4 Reasons Why Marketing Attribution is Essential in Digital Advertising
As a marketer, are you constantly searching for ways to improve your campaign performance, understand your customers' journey better, and make the most of every dollar in your budget?
Marketing attribution serves as a valuable roadmap in the customer journey identifying the routes that led to conversion and helping marketers to understand what channels to invest in.
Essentially, marketing attribution assigns credit to the various marketing efforts and channels that contributed to a customer's purchase decision. But why is marketing attribution such a big issue in digital advertising, and why is it so necessary? Many marketers may wonder which attribution model is best, and what works well for their organization and why. There are many moving parts to consider when it comes to marketing attribution, which is why it might seem like a minefield to those unfamiliar with its workings.
However, in this article, we're digging into four key reasons why marketing attribution is essential in digital advertising. We're here to help you understand and apply attribution effectively. Let's dive right in!
What is Marketing Attribution?
Marketing attribution is a method used in digital marketing to identify and assess the value of various touchpoints or channels that lead to a conversion event. This process enables marketers to understand which part of their marketing efforts is most effective in driving customer actions, such as purchases. If you have ever wondered how customers get from one touchpoint to another, and which ones make them “tick”, this is exactly where marketing attribution comes in.
The primary goal of marketing attribution is to distribute the value of a conversion event across multiple customer touchpoints. These touchpoints could include PPC (Pay-Per-Click) ads, SEO, social media impressions, retargeting ads, tv advertisements, and more.
For example, if a customer's journey involved clicking a Facebook ad, seeing an Instagram post, searching the brand on a search engine, and finally making a purchase, marketing attribution would help assign credit to each of these touchpoints for their role in the final conversion.
However, the technical challenge of accurately measuring customer journeys is often where marketers will stumble, as it requires a robust marketing attribution tool, a deep understanding of the customer base, and the ability to effectively interpret and act upon insights.
Some marketers may be familiar with commonly used static attribution models such as last-click, time-decay, first-click, u-shaped, and linear models. These models all lead to varying evaluations of channel performance and often do not meet the mark in providing transparency and accuracy.
How do Marketing Attribution Models Work?
Marketing attribution models work by examining the customer journey in detail and assigning credit to each touchpoint that contributed to a conversion. This credit assignment allows businesses to understand the value and effectiveness of different marketing channels, enabling them to make informed decisions regarding their strategy going forward.
Let’s consider a typical customer journey in the digital marketing landscape. Let’s say the journey starts with a display ad click, moves on to an affiliate-site click, and closes with a paid search click. At every transition from one stage to another, an attribution model comes into play, calculating the likelihood of conversion.
Through this attribution process, we derive the total number of conversions and the sum of revenues assigned to each channel. These figures are integral in calculating the Cost per Order (CPO) and Return on Marketing Investment (ROMI), which guide channel budget reallocation. Thus, marketing attribution models enable continuous optimization and refinement of marketing strategies.
First, the raw data is collected from various touch points through the algorithmic attribution software, such as through Adtriba’s tracking system or through integrating existing tracking systems' data. This data encapsulates different interactions users have with your marketing efforts, including clicks, views, purchases, and more.
Then, the collected data is processed through complex algorithms which identify patterns and relationships. These algorithms assign varying degrees of importance to different channels based on their impact on conversions. They are capable of learning and adapting, refining their attributions as new data comes in. However, in essence, the goal is to compare converting and non-converting journeys which results in a detailed, dynamic, and nuanced understanding of your customer’s journey and each channel’s role in leading to a conversion.
Why is Marketing Attribution a Challenge in Digital Advertising?
Accurately measuring customer journeys is a daunting challenge in digital advertising often because marketers simply don’t know where to begin. Several technical and analytical obstacles can get in the way of understanding customer journeys on a deeper level;
- Inconsistent Tracking Implementations: The inconsistencies in tracking mechanisms can create discrepancies in the data collected, making it difficult to compile a coherent and accurate picture of the customer journey.
- Device Switches: With customers often switching between multiple devices in their journey (desktop, mobile, tablet, etc.), keeping track of these transitions while ensuring the integrity of data becomes complex.
- Cookie Deletions: When users clear their browser cookies, the historical data that marketers have accumulated is wiped out. This creates a break in the journey, making it more difficult to trace the full path that can be collected and analyzed.
