The Role of Marketing Attribution in the New Age of E-Commerce

When it comes to marketing strategies, nothing is more important than analyzing and measuring every campaign’s actual effectiveness, influence, and ROI.

Without these measurements in place, how can you improve? How will you know if your budget has been well-spent? What if there’s a channel that you’re overlooking? These are all questions that marketing attribution modeling can help you to answer.

Understanding the contribution of every channel and the customer conversion process enables marketers to adapt and adjust accordingly. Let’s discuss what marketing attribution is; and how it can help e-commerce companies grow their businesses.

What Is Marketing Attribution?

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

It’s essentially a framework, or a set of rules, for deciding which marketing channels or touchpoints receive credit for the conversion. In simpler terms, marketing attribution is a straightforward way for marketers to measure the impact of each of their campaigns and activities.

How Does This Work?

Let’s say that you’re advertising on five different channels and have dozens of campaigns running at once. Attribution enables you to understand the performance of each at scale. It’s rare 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 the 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.

Marketing attribution enables marketers and e-commerce companies to view a full picture of each customer’s pathway and prioritize future efforts by understanding what’s working and what isn’t.

The 7 Marketing Attribution Models

There are seven standard attribution models frequently used by marketers, ranging from basic single-touch attribution models to multi-touch models.

1. The First-Touch Attribution Model

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.

While this model has its limitations — for instance, the initial click may not have been the only influential aspect behind the buyer’s decision — it’s important to give credit to the method by which a customer was first exposed or introduced to the e-commerce site.

2. The Last-Touch Attribution Model

Like the above method, the last-touch attribution model gives 100 percent of the credit to the last touchpoint, or interaction, that a consumer has with your business before making their purchase.

Let’s say that 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.

The last-touch approach is generally the simplest model to implement and one of the most commonly used. Understanding a customer’s last interaction before purchasing is insightful. However, this model doesn’t account for previous interactions that may have contributed to the decision.

3. The Last Non-Direct Click Attribution Mode

The last non-direct click attribution model still assigns credit to a single-touch interaction. Unlike the above model, it does not include direct traffic interactions that may have occurred immediately before conversion.

For the above example, credit is assigned to the Facebook ad that the user initially clicked on rather than the direct search that happened later on.

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

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 view of the entire marketing strategy but also assigns each step equal importance, which may not be the case.

5. The Time-Decay Attribution Model

Another multi-touch attribution model, the time-decay method, takes the “when” of each interaction into account. It 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

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.

Let’s say a customer first discovers you through an Instagram ad, later subscribes to your email campaign, and finally returns to your site through a Google search. The first and final points of contact will each receive 40 percent, and the subscription 20 percent.

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

The data-driven model is the most comprehensive approach when compared to other possible models. The data-driven model is tailored exclusively to your brand’s unique campaign needs and assigns attribution to whichever interactions your organization deems important.

Because the data-driven model is tailored to your company, it offers the greatest insight into your marketing campaigns and can lead to better ROI and increased revenue. If e-commerce companies are willing to invest more resources to determine which engagements have the most influence on a buying decision, the data-driven model will likely be viewed as the most valuable approach.

Conclusion

Marketing attribution truly enables you to understand each marketing channel’s value. Using this approach also facilitates the expansion of those methods, attracting the most prospects to your website.

The described attribution models provide you with an important decision to make. The right attribution model can dramatically impact where and how you devote your budget as well as the ROI your company can expect. It also provides a much clearer picture of what is and isn’t working in terms of conversion.

With a wealth of models at their disposal, e-commerce companies can work smarter and target the right channels and audiences.