Marketing Attribution in the New Age of E-Commerce

When you launch a project and develop a marketing strategy, it is especially important to analyze and measure its actual effectiveness, influence, and ROI.

If you know how well your budget was spent and which channel worked best or worst you can do better next time. It is marketing attribution modeling that can really help you here.

Marketing attribution is a method in which the value of various channels is analyzed in terms of connecting with potential customers. Marketing attribution models enable marketers to identify the actions that users take towards the desired outcome, such as a sale, and assigns value to each of them.

Experts say that it’s a rare occasion that a customer clicks straight onto a website and makes a purchase. It’s essential to understand the journey they took to get to that point and which channels were responsible for their decision to buy.

Attribution software can pull data from each channel (such as social media platforms, email campaign software, ad accounts, websites, and more) to dissect a customer’s conversion journey, assigning credit where it’s due for each interaction.

It gives a full picture of each customer’s pathway to prioritize future efforts by understanding what’s working and what isn’t.

There are 7 standard marketing attribution models

1. The First-Touch Attribution Model is a single-touch model that gives all credit to the initial channel the user engaged. If a customer clicked through to your site via an email campaign link and purchased a product or service, all credit goes to the email campaign.
   This model has its limitations as the initial click may not have been the only influential aspect behind the buyer’s decision but it gives credit to the method in which a customer was first exposed or introduced to the e-commerce site.

2. The Last-Touch Attribution Model, like the first one, gives 100 percent of the credit but to the last touchpoint, or interaction, that a consumer has with your business before making their purchase. For instance, a buyer initially discovers your site through a Facebook ad, but they later return to your site directly with your URL. You guessed it, all of the credit will be assigned to the last touchpoint. It’s the simplest model to implement and one of the most commonly used but this model doesn’t account for previous interactions that may have contributed to the decision.
3. The Last Non-Direct Click Attribution Model still assigns credit to a single-touch interaction. However, it does not include direct traffic interactions that may have occurred immediately before conversion. This model provides e-commerce companies with a more insightful look into what actually prompted a user to convert but still fails to acknowledge any prior touchpoints that may have occurred.
4. The Linear Attribution Model is one of the most commonly used multi-touch attribution methods. It involves splitting the credit for each conversion equally between all touchpoints involved in the purchase.
   For example, a customer may find you through a Google ad and later directly searches for your site. Both points of interaction will receive 50 percent of the credit.
   This model gives e-commerce businesses a broader look at the entire marketing strategy but also provides each step with equal importance.

5. The Time-Decay Attribution Model assigns more value to interactions that occur near the time of conversion, giving earlier touchpoints less credit.
   This model is advantageous if your business deals with lengthy sale cycles or if you want to focus on the relationship-building process.

6. The Position-Based Attribution Model divides the value of conversion between a customer’s initial interaction and their final interaction.
   Forty percent of the credit is given to each, and any other engagements that may have taken place in the middle will share the remaining 20 percent evenly.
   The model does give value to every interaction involved but is also helpful in that it provides more credit to the two most influential touchpoints.

7. The Data-Driven Attribution Model is the most comprehensive approach tailored exclusively to your brand’s unique campaign needs and assigns attribution to whichever interactions your organization deems important. It offers the greatest insight into your marketing campaigns and can lead to better ROI and increased revenue. It can be viewed as the most valuable approach.
   The right attribution model can dramatically impact where and how you devote your budget as well as the ROI your company can expect.