When it comes to measuring how marketing is driving sales, many organizations turn to direct attribution as a fast and inexpensive reporting tool.
However, assigning credit only to the last touch can paint an inaccurate picture that doesn’t consider a number of other interactions that could have influenced conversion.
This can lead to sub-optimal decisions and resource allocations. Using more rigorous fractional attribution approaches leads to better estimations of marketing’s impact on the business and optimization of executions for better performance.
Attributing Cause and Effect
“When all you have is a hammer, every problem looks like a nail,” said Abraham Maslow in The Psychology of Science.
Think of the poor analyst who was first challenged with measuring marketing effectiveness across a myriad of tactical approaches. Imagine this person looking at trends, change over prior period, and competitive results, finally resorting to some industry estimate to provide an answer to data-hungry management.
Across industries, metrics like direct mail response rate, coupon redemptions, voucher/co-pay card applications, and others were studied to understand program response.
These metrics are fine within the context of their own lanes, but when we use them to claim credit for customer action, we ignite the age-old argument between sales and marketing over who drove the sale.
The Fallacy of Direct Attribution
The explosion of digital data and the ability to go from click to sale increased the utility of direct attribution. Marketers began to think that they had a solid grasp on what was driving their sales.
The problem is, as the “hammer” of direct attribution became more compelling, marketers began treating every sale like a “nail,” being driven by some precisely attributable channel.
The lure of direct attribution is understandable — it's clean, it's easily derived, and (perhaps most importantly) easily explained to management.
This is especially true in industries with direct customer connections, such as insurance and banking, where these relationships seem very intuitive. However, consider these two example consumer experiences with media (moving in time from left to right, where blue indicates their likelihood of making an appointment):
In the first consumer experience, direct attribution would assign this appointment to search, while the second would be assigned to display. Neither of these examine the role of the other media. In the case of the second one in particular, TV did most of the work in converting this consumer, but gets no credit.
Embracing More Robust Measurement
Because the impact of direct channels can be measured in direct attribution, dollars tend to migrate there in marketing budgets.
Overall, this is the right thing to do as consumers migrate more activities online and engage in multi-screen behavior. But some organizations have virtually eliminated broad-reach media like linear TV, simply because they can’t measure it. Then they wonder why their brand equity is eroding.
It doesn’t have to be this way. More and more organizations across industries are realizing the fallacy of direct attribution and looking for more robust solutions, which can seem confusing at first.
Do I need fractional attribution or media mix? This one updates frequently, while that one takes a long time; but this one only has certain channels, and that one costs more.
First, understand that no matter the method, our objective is to use analytics to fractionally attribute sales (be they new prescriptions, policies, retail purchases, consultations, or even site actions) to marketing activities. The analytical techniques differ based on the situation, but it is all about understanding what we got for our marketing spend.
Regarding the choice of fractional attribution or media mix, my long-held belief is that this is an “and,” not an “or,” proposition. Media mix uses the full breadth of sales and marketing data to understand the complete spectrum of your marketing spend. The analysis helps us to understand the effects of media over time, especially broad-reach media. Gaining this understanding is not a job for a “black box” solution, as it requires transformation of data specific to industry dynamics in order to estimate the time-phased effects of media.
Fractional attribution leverages the depth, detail and frequent updates of digital and direct data, which can be tied to individual purchase paths.
Website log file data gets updated each day, with down-to-the-minute detail on digital impressions and clicks. Email data can show when individuals receive, open, and click through emails with the same granularity, as can inbound call-center data.
Using identity management processes, these data are merged to create event streams that show the paths of non-purchasers (anonymous) and purchasers. The key advantage of fractional attribution is that the models can be updated frequently (daily/weekly/monthly) to understand changes in campaign performance that can be acted upon in a fast-paced programmatic buying world.
One Version of the Truth
What is often not discussed is how these methods work together.
Today, marketing managers are often faced with one agency giving them an analysis that tells one story and another agency giving them a completely different story. This leads to confusion and frustration.
The supply chain world understands that organizations need “one version of the truth.”
That same clarity is needed in the attribution world. Fractional attribution has an amazing amount of granularity in the data behind it, but identity management is a huge challenge.
The data sets for this reach into the terabytes and represent only a portion of purchasers and non-purchasers. For many, thanks to cookie deletion, ad blocking, and multiple device use, there’s no way to create event streams to describe their behavior.
Also, fractional attribution describes only channels that can be tied to individuals. Because of these dynamics, fractional attribution must be aligned against media mix to provide a unified view, which is balanced to provide channel coverage, detail and analytical techniques with an online suite of tools and reports to enable decision support.
CIOs all over the world are creating big data infrastructure to enable data access and scale as we’ve never seen before.
Analytical attribution, be it marketing mix or fractional attribution, individually or (preferably) in concert, allows us to understand each medium’s impact. It also provides analytical rigor that gives marketers the confidence to take their findings to management and drive rapid decisions.
The hammer is not alone in the toolbox. Sophisticated marketers are using more analytical tools to bring competitive advantage in the marketplace and need to evolve beyond direct attribution to keep pace.
Title image by Jesse Orrico