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Multitouch attribution model  white-paper-final Multitouch attribution model white-paper-final Document Transcript

  • www.SlingshotSEO.comWhitepaperValuing Conversions Through Multi-TouchAttributionDetermine The True Value of Each Marketing ChannelResearch by Slingshot SEO, Inc. using client data from Jan. – Dec. 2011Executive SummaryIn order to measure the overall effect of online marketing campaigns, one must be able to determine the true value of eachmarketing channel: organic search, paid advertising, email marketing, direct visits, and referrals. Typically, a user will interactwith a website in a number of different ways using a combination of these channels over the course of a few days or evenweeks. This behavior can make it difficult to evaluate which channels are the most effective in influencing the user to make apurchase and which channels had little or no impact on the user.This study attempts to find the true value of each online marketing channel through a flat multi-touch attribution model. Aflat multi-touch attribution model is a way of assigning value equally to all interactions with a given website before aconversion takes place. As a marketer, Slingshot SEO recommends considering the influence of every interaction leading to aconversion, not just the last interaction.The tools to analyze each interaction leading to a conversion are available in Google Analytics using the Multi-Channel Funnelsfeature, as seen below. We have analyzed over 23 million multiple-interaction conversions across 30 domains, which includelarge retailers and service providers.For all 30 websites, Organic Search was the most undervalued channel. This document discusses the advantages andimplementation of a flat multi-touch model and presents the research findings for these 30 websites.In this document, you will find: -The Advantages of Using a Multi-Touch Model -How To Implement a Multi-Touch Model -Our Research Findings© Slingshot SEO, Inc. All Rights Reserved.
  • www.SlingshotSEO.comThe Advantages of Using a Multi-Touch ModelWhat is a model?A model is a compromise between simplicity and reality. It is too simple to credit the last referring campaign with aconversion, as marketers often do by default. The reality is that users will interact with a website a few times beforeconverting. Therefore, it would be helpful for marketers to look at all paths leading to a single conversion, not just the lastinteraction. This can be done using a flat multi-touch attribution model. Listed below are some of the issues betweensimplicity and reality that marketers often overlook, and why a multi-touch model is an effective compromise.Simplicity:LAST-TOUCH ATTRIBUTION:By default, Google Analytics credits each conversion to the last referring campaign/marketing channel.Below is a series of interactions leading to a conversion:Organic Search > Referral > Social Network > Email > Direct Visit ($100) = $100 ConversionThe "direct visit" gets all credit for the conversion.This model assumes that the final marketing event was the only influence on the user and ignores the previous paths.However, users often interact with a website several times before converting, and are influenced by each channel.FIRST-TOUCH ATTRIBUTION:You may want to attribute conversions to the first referring campaign/marketing channel.Below is the same series of interactions leading to a conversion:Organic Search ($100) > Referral > Social Network > Email > Direct Visit = $100 ConversionIn this case, the "organic search" gets credit for the conversion.This model assumes the first interaction was the main influence on the user and ignores the interactions that follow.However, nurturing potential customers is just as important as grabbing their attention in the first place. It may take anassisting interaction like a social network or a coupon offered through an email to influence a user to make a purchase.Reality:If “Last-Touch” and “First-Touch” are too simple to prioritize different marketing events, then how could a marketer value eachchannel? One way would be to examine each individual conversion and identify which channel was the most influential,either by average time on site, pages/visit, or other ways of measuring how the user interacted with the site. The goal wouldbe to find which channel or combination of channels convinced the user to make a purchase.Examining each conversion individually would be a long and arduous process, and there is no way to know which channelwas the true reason for each conversion. Assigning values to each path individually would be subjective and problematicbecause users respond differently to each marketing channel.A Compromise Between Simplicity and Reality:MULTI-TOUCH ATTRIBUTIONIn a flat multi-touch attribution model, we take the value of each conversion and divide it out equally among each channelin the path.For example, in the following series of interactions leading to a conversion, each of the five interactions is credited with anequal portion of the conversion value.© Slingshot SEO, Inc. All Rights Reserved. 2