- Tracking Restrictions and Consent Management: Increasing privacy regulations and user control over data sharing add another layer of complexity. These concerns are even more of a reality for companies in the EU which are subject to strict GDPR rules. These factors can limit the scope and depth of the data that can be collected and analyzed.
Furthermore, it can be challenging to determine which attribution model yields the most accurate results. For example, with 41% of marketers admitting to using “last click” for their online attribution, many businesses are suffering from relying on overestimated results by giving all credit to the final touchpoint. Conversely, models that distribute credit evenly may not accurately reflect the influence of each touchpoint.
Another issue arises when models concentrate solely on the journeys of converting users, potentially missing valuable insights from those who do not convert. Therefore, an ideal tracking solution should integrate all channel clicks and views, whether they’ve led to a conversion or not.
It should also seamlessly combine purchase data with channel-click data on a user-id basis, through cookies or other user identifiers, and conduct referrer analysis. This comprehensive approach will enable marketers to accurately map and understand the full scope of user journeys, making attribution an invaluable tool in digital marketing.
Reason 1: Understanding the Non-Converting Customer Journey
The path a customer follows before a purchase can often seem like a mystery. However, understanding this journey is paramount in determining the effectiveness of your marketing strategies. The key to unraveling this mystery? Marketing attribution.
How Attribution Helps Unveil the Customer Journey
As mentioned, marketing attribution isn’t just about keeping track of conversions. Rather, it’s about understanding the entire customer journey - both the roads that lead to conversions and the paths that don’t. Unveiling these differences is critical to correctly evaluating each channel’s performance in your marketing mix.
The Non-Converting Journey
Have you ever wondered why some paths lead to conversions while others don’t? The answer often lies in the intricate details of the user’s journey. An effective attribution model recognizes this and can provide valuable insights into why some users convert and others do not. Such understanding empowers marketers to optimize strategies and drive better results.
By analyzing the non-converting journeys, marketers can identify potential areas where users frequently drop off. For instance, you may find that many users abandon their shopping carts after clicking through a display ad. This could indicate that the ad creates incorrect expectations or perhaps the checkout process is too complicated.
Non-converting journeys can also help evaluate the effectiveness of your marketing channels. For example, if only 20% of users convert from a particular channel, that means that 80% do not. This could suggest the need to re-evaluate the relevance or targeting strategy of that channel.
Overall, analyzing non-converting journeys gives marketers essential insights into customer interactions with content and offerings. For instance, the ability to calculate the conversion probability is made possible only through understanding the non-converting journey.
Let’s say a user interacts with a Google Ad, a Facebook ad, and a retargeting ad. The overall conversion probability for this type of journey is 6%, which we know by looking at all such converting (6%) and non-converting journeys (94%). The same user journey, but without the Facebook ad, has a conversion probability of only 4% (96% of these journeys not converting). Thus, the inclusion of the Facebook ad increases the conversion probability by 50% relative to the scenario without it, demonstrating that the Facebook ad holds substantial weight in the conversion process.
Reason 2: Optimizing Campaign Performance and Maximizing ROI
Optimizing campaign performance is a central goal for every marketer, but the path to achieving this can often feel like navigating a maze, especially when it involves numerous marketing channels. When it comes down to improving the performance of your campaigns, and intrinsically linked, maximizing Return on Investment (ROI), marketing attribution emerges as an invaluable map, providing a comprehensive and detailed view of the customer journey.
The Challenge of Multichannel Campaigns
Today’s customers are more connected than ever, interacting with brands through a plethora of channels, be it search ads, social media, email marketing, or direct website visits. Understanding the individual and combined impact of these channels on the customer journey is crucial yet complex. Marketers are often confronted with the issue of double counting, where multiple channels claim credit for the same conversion. This can lead to skewed data, resulting in a false representation of a channel's contribution to the ROI.
Moreover, without a clear algorithmic approach to attribution, it’s challenging to identify which channels are performing well and which are not, hindering marketers’ ability to allocate resources and budget effectively.
Attribution's Role in Performance Measurement, Optimization, and ROI Maximization
Modern attribution models are not static; they are powered by algorithms that learn and adapt over time based on new data. This means the insights derived from attribution models are continuously evolving, reflecting the dynamic nature of consumer behavior and market trends.
