Attribution is one of digital marketing's biggest buzzwords and has become the focal point of many advertisers' daily lives. Yet, the definition of attribution, including how it should be utilized and the problems it addresses, varies widely. According to a recent Google Analytics and Econsultancy study, 72 percent of client-side marketers say that attribution leads to better ROI, but a lack of understanding of the topic is hindering widespread adoption. More than 40 percent of survey respondents say a barrier to attribution is being unsure of how to choose the appropriate model or weigh potential advantages.
In this article, I break down attribution -- one of the most misunderstood terms in our industry -- and explain how it can be used to help you get the highest ROI from your cross-channel marketing budgets.
In its simplest terms, attribution is the practice of valuing media's influence on the customer's journey to conversion. How does display advertising play a role in the customer journey? Does social media have an impact on influencing people to consider and eventually buy from your company? Getting to an answer for these questions starts with proper attribution.
More specifically, attribution is the process of assigning varying degrees of credit to different media based on their role in conversion. Consumers are usually exposed to multiple instances of marketing; attribution attempts to value each of these exposures based on their contribution to the marketer's end goal.
Despite advances in attribution measurement, many marketers today still give all of the credit to the last media clicked before a customer converts. Under this "last click" model, if a customer arrived at a website from a search for "Brand X" and completed a purchase, search would get all of the credit. But what if this customer saw a display ad that influenced his or her decision to perform the branded search in the first place? Last-click attribution doesn't capture this detail; granting credit to the "last click" is usually not an effective means of measuring your media and optimizing ROI.
Breaking down the myth of attribution
Before we go any further, it's important to distill a key myth about attribution: Attribution, that is the practice of granting different levels of credit to your media, will impact your revenue. Attribution alone will not impact revenue. It is an interim step to tell you what's working and what's not, but it won't change how much money you make. To improve revenue and ROI, you must use what you learn from attribution to change the way you allocate your marketing budget. Let's view an example to explore this concept further. This interactive chart shows the interplay of different types of media for a sample marketer and presents a simplified version of attribution. You can control two things on this chart:
- The budget split, which governs how budget is allocated to channels. This is what determines how much revenue you generate.
- The attribution settings, which govern how credit is assigned to channels. This is what can help you make more informed budgeting decisions over the long term.
In our simple example, say you are a media manager with a budget of $1,000 that you must split between search and display. In the absence of information regarding these channels' respective roles in the purchase path, you split your budget 50:50. At 50:50, you would make $4,250 in revenue.
Move the attribution settings with the slider, and you'll see that this has no impact on the total amount of revenue you earn. You can change the ROI that is associated with each channel -- but you cannot change the overall performance. This is because attribution does not affect your performance or revenue; it simply affects your bookkeeping.
Bookkeeping is critical, but it's only one step. It's important to understand how attribution should fit into your measurement and budgeting process.