How can you effectively use a time decay attribution model for marketing?

Easy way to understand this flow: TV Ad -> Radio Spot -> Ad on a 3rd party App -> Social Media Ad/post -> Website -> Email/SMS/Whatsapp Each of these touchpoints will have an impact on the purchase decision and hence the credit is given based on the most recent one getting the maximum credit (eg. email/SMS/whatsapp in this case)

Time decay attribution model refers to an attribution model that assigns varying weights to different touchpoints in a customer's journey based on the recency of interaction. It recognizes that the impact of marketing touchpoints diminishes over time, giving more weight to recent engagements when analyzing the customer's path to conversion. This model helps us as marketers better understand the influence of different marketing efforts on customer behavior, considering the temporal aspect of their interactions.

Think of the time decay attribution model as the storyteller of your customer's journey, where the climax gets the spotlight. In this model, the closer the touchpoint to the grand finale (conversion), the more credit it gets. It's like a suspense novel where the last few chapters are deemed most crucial to the plot. If a customer journey starts with a social media ad, wanders through your website, and then clinches the deal after an email, the email gets the hero's share of credit. This method acknowledges that while every step matters, it's the final interactions that really turn the tides. It’s a way of saying, "the last mile of the journey is where the magic happens.

Time decay attribution considers recent interactions more heavily: Weighted Attribution: Assign more credit to touchpoints closer to conversion. Emphasize the impact of recent interactions on the customer journey. Adjustment Period: Determine the decay rate based on your industry's typical customer journey length. Experiment and adjust the decay window to fit your business model. Data Analysis: Regularly analyze and refine your model based on the changing behavior patterns of your audience.

It is such a model that encompasses all the touchpoints while giving due credit to each. Although, now there's data-driven model as well which not only gives credit based on recency but also the impact of the channel.

A time decay model in marketing is used to give more weight to recent interactions or touchpoints in the customer journey. This acknowledges that the influence of marketing efforts tends to diminish over time. By employing a time decay model, you prioritize the impact of recent interactions, ensuring your marketing strategies align with the evolving preferences and behaviors of your audience.

Begin by assigning different weights to various touchpoints based on their recency. Assign higher weights to interactions closer to the conversion, gradually decreasing weights for older touchpoints. Implement this decay formula into your analytics platform or marketing software to attribute value to each touchpoint accordingly. Regularly review and adjust the time decay model to ensure its relevance and effectiveness in reflecting the customer journey over time.

Marketing team should ideally work with the BI team to enable this end to end by defining the lookback window and the following cooling period/attribution period.

It is a more advanced model than last click attribution and helps understand the entire customer journey while avoiding bias.

It has the following limitations: 1) Does not capture the impact/value of a channel. Eg. Social Media might have a greater impact than radio. 2) Does not consider the messaging as a part of the communication 3) Multiple visits to same touchpoints fail to be captured in a time decay model.