Importance of Marketing Attribution in Digital Marketing

What Is Marketing Attribution?

Marketing attribution is the process of determining which marketing actions help drive leads or sales. It takes into account all the customer touchpoints between learning about a brand and converting to a customer.

The Importance of Marketing Attribution in Digital Marketing

Marketing attribution allows businesses to:

Identify the best-performing marketing channels: Find out which marketing channels are driving the most customers to your business. And which ones are underperforming.

Get a better understanding of the customer journey: Learn more about all the different touchpoints involved in getting a new customer.

Improve return on investment: Stop wasting your marketing budget on under-performing channels. And double-down on your top performers.

Get stakeholder buy-in: Use marketing attribution data to prove the effectiveness of specific marketing channels. And get stakeholder buy-in to increase investment in the most effective channels.

Types of Marketing Attribution Models: There are different ways of attributing sales to specific marketing channels. And they’re collectively referred to as attribution models. The two main groups of attribution models are single-touch and multi-touch. Single-touch attribution models give all the credit for a sale to one specific touchpoint or channel (usually the first or last one). Multi-touch attribution models credit all touchpoints or channels that contributed to a sale. Let’s compare some of the most popular single and multi-touch attribution models:

First-Touch Attribution Model: The first-touch attribution model gives all the credit for a sale to the first touchpoint the customer had with your brand. Such as a click on your social media post. Or a click on your ad in search results. While this attribution model is simple to implement, it often doesn’t provide the full picture. A customer might have had a dozen interactions with your brand after the first interaction. For example, they might have read your blog content for a few weeks after initially discovering you through social media. And signed up for your email newsletter. Then, they might have read a couple of your emails and finally converted after clicking on a link in one of them.? If you use first-touch attribution, all the credit for this sale will go to your social media campaign. Even though other channels (like email) might have played a bigger part in landing the sale. This could lead to wasted marketing dollars investing in social media. When investing in email marketing may lead to a higher ROI.

Last Touch Attribution Model: With the last-touch attribution model, all the credit for a conversion goes to the last touchpoint the customer had with your brand before making a purchase. For example, a customer might have: Seen your billboard ad on their way to work for the past month Watched your brand’s Instagram stories for weeks Read your blog content for years But then, they click on your ad in Google search results and convert. With last-touch attribution, all the credit for the sale would go to your Google Ads campaign. Similarly to first-touch attribution, this attribution model is fairly simple to implement. But it suffers from the same downside—its simplicity can lead to you making the wrong judgment on the effectiveness of specific marketing channels.

Linear Attribution Model: Linear attribution is a multi-touch attribution model. It takes into account all the different touchpoints a customer has with your brand before making a purchase. And gives them all equal credit for a sale. This gives you a more complete picture of all the touchpoints involved with conversions. And can help you avoid overestimating the effectiveness of any single channel. But the linear attribution model has its own disadvantages. For one, it can be more difficult to implement compared to first-touch or last-touch attribution. As you need to monitor more touchpoints in greater detail. Also, depending on the customer journey for your specific business, all touchpoints having equal weight might be unrealistic. For example, a customer might have read ten articles on your blog and interacted with dozens of your social media posts. Then, they might have opened a single email newsletter from your brand and converted. In this case, while it’s useful to know that all three channels contributed to the sale, saying that they all contributed equally to the sale might not be accurate.?

Time Decay Attribution Model: With the time decay attribution model, multiple touchpoints are weighted differently. This model assumes that later touchpoints have a greater influence on driving the customer to make a purchase. The last touchpoint gets the most credit. While the first touchpoint gets the least amount of credit for the sale.

The downside of this model is that it can undervalue top-of-the-funnel marketing efforts. Here’s an example:? During a product launch, you might spend a considerable percentage of your marketing budget on traditional media advertising, social media marketing, and influencer collaborations to raise brand awareness and get people to learn about your product. This can help your pay-per-click (PPC) ads generate better click-through rates and ultimately convert at a higher rate. Because people have seen your brand in lots of places and therefore trust your ads more than others. Using time decay attribution, your PPC ads would get the most credit for the sale. While your initial brand awareness efforts would get the least amount of credit, even though they might have had a significant impact on sales.

