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How To Guide - Marketing Attribution
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How To Guide - Marketing Attribution

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Marketers have long pursued a goal that was once presumed unattainable: knowing with certainty what the impact is of any promotional or advertising spending. With the growth of digital marketing......

Marketers have long pursued a goal that was once presumed unattainable: knowing with certainty what the impact is of any promotional or advertising spending. With the growth of digital marketing in the past two decades, marketers have better analytic data about clicks, views and other buyer behaviours that have a relationship to conversion. The problem, however, is not one of simply measuring clicks or views: it is understanding and measuring the entire journey of a buyer as they travel from initial awareness to conversion. Specifically, how many promotional milestones or touch points did the buyer encounter? How influential was each one? Marketers want to know, because precise information about the influence and effectiveness of each message, communication or ad allows unprecedented optimization of each marketing channel. Marketing attribution is the science of understanding the influence of each marketing channel on a buyer’s journey.

This How-To Guide will explain marketing attribution, review various marketing attribution models, discuss when it makes sense to use it, and conclude with an action plan for implementing marketing attribution.

To obtain this document, visit us at http://www.demandmetric.com/register

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  • 1. How-To Guide © 2013 Demand Metric Research Corporation. All Rights Reserved. Marketing Attribution By Jerry Rackley, Chief Analyst September 30, 2013 EXECUTIVE SUMMARY Marketers have long pursued a goal that was once presumed unattainable: knowing with certainty what the impact is of any promotional or advertising spending. With the growth of digital marketing in the past two decades, marketers have better analytic data about clicks, views and other buyer behaviors that have a relationship to conversion. The problem, however, is not one of simply measuring clicks or views: it is understanding and measuring the entire journey of a buyer as they travel from initial awareness to conversion. Specifically, how many promotional milestones or touch points did the buyer encounter? How influential was each one? Marketers want to know, because precise information about the influence and effectiveness of each message, communication or ad allows unprecedented optimization of each marketing channel. Marketing attribution is the science of understanding the influence of each marketing channel on a buyer’s journey. This How-To Guide will explain marketing attribution, review various marketing attribution models, discuss when it makes sense to use it, and conclude with an action plan for implementing marketing attribution. WHAT IS MARKETING ATTRIBUTION? To help illustrate what marketing attribution is, and why it is helpful, consider a typical buyer journey. A buyer has a need for a solution and solicits recommendations from friends through a social media app on her smartphone. This triggers the display of a social media ad, which gets the buyer’s attention. She clicks on the ad and sees an opportunity to download a whitepaper. Completing a short form, she provides her email
  • 2. How-To Guide © 2013 Demand Metric Research Corporation. All Rights Reserved. address where a link to the whitepaper is sent. She reviews the email several days later on her PC, and after reviewing the whitepaper, does an organic search for more information and reviews. Reading a review on a website, she sees a banner ad which she clicks that takes her to a landing page on the vendor’s website. With her information needs satisfied, she clicks the “Buy Now” button on the landing page, places her order in the cart and checks out. This scenario reveals the challenge of and the need for marketing attribution. The key question is, which touch point was most influential in producing the conversion? The challenge in tracking this buyer’s journey is that it occurred across multiple devices and involved multiple touch points. Even just tracing the digital path the buyer followed is difficult. A further complication is that this scenario represents just one of many possible paths a buyer might follow to conversion, each one involving different devices and touch points. Marketing attribution has emerged to help marketers deal with the scenario just described. It’s a process that gives credit to the marketing channels that deserve it, in proportion to each channel’s contribution to the conversion. It allows marketers to more precisely understand the influence and contribution of each channel or touch point. With such an understanding, marketers can make fact-based decisions about how to optimize the entire mix of promotions, communications and ads through all channels. The result of this attribution-driven optimization process is higher conversion rates, increased revenue and potentially shorter sales cycles. MARKETING ATTRIBUTION MODELS Conceptually, marketing attribution is not difficult to understand. The difficulty is implementing it accurately. Some sort of model is needed to implement marketing attribution. In theory, you would use an attribution model that traces the entire customer journey, accounting for both online and offline channels of influence in that path. Full customer path attribution represents the gold standard of models, and it’s a good goal. Getting there is probably an evolutionary process, particularly for firms that are just beginning to experiment with attribution. A number of marketing attribution models exist, ranging from relatively simplistic to more comprehensive. Which model you choose depends on how your customers typically convert, your analytics acumen and a general willingness to invest in a marketing attribution effort.
