What is Attribution: A Marketer’s Quick Guide
by Dan Mochel, on February 28, 2018
One of the toughest aspects of any marketers job is understanding the impact their marketing spend on revenue.
For decades, marketers have been unable to know precisely when and where they should focus their marketing efforts to maximize ROI (return on investment).
Luckily, with the explosion of new digital channels, there are many clever ways to market your business for free. But even so, CMOs and CFOs need metrics - ways to quantifiably communicate what's working.
Marketing pioneer John Wanamaker once famously said,
Half of the money I spend on advertising is wasted; the trouble is I don’t know which half.
Unfortunately for marketers, this quote still resonates to this day.
Attribution models have advanced over recent years, but many marketers are currently using models that are archaic and inefficient.
Before we get too deep in the weeds, let’s take a step back and first define what is marketing attribution.
What is Attribution?
At the most basic level, marketing attribution is the way marketers determine which marketing touchpoints are leading customers to buy their product or service.
When a customer is thinking about buying a product or a service, they may visit a company website, click on a banner ad, read a blog or open an email offer.
Whether they realize it or not, these touchpoints are affecting their buying decision at varying degrees of importance. Attribution is the method of awarding credit from a purchase to the marketing touchpoints the customer experienced during their buying process.
DemandJump’s Prescriptive Attribution solution prescribes action and directs marketing spend to the areas that will produce the best outcomes, while improving return and reducing wasted spend.
Why Attribution Matters
Marketing attribution may be complicated for some marketers to understand, but the value that accurate marketing attribution brings to companies is game-changing.
As marketers, we can now fully understand whether we are efficiently spending our marketing budget and which individual marketing efforts are leading people to buy our product or service. This optimization turns the marketing department from a (perceived) cost center, to a revenue generating powerhouse.
With modern attribution, marketers finally have a central source of truth to rely on the way sales teams rely on CRM’s and finance teams rely on ERP’s.
Imagine you were a marketer and could view one platform to know precisely which marketing efforts were profitable, calculating their profitability before you spend anything, and how they impact each consumer at each stage of the buying process. Marketing would be changed forever.
How Do Attribution Models Work?
There are a number of attribution models that marketers use today, most commonly first-touch, last-touch, and multi-touch attribution.
First-touch attribution gives 100% of the credit for a purchase decision to the last touchpoint the customer interacts with. For example, if a customer sees a paid search ad for a product, then reads a blog about that product and ultimately clicks on a banner ad and purchases that product, a first-touch attribution model would give 100% of the credit to the first touchpoint the customer interacted with - the paid search ad.
Last-touch attribution is just the opposite of first-touch attribution. Using the previous scenario, a last-touch attribution model would assign all of the credit for the customer’s purchase to the banner ad that was clicked on.
Multi-touch attribution (MTA) is a common model among marketers because it gives all of the touchpoints in the customer journey credit for contributing to the final conversion. Although MTA allows marketers to give credit to all touchpoints throughout the buying process, it cannot properly weight each touchpoint based on its contribution to the customer converting.
The attribution models previously mentioned have been used for some time, but are outdated and unreliable. The most advanced solutions are now powered by advanced mathematics and algorithms.
Prescriptive attribution is the next logical step after historical standard marketing attribution methodologies are being rendered obsolete. Prescriptive attribution prescribes action and directs marketing spend to the areas that will produce the best outcomes, while improving return and reducing wasted spend.
Attribution and the Future of Marketing
Attribution enables marketers to think about their marketing spend the way Wall Street thinks about investment decisions. Armed with this powerful information, marketers can create an advertising ‘portfolio’ that will mitigate wasted marketing spend and maximize revenue.
DemandJump’s award-winning Traffic Cloud™ platform, the only prescriptive attribution solution, allows marketers to see their potential customers 3 steps before they reach their site, or more importantly, their competitors. The platform then shows marketers when and where to invest marketing dollars in order to drive qualified traffic across channels, resulting in new customers from direct competitors.