U-Shaped (Position-Based) Attribution Model: The U-shaped attribution model is a multi-touch attribution model that credits touchpoints as follows: 40% of the credit goes to the first touchpoint 40% of the credit goes to the last touchpoint 20% of the credit goes to all the remaining touchpoints

W-Shaped Attribution Model: The W-shaped attribution model gives 3o% credit each to: The first touchpoint The mid-funnel touchpoint The last touchpoint The remaining 10% is split evenly across all the remaining touchpoints.

How to Pick a Marketing Attribution Model: Picking the right marketing attribution model ensures you have accurate data to allocate your marketing budget effectively. Consider the following when choosing an attribution model for your business:

Your Goal: What are you trying to measure? Are you looking to find out which marketing channel brings in the most leads? Or which one drives the most revenue? In the first case, you might opt for first-touch attribution. In the latter, last-touch attribution might make more sense.

Sales Cycle Length: How long is your business’s sales cycle? A B2B business with a 6-month sales cycle will benefit from a different attribution model compared to a B2C business with a relatively short sales cycle. And the complexity of the sales cycle matters too.

Customer Journey: What does the customer journey for your business look like? What’s the average number of touchpoints, and how are they spread out? If the average sale for your business involves a lot of different touchpoints that could convert, linear marketing attribution would be appropriate.? If the customer journey is long, with lots of nurturing involved before they’ll convert, a time decay attribution model could be the right choice. Or imagine a business where the average sale only involves a few touchpoints that are likely to convert. In this case, a U-shaped or W-shaped attribution model might be best. Or even a customized model.

How to Implement Marketing Attribution: Now that you’ve decided on an attribution model for your business, let’s look at how to implement wider aspects of marketing attribution.

Choose the Right Marketing Attribution Tool: You’ll need specialized software to attribute conversions to specific marketing channels. We’ll cover some tools to use in the next section. But first, you need to know the features you should be looking out for. Here are the most important aspects to consider:

Ease of use: You don’t want to waste hours learning how to use the tool. Or training your team on how to use it.

Integrations: Any marketing attribution tool you decide to use should integrate with your existing tech stack.

Customer support: You’ll use these tools to help allocate your marketing budget, so continuous and proper functionality are key. Look for a tool that offers prompt customer support to quickly resolve any issues.

Integrate Marketing Attribution into Your Wider Strategy: In order to be effective, you need to integrate attribution into your wider marketing strategy. This involves:

Aligning Attribution with Business Goals: The way you approach marketing attribution needs to align with your business goals. To achieve this, you’ll need to: Determine your business goals Assign key performance indicators for each goal Choose an appropriate attribution model based on your goals

Training Your Team on Attribution Concepts: To get the most out of your marketing attribution data, you need to train your team on the specific marketing attribution model your business uses. And any tools you use. Here are a few questions marketing attribution reports can help you answer:

What does the average conversion path look like? Reports can reveal the exact steps customers take before making a purchase. You can then use this information to optimize specific steps in the process. How does the effectiveness of specific marketing channels change over time? You can use attribution reports to understand trends and market shifts. And adjust your marketing efforts accordingly. How do different groups of customers respond to marketing activities? Attribution reports allow you to analyze customer segments to understand how they might differ. This will give you the information you need to create highly personalized marketing campaigns. How long does it take for a prospect to turn into a customer? You can use attribution reports to get a better understanding of your sales cycle length. And then devise strategies to shorten it.

Optimize Your Campaigns Based on Attribution Data

Here are a few ways you can optimize your marketing campaigns based on attribution data:

Reallocate Marketing Budget: Use the data from your attribution reports to identify your top-performing marketing channels.? Then, reallocate your marketing budget from your worst-performing channels to your top performers. For example, you might notice that influencer collaborations are bringing in more revenue than your PPC campaigns. In that case, it might make sense to reallocate some of your PPC budget into influencer campaigns.

Adjust Targeting: Analyze how different customer segments respond to specific marketing activities and channels. Then, adjust your targeting to focus on the highest-converting customer segments. For example, analyzing your marketing attribution reports might reveal that buyers from the agricultural industry tend to convert more often than those in the financial sector.?

Use Remarketing & Retargeting: Using remarketing and retargeting to enhance the effectiveness of your marketing channels.? Remarketing is when you connect with past customers or those who have already interacted with your business. Typically via email. But retargeting is used to reach previous site visitors who may not have made a purchase.?