  • www.SlingshotSEO.comOrganic Search ($20) > Referral ($20) > Social Network ($20) > Email ($20) > Direct ($20) = $100 ConversionIn this case, each channel receives the conversion value divided by the number of interactions in the chain.The $20 credited to each path is referred to as an “Attributed Conversion.”This model assumes that each interaction has equal influence on the user and that each interaction plays a role in any givenconversion. In reality, each interaction may not have equal influence, but since we cannot easily quantify the intrinsic valueof each channel, we must acknowledge that it does have some influence over the user. This is the main advantage of a flatmulti-touch model over other models.While we may want to weight the first and last interactions more than the other paths, as Econsultancy points out in aninsightful post from March 2011, one must realize that “Attributed Conversions give us a sense of the ‘influence’ of a channelsince, if a channel appears often in paths where users are exposed to 20 events, you can say it has less value than one thatappears in paths where there were only two or three.”1That sense of “true influence” is what the multi-touch model was designed to achieve.Lexin Lin and Xuhui Shao show in their white paper, Data-driven Multi-touch Attribution Models, that more complex modelscan also be implemented effectively. Their study uses a bivariate metric, which evaluates multi-touch using a baggedlogistic regression and probabilistic models. It is considered a major contribution to the field and is highly recommendedreading.2How To Implement a Multi-Touch ModelGoogle Analytics (GA) provides the ability to track how visitors interact with a site before a conversion in its new feature,Multi-Channel Funnels. In order to apply the flat multi-touch model to conversion data, make sure the data currently beingtracking is valuable and accurate.Define conversions that reflect what you want a visitor to ultimately achieve on your website. It should be an actionableinsight that adds increased value to your business.Examples of possible goals to set up in order to track conversions:-eCommerce transactions/purchases-Newsletter subscriptions-Free trial subscriptions-Email list subscriptions-Upgrades-Quote requests-Downloads-Watching a video about a service/product-Viewing 5+ pages on the website-Viewing 10+ pages on the website-Facebook Likes / Google +1s-Job application forms-Contact formsWhen eCommerce data is linked to GA, the customer transaction costs (conversion values) will be assigned to eachtransaction. It would be helpful to assign conversion values to non-eCommerce goals as well.Each of these goals will be more valuable to some websites than others, so it is important to determine which add the mostvalue to your business.Once you set up meaningful goals and have a time frame with enough data, you can analyze conversion paths throughMulti-Channel Funnels.1 http://econsultancy.com/us/blog/7229-social-media-and-seo-massively-undervalued-study 2 The study is available for download here: http://www.turn.com/news/solving-the-multi-touch-attribution-problem/© Slingshot SEO, Inc. All Rights Reserved. 3
  • www.SlingshotSEO.comThis is located under Standard Reporting > Conversions > Multi-Channel Funnels > Top Conversion Paths. From here, applyconversion segments to find the number of conversions for last-touch, first-touch, or any-touch across all channels. Foradditional help with Google Analytics, please see our guide http://www.slingshotseo.com/resources/guides/how-to-use-google-analytics/The goal is to compare conversions (last-touch) with attributed conversions (flat multi-touch) for a specific channel.Basic channel groupings from Google Analytics include: organic, paid advertising, referral, social network, email, and direct.This comparison will help determine whether or not that particular channel is undervalued or overvalued.Below is a brief overview on how to find the value of each channel.For this walk-through, determine whether or not Organic Visits are undervalued or overvalued.1. Finding Conversions (last-touch)-This is simple. Create a new conversion segment specifying Include Last Interaction, from: Medium containing organic-Then select a time range and apply the segment.