The attribution illusion: which channel gives the highest ROI?

The consumers’ path to purchase has grown increasingly complex, with the vast majority of touchpoints occurring over multiple sessions and multiple marketing channels. So how can you effectively attribute value to each channel?

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Feb 01, 2018

Consider the sheer number of digital marketing channels most brands use: organic search, paid search, referral, social media, email marketing… The path to purchase is anything but linear. Touchpoints now happen over multiple sessions and multiple marketing channels.

In this increasingly complex world, how do you attribute value to each channel? It’s vital to measure effectiveness, but harder to track a customer’s full journey, leaving too many business marketing blind. And if you can’t see clearly, you can’t answer the crucial question: which channel gives the highest ROI?

Measuring the effectiveness of marketing channels has always been a necessity. But with the rise of multi-channel marketing – and the growing split between online, offline, earned and paid media – tracking a customer’s full journey is getting even more complicated.

Take customer A, who wants to buy makeup.

  • A searches for ‘bronzer’ on Google. Your brand pops up first (courtesy of your PPC campaign), and A clicks through and has a browse on your site, eventually deciding not to purchase. This is A’s first exposure to your brand.
  • Because of this, a few days later, a targeted Facebook ad pops up on A’s newsfeed. A clicks through to browse your website, and even adds products to the cart, but eventually decides not to purchase.
  • Finally, A enters your website after a direct search and purchases products.

Three touchpoints in the path to purchase. But which one is ultimately responsible for A’s decision to buy? And which one has been given most worth for the money spent on it?

You could argue the PPC is worthless because it didn’t lead to an immediate purchase. But on the other hand, there are those (not least Google AdWords) who’ll tell you that spending money here boosts brand awareness.

So where should you start, and where do you want to finish?

Relationships matter

Done right, attribution modelling can give holistic, accurate information about the financial return your activities are delivering. Once you know what’s really happening, you can target your budget to deliver better value to your business and your customers.

But many off-the-shelf attribution models don’t actually do this. If you want to see how they work (or don’t…), a simple soccer game does the job.

Last Click: This model attributes 100% of the goal to the last player who interacted with the ball.

So, Player F gets 100>#/b### of the value.

First Click: This model attributes 100% of the goal to the first player that interacted with the ball.

So, Player A gets 100>#/b### of the value. 

Time Decay: The players who touched the ball last get the largest amount of credit attributed to them, whilst the players further back get smaller values.

E.g. Player A gets 2.5>#/b### of the value, B gets 4.5%, C is attributed 8%, D gets 10>#/b###, E gets 25>#/b###, and player F gets 50>#/b### of the value assigned to them.

Linear: This model gives equal attribution to each player on the path to the goal i.e. every player who interacted with the ball is given equal credit.

E.g. All players are attributed 0.16>#/b### of the credit for the goal.

Position Based: The first and last players (A and F) are credited with 40>#/b### of the goal, and all other players (B, C, D and E) share the remaining 20%.

Every attribution model tells you something about individual players. But in a game, it’s the relationship between players that’s key. Each game is made up of thousands of touches, and we only know the value of an individual player by knowing what would happen if we took all the other players out.

Doing it right: data-driven multi-channel attribution

Multi-channel attribution understands customer lifetime value through “nonline” – multi-device, non-linear and online and offline – analytics. It identifies a set of unique user events that contribute to a conversion and assigns the actual value and cost to each of these events.

Now, you can see the real revenue generated from individual channels, and that means you can understand whether they’re cost effective.

What makes multi-channel attribution so impressive is how it drills down to granular detail. Rather than relying on proxy measures, you can see how your costs and revenue interact at every point of the path to purchase.

Take our soccer game. A multi-channel attribution model understands the relationship between each player, and how they each contributed to the final goal. It can also account for any offline influences on the team, like the manager’s chosen strategy, or team financing.

And when it comes to customer A, multi-channel attribution will take into account the relationship between all three touchpoints, and assign revenue accordingly.

The knock-on effect

Compare data-driven, multi-channel attribution to current off-the-shelf models like first- and last-click attribution and it’s clear that the standard solutions aren’t giving anywhere near as much information as businesses need.

Without granular detail and a proper understanding of the relationships between touchpoints, you could find yourself making decisions based on partial information. Unless you have the whole picture, you’re betting your campaign and your budget on a guessing game: if you changed your PPC campaign, how would it affect Customer A’s natural search and purchase decision? If you took Ronaldo off the pitch, how many goals would your team score?

A 2011 study by Forrester and iProspect showed that customers who see a brand’s display ads are more likely to search for that brand and/or category afterwards.

Like most marketers, you know that display advertising is better for brand awareness than for direct conversions. But does your attribution model fully reflect that reality?

A multi-channel attribution model takes the guesswork out of your decisions. It emphasizes the interplay between channels instead of choosing an arbitrary measure of credit. That means you can focus your attention on the things that really matter.

Start looking at situations in a multi-channel way and you’ll see what’s really pushing your customers through the purchase funnel.  They live in a world of multi-channel, multi-device journeys. Shouldn’t your attribution model do the same?

This is Part 1 in a series of three articles about how data-driven attribution can work for your marketing campaigns. Read on:

Part 2: Clearing the fence: overcoming the barriers to successful attribution

Part 3: Achieving a data-driven attribution model: the three ‘must-knows’

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