Marketers have more options than ever to generate a return on their investments (ROI). From organic search and social media to sponsorships, PPC, and affiliate marketing, marketers spread their resources across multiple platforms to get the best results.
With so many strategies to bank on, how do marketers decide which approach is generating the most cash flow, which is paying for themselves, and which ones they should outright ditch?
According to research conducted by Pyxl, over 80% of marketing teams are adopting attribution marketing methods to measure the effectiveness of their marketing strategies in 2021.
Attribution is the core of measuring the success of digital marketing campaigns.
Certainly, companies have always tracked and valued their marketing efforts, but only recently have marketers been able to truly verify the impact of their marketing initiatives.
What is Marketing Attribution
Marketing attribution is a way to understand which channels are driving customer acquisition with the most efficiency. It helps marketers design and execute more effective marketing campaigns by optimizing budgets and identifying the most effective customer conversion drivers.
Why Attribution Matters to Marketers
One problem that all marketers face is analyzing the effectiveness of campaigns. Nothing is more important to marketers than analytics.
But with so many channels to use, it can seem confusing to know which ones will yield results?
Is the spike in traffic to your site due to a Facebook ad or a piece of content you recently published? Which of your marketing channels resulted in a significant rise in targeted traffic, leads, sales, and revenue to your business?
Without proper attribution, you’d just look at vanity metrics like the number of shares or comments.
To gauge the success of a marketing campaign, you need to look at how many people interact with your content. Then, dig deeper by looking at how those interactions came about.
With marketing attribution, you can track what marketing channels are driving the most conversions for your business. That way, you can make sure to keep doing what’s working.
Other benefits include:
1. Narrow down the marketing budget.
Investing in marketing at the wrong time can leave your brand with an overspent budget with limited return. By applying analytics, you can not only find out which of your marketing efforts generate the best customer traffic but also optimize all of your future marketing efforts.
Assume that a paid media advertisement generated money for the company and had high conversion rates. In that scenario, you should set aside more money in the future for paid media promotions.
2. Increase ROI.
Marketing attribution sheds light on what is working and helps focus your mind on the most cost-efficient strategies. Effective attribution allows marketers to target the right customer at the right time with the right message, resulting in higher conversions and marketing ROI.
3. Improve personalization.
Customer behavioral data is the key to increasing sales. Marketers use attribution to understand what messaging, and channels drive high-converting customer actions. They also use data to guide their marketing decision.
4. Understand customers better.
Knowing the return on investment of your marketing channels will help you better understand how to target particular markets at the right time with the right content marketing strategy. Focus on questions like:
- What platforms do my contacts prefer?
- What kind of content is more likely to result in high-quality conversions?
- How are my contacts discovering my content?
For example, after tracking your results for a few months, you notice most of your leads are coming from LinkedIn. This may indicate that you should focus more time and energy on posting and nurturing relationships on LinkedIn and also try new approaches such as LinkedIn ads.
What are the Different Types of Attribution Models
There is no such thing as a one-size-fits-all attribution model for all businesses. So, before you go off on your own, you can educate yourself on the various forms of attribution models.
The list below details the commonly used attribution models. Let’s see how they work and which is the best one for your campaign.
Single-Touch Attribution Model
1. First-click attribution model
The first-touch attribution assumes that the customer decided to convert after seeing the first advertisement. Regardless of subsequent messaging, this model gives full credit to the first touchpoint—which is why the first click matters the most here.
For example, I came across this piece of ad on Facebook from Shopify. You immediately loved it and decided to click on it to read through the landing page. After a few moments of hoving over what’s on the page, you decide to download the gated resource.
Since you have made up your mind, you do not mind entering your email address and other info.
A few days later, a contact person from the sales team at Shopify calls you up and pitches a product that will make your life easier. You are satisfied with the product demo and purchase the product.
Which channel gets the credit here for conversion? According to the first-click attribution model, the credit will go to the original Facebook Ad.
2. Last-Touch Attribution
Last-touch attribution, on the other hand, offers complete credit to the last touchpoint a customer communicated with before making a purchase, disregarding previous engagements.
This model makes it easy to see where the bottom-of-the-funnel transitions are taking place.
For example, when you send out emails like this, you need to know what’s happening to them. And as a marketer, having access to that kind of information is priceless.
After all, if you don’t know which channels are closing the most deals and bringing in the most money, you can’t use them to bring in more money.
Multi-Touch Attribution Model
1. Linear Attribution Model
A Linear Attribution Model records each touch-point that led to a purchase. Each of these touchpoints is given equal credits for having driven the conversion.
For example, if someone does an organic search about your product and lands on your blog post, subscribe to your email newsletter. Later, when they see a Facebook ad, they do not shy away from visiting your website as direct traffic. But they still aren’t convinced yet to buy.
Some days later, they come across a display ad, click through to your website, and this time, they convert. In this model, all the touchpoints like organic search, email, Facebook Ads, direct traffic, and display ads—split the credit equally.
2. Position-Based Attribution Model
The position-based attribution model recognizes the fact that some touchpoints have a greater effect on the road to purchase than others.
The first contact and the lead conversion touch, in particular, are each given 40% of the credit for the lead. The remaining 20% is split between the touchpoints used between the first and lead conversion touchpoints.
For example, you searched for “solitaire game” on Google. You click on solitaired.com, land on the page, and browse around the website. A few days later, you come across an Instagram ad and an email sequence. Eventually, you convert because of the ad.
Under this model, Google search and the display ad get the most traffic. Everything in between only gets only a small amount.
3. Time Decay Model
The time decay model also gives different values to each touchpoint along the path to purchase. This model provides the touchpoints that were used closer to the conversion more value than those used earlier in the process, suggesting that the latter had a greater effect on the sale.
To put it another way, the last touchpoint gets the most credit, while the first receives the least.
This attribution model works well for determining which channels drive conversions regularly and which are mainly top-of-funnel channels.
4. W-Shaped Attribution Model
The W-shaped attribution model uses the same principle as the position-based attribution model, but it incorporates an additional core touchpoint – the opportunity stage.
The first touch, lead-creation touch, and deal-creation touch each earn 30% attribution, with the remaining 10% of the deal spread equally around the middle touches in between.
Conclusion
There are many ways to figure out which channels are the best investments for your marketing budget. Each of these methodologies will answer a different question about what worked and what didn’t while helping you narrow down your optimal marketing strategy.
Each model provides an answer to a different question in your click attribution and is critical to the success of your marketing mix.
At the end of the day, there is no right model.
The only attribution model that is right for your business is the one that provides you with useful data to help you improve your ROI.
Which model are you using as part of your marketing plan? Share your thoughts in the comment section below.
