An overview of Attribution Modeling

By Uri Bishansky
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Attribution Modeling Part 1


Introduction 

We now live in a digital age where users visit several sites by means of various devices while going through their buying journey. Your website is not different, users will visit your website a number of times before completing a transaction or providing their credentials and turning into a lead. You have to track their shopping behavior, know which marketing channels and marketing campaigns have the most impact on their behavior and what products and services they are most interested in. By keeping an eye on these aspects, you can make timely adjustments in your marketing mix. This is the only way you are going to survive the intense online competition.

Studies show that online users visit your site several times before they make their final purchase decision. As an online business owner, you have to know about the marketing channels that brought the buyers to your site and made them close the deal.

You will be surprised to know that your online shoppers pass through various supporting channels before the final encounter. In this post, I am going to share some examples of an online buyer's journey and show you what kind of effect different attribution models can have on your sales and ROI.

Defining Attribution Modeling

For an online marketer, the term Attribution Modeling can be a complicated concept to understand, but it is worth understanding. Let us try to understand this term in its simplest form. The definition of Attribution Modeling as per Google is:

"It is a set of rules that determine how credit for sales and conversions is assigned to touchpoints in conversion paths."

The fact is that most online marketers are already taking actions based on different attribution models without even knowing it. Various advertising platforms such as Google, Facebook, and other ad networks, as well as Google Analytics, provide conversion measuring functions. The data from these platforms can be used to attribute sales and conversions to different marketing channels.

The problem is that most marketers do not know that they are making important optimization decisions without understanding the big picture. Let us have a look at an example to further understand this concept.

A college named BIG (Business Is Great) runs an advertising campaign in order to enroll new students to next year's MBA course. An accounting grad named Andrew is interested in proceeding with his academic studies and he starts to search the net for information. Andrew takes the following steps before converting to BIG's landing page for MBA studies. Keep in mind we are focusing on the steps that took place on BIG's site only:

Steps

Source

Remarks

Step 1

Google Organic

Search Query: "Post-graduate studies for CPA's"

Step 2

Facebook Remarking Ad

Andrew lands on BIG landing page

Step 3

Google Search Ad

Search Query: "MBA Studies for CPA's"

Step 4

Google Remarketing Ad

Converted

 

This example clearly shows that the user had 4 touchpoints with BIG's site before the actual conversion. If you look at Google Analytics, it will show Google Display (Remarketing Ad) as the source since this was the traffic source when Andrew actually converted.

What about the contribution of Facebook Ads, Google Organic, and Google search? Don't they get any credit for this conversion? Well, sure they do and it is actually the result of attribution modeling.

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Some Common Attribution Models

Before looking at the different Attribution Models and choosing one of them, online business owners or marketers must first understand and identify their marketing objectives. Here is a quick overview of the most common attribution models:

  • First Click

As per this model, all the conversions/conversion value is attributed to the source of the first click. In the example cited above this refers to Google Organic Search. Although it is not very common, it is basically used to measure the impact of a brand-awareness campaign.

  • Last Click

As per this model, all the conversions/conversion value is attributed to the source of the last click. In our example, this would refer to Facebook Remarketing Ad. This is the default attribution model of Google Analytics and is most commonly used while working with performance agencies. You will see this model at work in the mobile app industry.

  • Linear

In this model, an even amount of conversion value is attributed to each touchpoint. This seems like a more logical approach, but this model is not applied in every business. The linear model provides a better and more relevant insight than the first/last click model and it is quite easy to implement and measure.

  • Time Decay

This model assigns the most credit to the touchpoints which fall near to the time in which the actual conversion took place. This model is a bit sophisticated and therefore harder to implement and it is not relevant to every business. Businesses which run time-bound campaigns or sales cycles that involve a short consideration phase find this model more relevant since they want to know the value of clicks that were closer to the campaign.

  • Position Based

This model is a combination of the last click, first click, and the linear models. In case you want to find out the value of touchpoints that help you make sales by attracting your customers, and the final touchpoints that result in the actual conversion, you can simply use the position based model. In this model, the last and the first touchpoints are attributed a certain percentage of the conversion value whereas the remaining touchpoints are attributed linearly the rest.

Let us have a look and see how we can apply the Position Based model to our example. Joe eventually ended up enrolling in the MBA program and he will pay about $100,000.

Attribution Model

Value Attributed ($)

First Click

Google Organic - $1000,000

Google Search Ad - $0

Google Display Ad - $0

Facebook Ad - $0

Last Click

Google Organic - $0

Google Search Ad - $0

Google Display Ad - $100,000

Facebook Ad - $0

Linear

Google Organic - $25,000

Google Search Ad -$25,000

Google Display Ad - $25,000

Facebook Ad - $250,000

Time Decay

Not much info in this example

Position Based (70/30)

Google Organic - (35%) - $35,000

Google Search Ad - (15%) - $15,000

Google Display Ad - (15%) - $15,000

Facebook Ad - (35%) - $35,000

 

This table clearly shows how much of the $100,000 has been attributed to each touchpoint in different models. 

Conclusion

Attribution modeling can assist you in understanding how each marketing channel assists your overall business goals. Think of the entire marketing operation as a wrist watch. The watch needs all the gears to operate correctly, removing one the functioning gears could result a in complete failure to your watch. So watch out! 

clock-1360997_960_720.jpg

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About Uri Bishansky

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Uri is the co-author of the Amazon no.1 Bestseller "The Smart Marketer's Guide to Google AdWords". He has been programming since he can remember himself. He lives by excels and numbers, rides bikes, loves dogs and a keen self-educator. Uri has a degree in finance and has been a google partner since 2013.

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