Today’s digital consumers are engaging with brands on multiple channels and might return to each individual channel several times before making a purchase. To adapt to this consumer behavior, marketers are creating digital ecosystems- instead of creating content for each channel in silos, they are creating rich, integrated campaigns that include all touch points from email drip campaigns, to social media, to search engine optimized website content. When you’re building your ROI reports, how do you know which of these channels should “get credit” for individual sales?
I’ll use Mediacurrent as our business and you as our potential customer for this scenario.
Let’s say you have a Drupal project. You might start by doing a Google search for a specific Drupal problem you’re trying to solve. Because Mediacurrent is an avid Drupal blogger, you find one of our blogs and click through.
After reading our blog, you might sign up for our email newsletter and follow us on social channels because we’re super interesting.
After weeks or even months of reading our emails and social media posts, you might see a Facebook ad for one of our eBooks, click through to download it. After reading the eBook, you are ready to talk about a proposal, so you type 'mediacurrent.com' into your browser and fill out our contact form (and convert).
In this scenario, which channel should we give credit to for the conversion? The user interacted with us on many channels and was nurtured through a variety of campaigns.
You could say the direct traffic because it was the most recent thing the user did and probably “talked them into” converting. That wouldn’t take into account all of the other interactions that led them to convert- including the Facebook ad that led them to the eBook. You could also say that organic search should get the credit because it is the channel that first introduced them to us.
The fact is determining ROI on a specific channel is difficult (or even misleading) if you aren’t using the correct attribution model for your business.
Most Commonly Used Attribution Models
An attribution model is a way to figure out which digital channel should get credit for a sale or conversion. Below are the most common attribution models.
First Interaction Model
This model attributes 100% of the credit to the first channel the user interacted with to get to your website. In the example above, 100% of the credit would go to organic search efforts.
Last NonDirect Click Model
The Last NonDirect Click Model gives 100% of the credit of the conversion to the most recent channel that is not direct. In our example, all of the credit would go to Facebook advertising.
What is a Direct Traffic Source? Users coming from the “direct” channel got to your website by typing it directly into their browser or clicking in from a bookmark.
The theory is that direct users have already been “wooed” by your previous marketing efforts. By default, most programs, like Google Analytics, will use this attribution model.
Last Interaction Model
This model attributes 100% of the conversion value to the last channel that brought the user to the site before converting - even if it’s a direct traffic source. In our example that would give full credit to direct traffic because you came back to 'mediacurrent.com' directly (not through another link or channel) to actually convert.
Multi-Touch Attribution Models
By this point, you may have decided, like me, that most of the common attribution models are too simple to be useful. They just don’t give enough information for people to base ROI decisions on. This is why several marketers are moving to a multi-touch attribution model. I’ve summarized the most popular below.
Instead of giving credit to one channel, this model attributes equal credit to all channels that the user interacted with before converting. For our example, organic search, email, social media, and direct traffic would all share equal credit.
Time Decay Model
This model gives more weight to channels that were used closest to the time of conversion and less weight to early interactions. In our scenario, that would mean channels like direct and Facebook ads would have more credit than early interactions like organic search.
This model puts the most weight on the first and last interactions, then adjusts the weight for interactions in the middle accordingly. In the example above, the organic search and direct would get the most credit and the rest of the credit would be shared between the email, social media, and Facebook ads.
In practice, you might assign your weights to look something like this:
- First interaction: 25% of the credit
- Second interaction: 10%
- Third interaction: 10%
- Fourth interaction: 10%
- Last interaction: 55%
Notice how I gave the last interaction the most weight, the first interaction the second-most weight, and then split the remaining between everything in the middle? You don’t have to use the same breakdown. You might give equal credit to the first and last or a different percentage. The basic principles are the same though regardless of how you customize it.
Deciding on an Attribution Model for your Business
Deciding on an attribution model is tricky business. You don’t want to select something that is too simple because it might not paint the full picture of what caused someone to convert. You also don’t want a model that is too inclusive that it’s impossible to determine which channel is actually bringing value.
The most important thing anyone who makes ROI decisions can do is to deeply consider each model. By the end, you might decide to make your own custom model that is specifically tailored to your sales cycle. And at the very least, you’ll come away with a deeper understanding of what goes into an individual conversion.
What have you seen in your business? Are your users using several channels before deciding to convert? How do you attribute credit and assign ROI?
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