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Attribution Models: The Good, The Bad, and The Ugly

Attribution Models: The Good, The Bad, and The Ugly

As the marketing landscape continues to grow more complex, understanding the consumer path to purchase and the many influences on people's final decisions can be challenging.

Increasingly, organisations are turning to marketing attribution to determine the role that various channels and ad events play in influencing the customer journey. That said, many marketers are still missing the mark when it comes to their attribution approaches.

The limitations of clicks

One common mistake in the realm of attribution occurs when marketers place too much emphasis on the click. Marketers love to count clicks because they represent an action and are easy to quantify. However, people who click on display ads often don't convert, so optimising those campaigns for clicks doesn't necessarily make sense the way it would in a search ad campaign. 

Understanding view-based conversion is key, as consumers often need to be exposed to ads multiple times before converting. As such, the conversion rate - not the click rate - is where you need to focus. That said, even when focused on conversion, many attribution models don’t tell the whole story. 

The spectrum of attribution models

Today's attribution models vary widely in terms of sophistication and effectiveness. Consider the following models currently in use today: 

  • First-click: All credit is given to the first click on the path to conversion.
  • Last-click: All credit is given to the last click on the path to conversion.
  • Linear: Credit is spread equally across all clicks on the path to conversion.
  • Time decay: More credit is given to clicks that occur closest to the conversion.
  • Position-based: Credit is given based on the position of the click on the path to conversion, with the first and last click receiving more value.
  • Regression/algorithmic: Credit is given based on regression analysis of historical performance.

Past research has found that although an astounding 54% of marketers used last-touch attribution, only 14% believed it was a highly effective approach. That's not terribly surprising. Last-click methodologies are relatively simple to implement, yet most marketers recognise that placing 100% of the credit on the last consumer touchpoint ignores all previous events that led the consumer to that final step. 

If your company is employing a last-click or first-click attribution model, you are losing visibility on a massive amount of conversions, as well as a huge opportunity to optimise your ad spend. Some marketers over-simplify their attribution approaches and thereby willfully ignore a large percentage of ad events in a campaign. Others implement "leaky" attribution approaches that fail to capture certain ad and purchase events altogether. 

Restricting how many times a customer sees a digital ad saves on marketing dollars but data shows that this train of thought can be a gross miscalculation. Limiting a customer to one ad event produces a 15% conversion rate, while the tenth event bears out the highest conversion rate, at 22%. 

With over-simplified or leaky attribution models, marketers are unable to appropriately understand the dynamics of their campaigns, which can lead to ineffective optimisations. For example, last-click attribution models typically assign a significant amount of conversion credit to retargeting efforts. As such, marketers can be tempted to rebalance their ad spends heavily in favor of retargeting and, thus, neglect the many other ad events - such as impressions from an SEO spend, for example - that influenced customers along the way. 

Taking a holistic, data-driven approach

Every touch point on the path to conversion has value, and the strongest attribution approaches are able to identify how channels assist one another along the consumer path to purchase, regardless of whether or not people are clicking. A closed-loop approach captures all ad events and assigns value to those events in a thoughtful way. The more detailed the approach, the better marketers are able to make smart decisions as it relates to campaign optimisation. If you understand the importance of all ad events along the path to conversion, you'll be able to significantly improve your return on investment and execute more efficient campaigns. Furthermore, you won't neglect the importance of long-term ad dollars whose value can only be understood in the context of the broader conversion path. 

Some marketing organisations rely on basic spreadsheets for attribution, while others leverage complex tools and data analysis. Over time, companies tend to move toward more-sophisticated solutions, migrating from narrow last-click approaches to multi-channel views that weight impact based on experience. 

However, in the end, there is no one-size-fits-all attribution model. While approaches like linear attribution and position-based attribution capture more touch points on the path to conversion than last-click and first-click approaches, they still are unlikely to reflect the true influence of each ad event without a fair amount of customisation based on a marketer's experience and understanding of their role in a sale. The key lies in a marketer's ability to capture and interpret campaign data -- at every touch point, both short term and long term. 

Patrick Hopf

Patrick Hopf

CEO at SourceKnowledge. A digital industry veteran and a founder of SourceKnowledge, Patrick started his career driving strategy and product development for one of the internet’s earliest search engines. His focus is now on building innovative video ad serving technology. A keen industry blogger and presenter, Patrick is a staunch evangelist for up-and-coming technologies, and the progressive work his team is doing in defining the future of video advertising.

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