-Now record the total Conversion Value for this Last-Touch Organic segment. If there are no conversion values assigned, then record the number of total conversions.2. Finding Attributed Conversions (flat multi-touch)-This is the tricky part. First, create a conversion segment specifying Include Any Interaction, from: Medium containing organic -Next, export the CSV into Excel.There are three columns: Basic Channel Grouping Path, Conversions, and Conversion Values.-For each path, the task is to divide each conversion value and attribute it to each channel, depending on how many times it appears in that path.-One way would be to delimit the first column, which breaks out each interaction into a single column. This can be used to apply =COUNTIF() functions to determine the number of Organic interactions in that path.© Slingshot SEO, Inc. All Rights Reserved. 4
  • www.SlingshotSEO.com-Determine the value of those Attributed Conversions that belong to Organic in each path and sum those values. This is the total amount Attributed Conversions for Organic Search.-These steps are reiterated below:Download the CSV to get three columns of data. Basic Channel Grouping Conversions Conversion Value Organic Search > Direct 100 $200,000Organic Search > 50 $9,000Organic Search > Direct Delimit the first column. Basic Channel Grouping Conversions Conversion Value Organic Search > Direct 100 $200,000 Organic Search Direct Organic Search > 50 $9,000 Organic Search Organic Search Direct Organic Search > DirectFor each row, determine the number of interactions in each path using COUNTIF statements. Next, determine how manytimes “Organic Search” appeared in each path. Determine what each interaction is worth for each path. Basic Channel Conversions Conversion # of Organic # of Total Each Interaction Attributed Grouping Value Search Interactions is Worth: Conversions to Organic Organic Search > 100 $200,000 1 2 $100,000 $100,000 Direct Organic Search > 50 $9,000 2 3 $3,000 $6,000 Organic Search > DirectFor the first path, each interaction is worth $100,000, so "organic search" gets credit for $100,000 because it appears once inthe path.For the second path, each interaction is worth $3,000, so "organic search" gets credit for $6,000 because it appears twice inthe path.Sum the entire column for “Attributed Conversions to Organic” to yield $106,000.This is the amount of Attributed Conversions used to compare with Last-Touch Conversions.Divide (Attributed Conversions) by (Last-Touch Conversions) to determine how overvalued or undervalued that channel is.If "organic search" had 1,500 Attributed Conversions and 1,000 Conversions (Last-Touch), then "organic search" isundervalued and should be worth 50% more than its current value.This is useful because once attributed conversions have been determined for every available channel, a marketer canprioritize these events based on all interactions, not just the last-touch.© Slingshot SEO, Inc. All Rights Reserved. 5
  • www.SlingshotSEO.comResearch FindingsSlingshot SEO conducted this multi-touch attribution study on 30 of our largest clients for the time period of Januarythrough December 2011.In order for a website to qualify for the study, it must have had Google Analytics and meaningful goals set up for 2011. Ameaningful goal is an actionable insight that adds increased value to a business.For privacy reasons, we have removed the client’s name and domain and instead listed a general category for each of the 30businesses included in the study.Below is an example of our findings for one “Retailers & General Merchandise” website in 2011:Organic SearchAttributed Conversions (multi-touch): 4,492,548Conversions (last-touch): 3,916,743A difference of 114.70%Indicates Organic Search was undervalued and would be increased by 14.70% in a flat Multi-Touch model.Non-Branded Organic SearchAttributed Conversions (multi-touch): 257,058Conversions (last-touch): 217,429A difference of 118.23%Indicates Non-Branded Organic Search was undervalued and would be increased by 18.23% in a flat Multi-Touch model.Direct VisitsAttributed Conversions (multi-touch): 7,592,940Conversions (last-touch): 8,305,468A difference of -108.58%Indicates Direct Visits were overvalued and would be decreased by 8.58% in a flat Multi-Touch model.Paid AdvertisingAttributed Conversions (multi-touch): 1,343,804Conversions (last-touch): 1,102,729A difference of 121.86%Indicates Paid Advertising was undervalued and would be increased by 21.86% in a flat Multi-Touch model.Referral VisitsAttributed Conversions (multi-touch): 982,419Conversions (last-touch): 862,349A difference of 113.92%Indicates Referral Visits were undervalued and would be increased by 13.92% in a flat Multi-Touch model.The table below shows the percent increase in value when considering attributed conversions as opposed to last-touchconversions.Percentages calculated by [Attributed Conversions / Last-Touch Conversions] – 1A positive percentage indicates that the channel was undervalued.A negative percentage indicates that the channel was overvalued. The following channels are shown in Table 1.1:"organic search", non-branded organic search", "direct visits", "paid advertising" (CPC), and "referral visits" (including social & email referrals).© Slingshot SEO, Inc. All Rights Reserved. 6
