With today’s cutting-edge tools and online solutions, organizations are getting more out of every marketing dollar. It was challenging for companies and their marketing departments to accurately attribute revenue to a specific campaign in years prior.
Solutions now exist that allow companies to track their marketing spend while also identifying return on investment. With this in place, decision-makers have greater insight into how they should allocate their marketing budget.
But just because it’s easier to track where revenue derives, it’s not always easy to assign a finite budget. Because there is only such much money to go around, organizations can optimize their marketing budgets by properly incorporating attribution.
What is attribution?
Attribution is one of the most effective measurement practices in marketing today, capturing the attention of marketers and accountants alike. Generally speaking, attribution is the method of analyzing individual touchpoints consumers have during their buying journey to determine which ones drive them toward a purchase.
More specifically, the sum of these touchpoints make up what is called multi-touch attribution. For organizations hoping to justify the budget for specific campaigns, understanding and tracking multi-touch attribution, as well as using the right attribution platform, is key to making the case on how to spend every marketing dollar effectively.
Multi-touch attribution comes in different models and can include everything from opening an email, visiting a website, or engagement during an event. There are at least six attribution models organizations can incorporate.
In this model, equal weight is given to each touchpoint along the journey and receives equal credit for how revenue was generated.
The time decay model assigns more credit to the touchpoints closer to the actual sale, believing they carry more influence than earlier touchpoints.
The U-shaped multi-touch attribution model assigns more credit to the first and the last touchpoints. The remaining touchpoints each receive equal sales credit divided equally among them.
The W-shaped multi-touch attribution model is similar to the U-shaped model. This model focuses on three touchpoints (instead of 2 in the U-shaped model), with 90% of the credit given equally to the first touch, the lead creation touch, and finally, the opportunity creation touch. The remaining touches each receive equally divided credit.
While more complex than the other models we’ve discussed so far, the full path model is not too far from the W-shaped model due to giving equal weight (22.5%) to the same three touchpoints in addition to the lead creation touchpoint.
The custom multi-touch model is the most complex attribution approach. This model allows organizations to develop a unique formula in determining the revenue credit assigned to each touchpoint.
Other multi-touch attribution models can be deployed, especially under the guise of custom approaches. An algorithmic multi-touch attribution model is one that could fall under the custom umbrella. Rather than assigning credit to touchpoints based on a model, the algorithmic approach maps a customer’s journey and assigns credit based on data that could regularly change.
This is possible because machine learning is incorporated; collecting and analyzing information captured during the accreditation process. The algorithmic multi-touch attribution model offers great flexibility and accuracy.
Tracking every dollar
To make your marketing dollar work for your business, organizations need to track every dollar. With limited resources, decision-makers must determine where they spend their marketing dollar and whether that spend is warranted. When it comes to assigning a portion of the marketing budget to an ad campaign, attribution can become an advocate’s best friend.
Using one of the multi-touch attribution models mentioned above, organizations can track their campaigns’ results and determine whether that allocation was worth the spend. In addition to leveraging a preferred attribution model, organizations can also measure campaign performance using a return on ad spend (ROAS). By using ROAS, organizations can determine, down to the dollar, whether their marketing allocation provided the best possible return on investment.
Once an organization can determine an ideal multi-touch attribution model and reach their desired ROA’S, they can confidently allocate their marketing spend to those tactics that provide the most significant return. The important takeaway is not to use attribution to lower your marketing budget. The emphasis is to use attribution to maximize the budget that already exists.
Over the last decade, Lucas Sommer has worked with hundreds of organizations and marketers to set up their attribution and help them get useful insights from their data. As director of marketing for LeadsRx (marketing attribution software), he currently focuses his energy on understanding and optimizing their cross-channel stack as well.”
Marketing attribution stock photo by Andrii Yalanskyi/Shutterstock