Marketing Attribution: Understanding Its Significance for Your Business
June 16, 2022
Over time, marketing has evolved into a vast art and science with many facets. Businesses around the world use a range of different marketing techniques across multiple channels for reaching out to their target audience and persuading them to engage with them.
However, it is important to determine which marketing activities and procedures provide the best ROI for businesses. One of the key motives of marketing is to convert prospects and drive more revenue home. If you are spending a fortune marketing your offerings over multiple channels without experiencing any increase in your sales, your efforts are going in vain.
This is what makes marketing attribution important.
What Is Marketing Attribution?
In simple terms, marketing attribution is the process of identifying and analyzing marketing techniques that lead to conversions and boost sales.
A customer encounters multiple touchpoints throughout their buying journey, from the moment they are approached with a promotional message to the moment they end up making a purchase. Marketing attribution is the analysis of these touchpoints for determining the specific messages and/or channels that have the desired impact on the prospects/customers. It is also used to determine the marketing tactics that allow customers to move a step closer to making a purchase in their respective buying journeys.
Marketers use a range of different marketing attribution models depending on their preferences, such as time decay, multi-touch attribution, lift studies, and more. All marketing attribution models provide you with valuable insights into how, where, and when your prospects and customers interact with your marketing messages along with the results obtained from the same. This allows your marketing team to make necessary changes in your marketing campaigns for better results and earn more ROI.
Why Is Marketing Attribution Important For Your Business?
Marketing attribution is a holistic approach to marketing analytics that takes into consideration every customer interaction and marketing tactic performed by an organization.
Here are the reasons why marketing attribution is important for your business:
Better ROI
One of the biggest reasons why marketing attribution is important for your business is that it provides you with a better return on your investment. If you are unaware of the marketing channels and techniques that work best for your organization, you are likely to spend a fortune on processes that do not yield the best returns.
With marketing attribution, you can identify and focus on the marketing techniques that help you get the best results and increase your sales. This helps you get the worth of the money you spend on running marketing campaigns and reaching out to your prospects/customers.
Optimized Marketing Expenses
Marketing attribution allows you to identify the techniques that work and the ones that don’t. This prevents you and your team from following the trial-and-error approach of implementing the technique that gets you the desired results. When you are aware of the right channels and marketing approaches that work in your favor, you can optimize your marketing spending and organize your budget.
Higher Personalization
In the age of digitization, marketing is all about approaching the right person with the right message at the right time. The rise in marketing automation has allowed marketers to personalize their messages based on their specific likes, needs, and preferences.
With marketing attribution, you can analyze the different touchpoints for every single customer and prospect targeted by you. When you know which channel and marketing tactic works for a specific customer, you can get more personalized in your approach and increase your chances of closing more deals.
Improved Offerings
When you carry out marketing attribution, you understand the aspects of your product or service that are liked and the ones that are not really preferred by your target audience. This helps you make necessary changes in your offerings and improve them to suit the needs of your customers. When you target the functionality your customers are looking for, you are likely to make more sales and increase your ROI.
Better Creativity
Marketing is an ideal combination of art and science. While it is the science of analyzing the needs of your customers and following a systematic approach to fulfill them, it is also an art of persuasion. Marketing attribution helps you analyze the manner in which your customers engage with your marketing messages across multiple platforms. This allows your marketing team to hone their communication skills and enhance their creativity to come up with innovative ways of interacting with your customers.
Types Of Marketing Attribution Models
A marketing attribution model is an analytical model that facilitates assessments at the user level. It involves statistical analytics that allows marketers to understand their customers better and analyze the efficacy of their marketing processes. Marketing attribution modes allow you to run better marketing campaigns and increase the ROI you generate out of the same.
Ideally, a marketing attribution model provides you with valuable insights into the following aspects:
- The messages your prospects were exposed to and the channels for the same
- The touchpoint(s) that has the greatest impact on your prospects/customers on purchase decisions
- How brand perception affected your customers’ purchase decisions
- The importance of message sequencing on specific marketing channels
- The marketing channel and messaging approach get you the best results
- The effect of external factors on your marketing activities
Based on the analytical techniques used, marketing attributions can be segregated into two major categories – Single-touch Attribution Models and Multi-touch Attribution Models.
Single-touch Attribution Models
Single-touch attribution models are the marketing models that involve 100% allocation of revenue credit to one marketing campaign. In other words, single-touch attribution focuses on only one of the many touchpoints in the buying journey of a customer.
Single-touch attribution models can further be divided into two major types:
- First-touch Attribution Model
– This attribution model works on the assumption that the prospect or customer chose to convert and make a purchase after the first ad (or any other promotional message) they encountered. This approach gives full attribution to the first touchpoint in the buying journey of a customer, irrespective of the messages they encounter later.
- Last-touch Attribution – As opposed to the first-touch attribution model, this model focuses on the last touchpoint in the buying journey of a customer without giving credit to the promotional messages encountered earlier.
Multi-touch Attribution Models
As the name suggests, multi-touch attribution models take all customer touchpoints into consideration involved in the buying journeys of a prospect or a customer. These models are regarded to be more accurate and holistic in nature as they provide a more precise assessment of the marketing efforts of your team.
According to the multi-touch attribution model you choose, you can assign values to different marketing channels accordingly.
Multi-touch attribution models can be further divided into four different types:
- Linear Attribution
– Linear attribution revolves around recording every touchpoint in a customer’s buying journey leading to the purchase and giving all touch-points the same credit in converting the deal.
- U-shaped Attribution
– U-shaped attribution model takes into consideration the fact that some engagements can be more impactful that others. Here, the first and last touch-points are provided with 40% of the conversion responsibility each. The remaining 20% of the responsibility is divided among the touchpoints in between.
- Time Decay Attribution
– The time decay attribution model weighs every touchpoint different as your customers make their journey toward making a purchase. Here, the weightage given to touch-points increases as a customer heads closer to the purchase.
- W-shaped Attribution – This attribution model uses the same approach as the U-shaped model along with taking the opportunity stage into consideration. Here, the touchpoints involving the first message, lead conversion, and the final opportunity creation is given 30% of the credit each. The remaining 10% of the weightage is divided among the remaining engagements.
Key Marketing Attribution Challenges
Now that you are well-versed with the importance and different types of marketing attribution, let us have a brief look at the major challenges you may encounter during the process:
- In-market Bias
– This is a situation where a customer has already been in the market for long and would have made a purchase irrespective of consuming your promotional messages. Here, the ads (or any other promotional messages) end up getting the credit.
- Correlation-based Bias
– This bias deals with the assumption that one event leads customers to another event that brings them close to making the purchase while that may not be the case.
- Cheap Inventory Bias
– This bias provides you with a faulty view of how media performs, making cheaper media seem like it is performing better because of the natural conversion rate.
- Digital Signal Bias – The digital signal bias takes place when you fail to find a relation between online marketing activities and offline sales.
The Final Word
Marketing attribution is a powerful analytical tool to assess the efficiency of your marketing processes and choose the right tactics to persuade your customers throughout their buying journeys. If utilized well, it helps you enhance your marketing campaigns, get a better ROI, and build healthy relations with your customers.
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