Instagram, Twitter, and YouTube. Which of these platforms are most effective at obtaining your customers? Your marketing attribution model is the key to knowing the answer.
Since the average customer uses nine different channels to communicate with a business, marketers can benefit significantly from an attribution model.
Before diving into the suitable model for you, let’s answer the question: What’s a marketing attribution model?
- Marketing attribution analyzes marketing tactics to determine which method contributes to sales or conversions.
- Benefits of employing a marketing attribution model include higher return on investment, personalized customer experiences, improved product functionality and an optimized marketing budget.
- Six marketing attribution models for consideration are first interaction, last interaction, last non-direct click, linear, time-decay and position-based.
What is marketing attribution modeling?
Marketing attribution analyzes marketing tactics to determine which contributes to sales or conversions. Since there are many touchpoints on a buyer’s journey, a marketing attribution’s goal is to decide which interaction had the most significant impact on their decision to convert or take the desired action.
To illustrate: Sue sees a banner ad on a website for summer dresses. She clicks on the ad and subscribes to the newsletter in exchange for a 20% discount on her first purchase. Sue browses around the site and leaves without buying an item. A few days later, Sue receives an email reminding her about the product, and she purchases a dress after clicking on a link in the email.
So, which touchpoint had the desired outcome? Was it the banner ad on the website or the email reminder? Your business’s marketing attribution model makes that determination.
Why is having a marketing attribution model important?
There are at least four advantages to having a marketing attribution model:
- Return on investment (ROI) – The proper attribution model enables businesses to connect with their target buyers at the right time with an engaging message. The result is a higher conversion rate and ROI.
- Personalization – Marketing attribution data provides marketers insight into the messages and channels preferred by each customer for more successful targeting throughout the buyer journey.
- Product enhancements – Through attribution data, companies can better understand their shoppers’ needs and product pain points. Businesses consider this information when making upgrades or enhancements to their products.
- Marketing budget – Marketers optimize their expenditure by allocating their budget towards the top-performing digital channels.
6 marketing attribution models to consider
Marketing attribution models fall under two categories: single-touch and multi-touch. The first two model types we will consider are within the single-touch category. The remaining four are multi-touch.
We’ll provide the explanation and the advantages of each model type. You can evaluate the model type most suited for your business.
1. First interaction
Explanation: Also known as “first-touch” or “first-click,” these models award all the points for each conversion to the first digital channel a customer interacts with for your business. It doesn’t matter if the customer interacts with additional touchpoints before ultimately performing the desired action (e.g., a product purchase or signing up for a paid monthly subscription).
Advantages: These attribution models are simple. Marketers can see where to find customers at the top of the sales funnel.
2. Last interaction
Explanation: Similar to the first interaction, these attribution models award all the points for conversion to a single digital channel. In this case, it’s the customer’s last interaction with your company before converting.
Advantage: Last interaction attribution is also simple to implement and gives businesses a fundamental insight into their customers’ behaviors.
Explanation: Also called algorithmic attribution models, data-driven attribution uses machine learning to automatically give partial credit to the multiple interactions that lead to a conversion. The caveat is that they are most effective with high interaction and conversion numbers. For instance, Google Analytics requires at least 600 conversions each month to enable this feature. Also, this model’s inner workings aren’t as apparent as the others.
Advantage: This is the most reliable attribution model if your business has high traffic.
Explanation: As part of the multi-touch category of models, this attribution values each customer interaction with your business on their buyer journey and assigns the points equally. If a customer first interacts with an ad on social, then a display ad and finally a paid search placement before they make a purchase, then the model divides the points for that conversion evenly between the three touchpoints.
Advantage: Linear attribution is a helpful way to show the value of a multichannel or multi-touch marketing strategy.
Explanation: Time-decay attribution adds a layer of complexity to the linear model by adding more points to each touchpoint closer to a conversion. The thought behind this approach is that those channels significantly impacted the decision to purchase. So, as a rudimentary example, if the social media ad were the customer’s first interaction, it would get one point. The second interaction, say, an email ad, gets two points. The last interaction, a banner ad, would earn three points.
Advantage: This model is ideal for companies with high-consideration products (e.g., a car, a weight-loss program). Here, establishing and building a relationship with the customer over time is a crucial aspect of the sales cycle.
Explanation: The position-based attribution model assigns the highest points to the first and the last interaction in the buyer journey. Going back to our rudimentary example and calculating by percentage, the social media ad would receive 40% of the credit. The email ad would earn 20%, and the banner ad would receive 40% of the credit.
Advantage: This model type accurately provides data for the top and bottom of the sales funnel, both essential for businesses with lengthier sales cycles. It also shows the value of other marketing strategies that keep prospects engaged or renew interest.
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