  • www.SlingshotSEO.comTable 1.1 – Multi-Touch Attribution AnalysisPercentages calculated by [Attributed Conversions / Last-Touch Conversions] – 1A positive % indicates that the channel is undervaluedA negative % indicates that the channel is overvalued Client Category Organic Non-Branded Organic Direct Paid Referral Business & Industrial 29.57% 31.54% -35.74% 26.31% 8.75% Business & Industrial 24.34% 54.72% -12.75% 18.35% 25.93% Business & Industrial 1.17% 1.17% -10.93% 14.20% 3.16% Computers & Consumer Electronics 16.42% 25.66% -9.63% - -2.86% Computers & Consumer Electronics 10.70% 10.98% -16.73% - 22.51% Computers & Consumer Electronics 3.24% 23.50% -3.14% 22.72% -30.63% Finance & Insurance 19.76% 66.92% -0.77% -22.60% -0.11% Finance & Insurance 9.90% 13.03% -1.83% - 0.25% Health & Wellness 21.11% 23.57% -22.88% 0.23% -8.68% Health & Wellness 4.72% 5.44% -24.58% - 11.92% Home & Garden 42.09% 51.64% -6.78% 96.67% -52.53% Home & Garden 27.65% 31.91% -27.99% 22.60% -8.00% Home & Garden 25.44% 27.48% -14.46% 19.35% 4.87% Home & Garden 19.74% 25.02% -28.20% 13.60% 34.66% Home & Garden 19.37% 20.41% -28.58% 11.18% 32.09% Home & Garden 12.00% 13.00% -29.71% 5.69% 15.10% Home & Garden 10.97% 14.76% -15.21% 11.54% 15.50% Home & Garden 8.33% 16.95% -10.80% -2.86% 15.23% Occasions & Gifts 7.73% 5.84% -4.57% 32.93% 50.65% Retailers & General Merchandise 77.25% 44.74% -26.19% 24.34% -52.30% Retailers & General Merchandise 31.10% 36.51% -25.08% 71.28% -9.92% Retailers & General Merchandise 26.99% 81.59% -29.90% 76.88% -23.15% Retailers & General Merchandise 20.21% 20.21% -8.41% 7.31% 16.31% Retailers & General Merchandise 14.70% 18.23% -8.58% 21.86% 13.92% Retailers & General Merchandise 13.07% 13.07% -6.71% -5.23% 3.77% Retailers & General Merchandise 12.61% 26.01% -15.56% - 19.93% Retailers & General Merchandise 12.28% 19.37% -7.79% - 2.68% Retailers & General Merchandise 11.95% 18.42% -15.49% - -11.45% Retailers & General Merchandise 7.71% 9.10% -12.93% 12.15% 16.97% Retailers & General Merchandise 6.84% 14.51% -11.75% 11.92% 6.24%Remark: For all 30 websites, "organic search" and "non-branded organic search" were being undervalued in 2011. Multi-touch attributionshowed that "organic search" should have been worth as much as 77.25% more than previously thought, and "non-branded organic"should have been worth as much as 81.59% more.Also, for all 30 websites, "direct visits" were being overvalued in 2011. "direct visits" should have been worth as much as 35.74% less thanpreviously thought.© Slingshot SEO, Inc. All Rights Reserved. 7
  • www.SlingshotSEO.comTable 1.2 – Multi-Touch Attribution Most Undervalued & Overvalued Channels Client No. Client Category Most Undervalued Most Overvalued 1 Business & Industrial Non-Branded Organic Direct 2 Business & Industrial Non-Branded Organic Direct 3 Business & Industrial Paid Advertising Direct 4 Computers & Consumer Electronics Non-Branded Organic Direct 5 Computers & Consumer Electronics Referrals Direct 6 Computers & Consumer Electronics Non-Branded Organic Referrals 7 Finance & Insurance Non-Branded Organic Paid Advertising 8 Finance & Insurance Non-Branded Organic Direct 9 Health & Wellness Non-Branded Organic Direct 10 Health & Wellness Referrals Direct 11 Home & Garden Paid Advertising Referrals 12 Home & Garden Non-Branded Organic Direct 13 Home & Garden Non-Branded Organic Direct 14 Home & Garden Referrals Direct 15 Home & Garden Referrals Direct 16 Home & Garden Referrals Direct 17 Home & Garden Referrals Direct 18 Home & Garden Non-Branded Organic Direct 19 Occasions & Gifts Referrals Direct 20 Retailers & General Merchandise Organic Referrals 21 Retailers & General Merchandise Paid Advertising Direct 22 Retailers & General Merchandise Non-Branded Organic Direct 23 Retailers & General Merchandise Organic Direct 24 Retailers & General Merchandise Paid Advertising Direct 25 Retailers & General Merchandise Organic Direct 26 Retailers & General Merchandise Non-Branded Organic Direct 27 Retailers & General Merchandise Non-Branded Organic Direct 28 Retailers & General Merchandise Non-Branded Organic Direct 29 Retailers & General Merchandise Referrals Direct 30 Retailers & General Merchandise Non-Branded Organic Direct Remark: The most undervalued channel was typically "non-branded organic searches", while the most overvalued channel was typically"direct visits".© Slingshot SEO, Inc. All Rights Reserved. 8