The real-time analysis offered by these models enables marketers to make prompt adjustments to their strategies, ensuring their campaigns remain relevant and effective. It also provides a granular understanding of each touchpoint's performance, allowing marketers to invest wisely in the channels that contribute most to conversions. For instance, if an attribution model reveals that a particular ad campaign is not performing as expected, marketers can quickly tweak the campaign to divert resources to more successful channels.
Moreover, a holistic attribution model incorporates both online and offline marketing channels. This comprehensive view allows marketers to understand the cross-channel behavior of their customers, leading to more accurate measurement, improved campaign optimization and accurately calculating ROI.
Reason 3: Facilitating Budget Allocation Decisions
Making smart budget allocation decisions is a key component of a successful marketing strategy. However, this can be quite challenging, particularly when it comes to understanding the complexity of the customer journey. But why is it so crucial?
The Challenge of Allocating Marketing Budgets
Marketers often grapple with uncertainty regarding which channels are genuinely contributing to sales or conversions. The reliance on static attribution models for budget distribution can potentially be misleading. For instance, a disproportionate focus might be placed on direct search due to the influence of last-click attribution, thereby overshadowing other valuable channels.
Moreover, leaning heavily on platform-specific data (for example, Google Analytics 4) may foster biased results, possibly leading to an over-investment in certain channels, such as Google Ads. This issue typically arises when marketing channels are optimized in isolation because of flawed performance attribution. It results in a sub-optimal allocation of the marketing budget, which does not truly reflect the holistic performance of all marketing channels.
Generating more precise insights into channel performance, attribution allows marketers to make strategic decisions, maximizing the effectiveness of each dollar spent. This ensures budgets are directed to the channels that truly contribute to conversions, leading to a more efficient marketing strategy that's primed for success.
Reason 4: Considering Display Views and Impressions
It is no surprise for marketers to hear that clicks often take center stage. But there’s another layer to the user journey that deserves attention - views and impressions. These often act as silent contributors operating behind the scenes, painting a more nuanced picture of consumer behavior and their interaction with your brand.
The Importance of Display Views and Impressions
Display views and impressions represent the instances where a user views an ad but doesn’t necessarily click on it. While these are often not considered measurable actions, they create a latent impression that can influence future decisions and behaviors.
Much like a billboard on a busy street or an advertisement on television, online display ads serve a crucial role in building brand awareness and recall. Even without promoting an immediate click or action, a well-placed and crafted ad can linger in a user’s mind, influencing their perceptions and future actions. In this way, views and impressions are integral parts of the user’s journey toward conversion, even though their impact might be indirect or delayed.
Limitations of Traditional Attribution Models
Despite the undeniable importance of views and impressions, traditional attribution models often fall short in accounting for them. These models are typically designed to track direct, quantifiable interactions like clicks.
This limitation can lead to an undervaluing of certain channels that contribute significantly to the overall advertising ecosystem. For instance, a display ad campaign may generate a substantial number of impressions but not result in clicks. Without considering these impressions, marketers could prematurely deem the campaign ineffective.
The upcoming discontinuation of third-party cookies further complicates this landscape. As this change looms on the horizon for Chrome users, the way we measure and attribute value to display views is set to change. Traditional attribution models will no longer be sufficient in this regard, as the lack of third-party cookies will pose difficulties for marketers and will require a rethink of established methods.
The Continued Relevance of Marketing Attribution
In today’s evolving landscape of digital marketing, understanding the customer journey has never been more important. With the phasing out of third-party cookies and constant algorithm updates affecting how we measure consumer behavior, the significance of marketing attribution is amplified.
Attribution not only helps you identify how your customers navigate their journey to conversion but also empowers you to optimize your marketing strategies, allocate budgets efficiently, and achieve a higher return on investment. As discussed, it presents a comprehensive view of the customer journey that takes into account every touchpoint, from the first ad impression to the conversion click.
The importance of this has been highlighted by recent shifts in digital marketing, such as in display ad measurement. The future of user journey tracking is changing and becoming more crucial in providing marketers with a complete understanding of user interactions and their impact on conversion.
Navigating these changes and implementing robust attribution models can be a challenging task, but it’s crucial to staying competitive in today’s digital marketing era. Now is the perfect time to rethink your approach and make sure you’re not just keeping pace with the industry but staying a step ahead.
Interested in learning more about how you can leverage marketing attribution to benefit your business? Book a demo with us today and let our experts guide you on how our solution can guide your marketing strategy into the future!