  • 3. How-To Guide © 2013 Demand Metric Research Corporation. All Rights Reserved. Here are descriptions of some of the common models:  First click. Also known as first-touch, this model essentially credits the entire customer purchase or conversion to the first click, touch or encounter that customer had. For example, the first touch point in a customer buying journey gets 100% attribution for a conversion, even if other touch points may have influenced the customer along the way. If this customer journey is typically extremely short, this model may make sense. In situations where the customer journey is long, involving many other touch points, it makes little sense to attribute everything to the first touch or click. It may hold true that the first touch was the most influential, but if the customer’s path to conversion included other touch points, this model is not recommended.  Last click. Similar to the first click model, except the attribution now goes entirely to the last touch point prior to conversion. The premise of this model is that the last touch point in the customer journey created the conversion, so it therefore gets 100% of the attribution, even if there were many touch points along the way. This model seems to make some sense and it has enjoyed much popularity. But is increasingly falling out of favor because it doesn’t account for any downstream influences that very likely factored in the conversion.  Linear or Equality. Unlike the first click or last click models, the equality model acknowledges multiple touch points in the customer buying journey, assigning equal attribution to each one. For example, if a customer’s journey to conversion involved four different touch points, each one is assigned 25% attribution under this model. Equality is a good evolutionary step up from first or last click models, but it’s not without some flaws, the biggest of which is assuming that all touch points are equally effective and influential, which is rarely the case.  Custom. A custom model is the best option, and the one that most closely approaches true customer path attribution. This model recognizes that each firm or solution has a unique customer path to conversion, and a model is built to provide precise attribution to all the touch points in that path. Implementing a custom model that attributes an accurate percentage for each touch point’s contribution requires more advanced analytics capability and the
  • 4. How-To Guide © 2013 Demand Metric Research Corporation. All Rights Reserved. technology assistance of an attribution vendor. It’s a major improvement over the linear model, because it recognizes that not all touch points are equally influential. The greatest attribution is given to the touch points that have the greatest impact on the phases of the customer journey. If, for example, analytics show that the touch points in the discovery phase of the journey are most impactful, they might receive 60% of the attribution, with the remaining 40% divided in a similar manner across the awareness, consideration and decision phases of the buying process. There are, of course, other attribution models, as well as variations on the ones described here, but these are the most frequently encountered. WHEN DOES MARKETING ATTRIBUTION MAKE SENSE? Marketing attribution is a newer marketing discipline, and marketers who love new approaches or are simply eager to link marketing more closely to revenue generation will eagerly embrace it. Before jumping in to the deep end of the marketing attribution pool, it’s worth assessing your situation to see if it makes sense. Here are some things to consider as you weigh the pros and cons of marketing attribution:  Do you have a culture that will support marketing attribution? This discipline is very data and analytics driven. Perhaps the organizations that need marketing attribution most are those that have long been driven or guided by intuition, opinion or conjecture. However, these organizations are also least prepared for the shift to a data-driven marketing culture. For such organizations, the move to marketing attribution may seem threatening to some and therefore requires care and sensitivity in planning this move.  Do you have a relatively short or simple path to customer conversion? While it is rare, there are some firms whose customers travel a short, streamlined path from awareness to conversion. So short, in fact, that data and analytics needed to understand attribution are enviably simple. If your company is one of the few where first click or last click attribution are one and the same, where few or no other touch points influence the customer journey to conversion, then attribution is easy. Consider yourself fortunate if this is your situation, but also understand that