  • www.SlingshotSEO.comTable 2.1 – Top 20 Most Common Conversion Paths (with 2 or more interactions)Over 23.5 million multiple-step conversions were analyzed in this study 1. Organic Search > Organic Search 2. Organic Search > Organic Search > Organic Search 3. Paid Advertising > Paid Advertising 4. Direct > Direct 5. Organic Search > Organic Search > Organic Search > Organic Search 6. Referral > Referral 7. Paid Advertising > Paid Advertising > Paid Advertising 8. Organic Search > Direct 9. Direct > Direct > Direct 10. Organic Search > Organic Search > Organic Search > Organic Search > Organic Search 11. Referral > Referral > Referral 12. Paid Advertising > Paid Advertising > Paid Advertising > Paid Advertising 13. Direct > Organic Search 14. Referral > Referral > Referral > Referral 15. Organic Search > Organic Search > Organic Search > Organic Search > Organic Search > Organic Search 16. Direct > Direct > Direct > Direct 17. Referral > Referral > Referral > Referral > Referral 18. Referral > Organic Search 19. Paid Advertising > Paid Advertising > Paid Advertising > Paid Advertising > Paid Advertising 20. Paid Advertising > DirectRemark: This table was included because it demonstrates the “quick-and-easy” way of looking at conversions, but it does not necessarilyreveal the user behavior patterns behind the scenes concerning which channels are the most influential. The table is helpful because itoutlines which overall paths are most likely to be taken by a user without having to apply a multi-touch model to break out the valuesbetween each individual channel. Users take a number of different paths before converting, and as a result, there are many unique paths that would be overlooked since they are not in the top 20 most common paths. Just looking at this table would not reveal that "direct visits" are being overvalued or that"organic search" is being undervalued. This speaks to the need for the quantitative analysis from a multi-touch model to prioritize channels more effectively.© Slingshot SEO, Inc. All Rights Reserved. 9
  • www.SlingshotSEO.comDiscussion/Additional Remarks For these 30 businesses in 2011, "direct visits" were getting more credit for conversions under a last-touch model, as they were often the last interaction before a conversion. As a result, other channels like "organic search", "paid advertising", and"referrals" were typically undervalued.Why would organic search be undervalued? Organic searches drive sales/conversions from the top of the funnel as usersare doing initial research. This affects the organic channel as a whole, but also conversion rates for generic organickeywords. On average, users in this study took 2.79 interactions before converting. The last step before a conversion wastypically a direct visit to the site or a branded keyword search.The “upper funnel” keywords may not have high conversion rates, but their goal is to capture as many initial research queriesas possible so that users will visit the site, do their research, find the product that best fits their needs, compare prices, andreturn later through a direct visit. This behavior helps explain why looking at conversion rates for a generic keyword can bemisleading because the top-level keywords are not getting credit for those conversions. The influence of organic searchshould not be limited to conversion rates and traffic numbers. Attributed Conversions are just as important to analyze.The Multi-Touch Attribution model should be used to value conversions, determine the most influential paths, and prioritizedifferent marketing channels. Some marketers may prefer a model that weights the first and last conversions more than theassisting interactions. No matter which model is chosen, valuing conversions should be part of ROI-focused discussionswith clients and a key focus for all marketers.© Slingshot SEO, Inc. All Rights Reserved. 10
  • www.SlingshotSEO.comStudy ContributorsStudy written and conducted by Evan Fishkin Head of Research and Development Casey Szulc StatisticianQuestions & Comments can be sent to research@slingshotseo.comSlingshot SEO8900 Keystone CrossingSuite 100Indianapolis, IN 46240http://www.slingshotseo.com317.575.8852 Interested in More? Contact Daren Tomey, SVP Corporate Development at Slingshot SEO to discover how your company can dominate online rankings. D.Tomey@SlingshotSEO.com Office | 317.575.8852 Mobile | 317.319.3840 Twitter | @darentomey| @SlingshotSEO© Slingshot SEO, Inc. All Rights Reserved. 11