte LLP and the American Marketing Association) reported that companies plan to up their budget allocation on marketing analytics to 17.3% from 5.8% over the course of the next three years. However, there is no sign that greater investment will lead to better outcomes. Companies are continuing to invest in data analytics with no clear strategy on how to turn this into a successful marketing campaign. According to Forbes insights, 89% of the marketing executives that took part in their study, say ROIs aren’t fully quantifiable when merging analytics and data strategies. Meanwhile FMCG suggest that 95% of data being generated and sold to marketers is not only useless, including large amounts of irrelevant data, but also damaging.
Pressure to Deliver: The Rising Cost of Customer Acquisition
Marketing analytics has never been more important to get right. As digital marketing demand continues to grow, the return on ad spend has continued to fall. The Mary Meeker report showed that eCPM (effective cost per thousand ad impressions) at Facebook has grown 112% since Q1 2017 while CTR (click-through rate) is up 61% during the same period. As the cost of customer acquisition continues to rise, it’s no wonder that customer lifetime value is high on a marketers agenda. Marketers need know that every marketing dollar spent is delivering maximum impact. However, this is where multi-touch attribution can be a game-changer.
The Increasing Complex Customer Journey (And The Role of Multi-Touch Attribution)
We know that the customer digital journey is increasingly complex to monitor – in the fashion sector for example, a report by NetElixir estimated that each online fashion conversion involved an average of 7 online interactions. That often translates to many data points across multiple platforms, difficult to capture and difficult to analyze.
However, the latest multi-touch attribution technology platforms (like Fospha) are able to consolidate previously siloed data to create a more complete picture. The beauty of this is that it articulates how a consumer journey has developed from browsing a product’s website into becoming a paying customer. Through the multi-touch attribution model, marketers can coherently map each step a consumer takes in their path to purchase while giving a numerical value to each interaction. Dependent on those values, resources can be redistributed to conversion positive channels. In short, marketers can decipher which adverts are bringing in limited or no ROI and adjust accordingly. For example, although a customer may purchase on amazon, multi-touch attribution also considers and values the ad on Facebook that prompted that customer to look into buying that product in the first place.
By contrast, if marketers focus more on last-click attribution (and in the Mary Meeker report they rate this as being more important than multi-touch attribution), they miss the bigger picture. It’s all well and good to zone in on that critical moment when a customer presses “buy” but to not look deeper into where that purchasing journey began – and how it evolved – is to miss a trick. Without discovery, the purchase would never have been made.
The Difficulties of Accurately Calculating Multi-Touch Attribution
More often than not, the reason why multi-touch attribution is often so undervalued is because it is considered so hard to accurately calculate. Organizations trying to execute multi-touch attribution are often beset with problems. Firstly, one of the problems we see with many of our Fospha clients is that most companies are now overwhelmed by the sheer amount of data they hold, making it hard to process in a timely manner. Landing the key questions that the analytics needs to answer is critical – companies can then make sure that the data they are capturing is relevant for actionable insights. Secondly, data silos and siloed teams make interpretation often nigh on impossible. Data from mobile devices and from PCs may suggest similar browsing paths but if the consumer data and the data on pages browsed cannot be paired up, it’s difficult to assess browsing behavior.
Thirdly, many companies struggle to recruit the right data analyst talent. The CMO Survey found that only 1.9% of marketing leaders reported that their companies have the right talent to leverage marketing analytics.
Little wonder then that multi-touch attribution has fallen low on the agenda in favor of easier to calculate alternatives…
The Power of Multi-Touch Attribution Tools
However, many companies are increasingly realizing they don’t need to go it alone but can benefit from engaging with multi-touch attribution specialists and tools. For example, Fospha technology is designed to capture and stitch unique, cross-channel, cross-device interactions within a company’s own Customer Data Platform. With data integration complete, true multi-touch attribution can be executed, computing the contribution of each interaction to derive the data-driven value of each marketing touchpoint. A true assessment of ROI at each part of the customer journey and actionable insights as a result.
For those that can and do execute well on multi-touch attribution, as well as other analytical insights, the rewards are high. The Digital Trends 2020 report suggests that companies confident in measuring their ROI for digital marketing programs are more than twice as likely to have exceeded their 2017 business goals by a margin of 22%. At Fospha, we find that our clients are, on average, able to eliminate 50% of wasted spend in paid search and improve cross-channel marketing ROI by 30%, all of which can have a knock-on effect on customer lifetime value. With digital marketing costs undoubtedly set to continue rising, multi-touch attribution and understanding the ROI of every dollar spent at each part of the journey has never been more critical.