  • 5. How-To Guide © 2013 Demand Metric Research Corporation. All Rights Reserved. many forces outside your control, including competitors, will likely introduce change into your customers’ journey.  What are you doing with the data you already have? As previously stated, marketing attribution is very data and analytics driven. Chances are, however, that even if you haven’t implemented marketing attribution, you have some marketing analytics data – what are you doing with it? If you’re not already using the analytics data you have to its fullest potential, you’re probably not ready to implement marketing attribution, which will take your analytics processes to the next level. ACTION PLAN: IMPLEMENTING MARKETING ATTRIBUTION Properly implemented, marketing attribution can provide some amazing insights about the true value of your promotional communications and advertising. What does it take to start getting these insights? Here are some steps you can follow: 1. Assess the need and fit  If you’re essentially guessing when it comes to allocating spending across various marketing channels, without real insights into their effectiveness, you will probably get significant benefits from marketing attribution. This is even truer if your marketing spending is substantial and your customers navigate a moderate to complex path to purchase.  As discussed in the previous section, there is a cultural success factor to consider. For marketing attribution to succeed, you must have a culture that embraces analytics, as well as one that is willing to invest in the process and trust the results. Without this cultural foundation, a marketing attribution initiative is likely to fail. A simple test is this: are you already using the marketing analytics data that is available to you? If so, you have some level of cultural readiness to implement marketing attribution. If not, you need to understand why you think marketing attribution will work for you. 2. Consider a vendor and/or advisor
  • 6. How-To Guide © 2013 Demand Metric Research Corporation. All Rights Reserved.  Unless your purchase process is very simple, involving few touch points, you will probably benefit substantially from outside expertise and the help of a vendor. Use the Demand Metric Business Case Template to help justify the need for outside counsel and resources. If you opt not to use outside resources, make sure you have the necessary analytical skills in- house.  Any capable vendor or advisor will provide a detailed set of steps and implementation plan. However, if you decide to proceed on your own, the remaining, high-level action plan steps follow. 3. Understand the path and choose a model  Carefully research the paths that customers navigate from awareness to conversion. Do not trust your instincts, but conduct proper research to understand the variations on the customer journey, and it is likely there are several. Document each path variation and the touch points a customer might encounter. Use the Demand Metric Purchase Process Diagram to help you with this task.  Identify which attribution model you will use. Keep in mind that the simpler models, such as last click, while easier to implement, are less useful. 4. Data collection, analysis and usage  Determine what data is needed to support the attribution model you have chosen to implement.  Define and implement data collection processes and test to ensure they function reliably.  Develop your analytic processes to exploit the attribution data you collect and determine how often you should perform the analysis.  Use the results of your analysis to optimize your mix of touch points. Invest more in those that are most effective, and eliminate or scale back on those that are least effective. Always
  • 7. How-To Guide © 2013 Demand Metric Research Corporation. All Rights Reserved. validate the decisions you make against future analytics to ensure your decisions produced the desired outcome. The steps defined in this action plan will require commitment and an investment. Your marketing attribution process will need time to mature to deliver full value. Factor the need to develop skills and collect a solid base of analytic data into your business case for marketing attribution. BOTTOM LINE Properly implemented marketing attribution can help improve the ROI of many marketing efforts. The fact-based decisions that marketing attribution enables can help your marketing and advertising perform at a higher level, and potentially at a lower cost. At the same time, it is important to understand that marketing attribution will not fix a fundamentally unsound marketing strategy, although it may provide insights about how to fix it. To work best, the marketing attribution discipline needs the support of a thoughtfully crafted marketing plan, and vice-versa. Finally, recognize that marketing attribution is not a “once and done” task, but an ongoing effort that yields maximum benefits when it becomes woven into the fabric of marketing. ABOUT THE RESEARCH ANALYST Jerry Rackley is Chief Analyst at Demand Metric. His 30-year marketing career began at IBM, and includes experience in the technology and financial services sectors. He has worked with companies ranging in size from startups to members of the global 1000, performing marketing, marketing communication, public relations and product management work.