Attribution models: What they are, why they matter, when to use them
Most paths to purchase are not a straight line. There are lots of ways for customers to discover your brand, engage with it, and move further down the sales funnel. That’s why attribution models have become a necessary tool for marketers looking for data to improve their campaigns.
In this article:
- What is attribution modeling?
- Why do attribution models matter?
- Example of attribution
- Single Touch Models
- First Touch Model
- Qualified Lead Model (Last Touch)
- Lead Creation Model
- Last non-direct click Model
- Last < most important touch > Model
- Multi-Touch Models
What is attribution modeling?
Attribution modeling is a strategy that allows marketers to analyze and assign credit to marketing touchpoints that occur at the specific steps of the customer journey, from searching for a product online to making a purchase, and every action in between. Using attribution models helps marketers better understand which parts of their marketing effort are driving the most leads to that part of the sales funnel.
With multi-touch modeling, you can distribute credit across multiple touchpoints to see how marketing interactions affect the entire sales funnel.
Why do attribution models matter in digital marketing?
As a marketer running multiple campaigns on multiple platforms, it can be difficult to determine which mix of PPC keywords, display ads, landing pages, and SEO are generating leads that move efficiently through the sales funnel and down the conversion path. With attribution modelling, marketing teams get a bird's eye view of each customer journey from the starting point to the end purchase.
For example, customer A and customer B are both looking for a product your company sells. Customer A converts in 1 step because they came to your website knowing what they wanted and your site was able to provide it. Easy as pie.
Customer B, however, may have a completely different experience getting to that conversion. Let’s say Customer B first clicked on your company’s display ad, then interacted with your brand on social media before visiting your company’s website from an organic search listing, downloaded an ebook and reached out via a live chat a week later before signing up for a demo of your product.
As you can see, customer B’s user journey involved several steps, or touchpoints, over a period of time.
If you only give credit to the last touchpoint before a sale, you’re missing out on all the touchpoints along the way that influenced your customer’s choice to invest in your brand. This is a perfect example of a multi-touch conversion route and is becoming the rule rather than the exception in today’s online sales conversion reality. By understanding which top-of-funnel efforts are successful, you’re able to determine which marketing efforts attract customers in the first place, and guide them deeper into the sales funnel.
Similarly, attribution models that emphasize the last touch before the conversion action give you insight into which marketing channels drive potential buyers to actually convert. If you have an idea of which touchpoint creates conversions, you can make sure to infuse those channels with the best calls to action and other purchasing prompts.
But why is it important to know about single or last touch versus multi-touch conversion routes? To save you money, that’s why.
As a marketer, you’re concerned with how and when your ad campaigns create conversion events. Attribution modeling can provide vital data about your marketing efforts, including what paid search campaigns work, what campaigns don’t, and where you should be allocating your money for optimal conversion rates at important milestones in the sales process. Attribution modeling allows marketing campaigns to stop with the throwing spaghetti on the wall to see what sticks technique (picture tossing out every marketing strategy online and praying that something will stick), work smarter not harder, and harness the power of return on investment (ROI) data.
Single-touch vs Multi-touch
There’s a large variety of attribution models out there, from AI-based software, Facebook’s own attribution tool, or the standard Google Analytics attribution models. However, they’re generally split into two main varieties: single-touch and multi-touch.
Single-touch models, as the name suggests, assign credit to one single touchpoint in the customer journey–usually the first (when they initially interacted/became aware of your brand) or the last (when they decided to make a purchase).
The following are single-touch models:
- First touch model (first-click attribution)
- Qualified lead model (Last touch) (last-click attribution)
- Lead creation model
- Last non-direct click model
- Last < most important touch > model
There is a certain logic here–the first and the last touchpoints are obviously pretty important. If you can’t get people initially interested, then it’ll be hard to lead them along the funnel–however, if you can’t then close the sale, it’s all for nothing.
But single-click models have their own limitations. The modern consumer journey is increasingly fragmented, with customers quickly jumping from one channel to another. For instance, say your company sells shoes. A customer might see an ad on Instagram, click onto your account, then a few days later go onto your website, before clicking off and only a week later being retargeted by a Facebook ad, clicking on that link, and finally making a purchase.
If you choose to attribute 100% of the credit to any one single touchpoint then you’ll miss the entire consumer buying process. As important as the initial Instagram ad was, was the Facebook ad not just as (if not more) important? In fact, would they have even purchased had they not gone onto your website and browsed your products in more depth?
In fact, would they have even purchased had they not gone onto your website and browsed your products in more depth?
This is where multi-touch attribution comes in. Multi-touch attribution aims to assign each touchpoint along the consumer journey with an appropriate amount of value (correlating to its importance in the buying journey).
The following are multi-touch models:
- Linear attribution
- Time decay attribution
- U-shaped Attribution
- W-shaped Attribution
- Z-shaped Attribution
Say you had a customer who spent $100 on your shoes. In the example mentioned above, you might decide that the initial touchpoint–the ad on Instagram–was worth $30. Them clicking onto your Instagram account was worth $20, visiting your site a few days later another $20, and the final retargeted Facebook ad which directly led to the sale was worth $30. Some other examples of multi-touch models include the linear model, time decay model, position-based, or custom rule-based models.
Some multi-touch models have pre-determined mathematical equations that dictate how much credit to assign to each touchpoint, whilst custom multi-touch attribution models give you the ability to fine-tune this according to a myriad of factors (prior experience being the main one).
In all, it’s clear that multi-touch attribution is the more comprehensive model, and offers marketers significantly richer insights than single-click attribution models.
Single Touch Attribution Models
Also referred to as first-click attribution, this model gives all of the credit to the very first interaction your business had with a customer before they convert i.e. make a purchase. Use this model to see what catches new customers’ attention at the top of the funnel.
This attribution model identifies the unsung heroes of your marketing. Maybe your PPC campaigns don’t directly create sales, but they lead to the kind of awareness and engagement with future customers that does eventually generate revenue. If you only count what’s at the end of the funnel, you might cut your PPC efforts and see a drop in sales accordingly. This attribution model is especially important for businesses that have longer sales cycles and are working to create brand advocates, rather than simply one time purchases.
The qualified lead model, also known as last touch attribution, gives all of the credit to the last interaction your business had with a customer before they convert i.e. make a purchase. It’s also referred to as “last-click attribution” or “last-interaction.” This model is the default on most platforms, including Google Analytics.
For example, if a customer visited a blog post you wrote before calling your company number on that page, the blog post would be their “last touch”, or the touchpoint that created the raw lead.
The qualified lead model approach has been used in marketing for a long time, but it’s starting to fade as the most effective way to analyze your marketing–especially when there are so many other touchpoints involved in a consumer’s buying decision. However, this model lets you know which marketing channels or campaigns drive your customers to action, so you can optimize on those important moments. This model is particularly effective for understanding shorter sales cycles where the buying process is quick and the conversion action is often immediate.
Lead-creation-touch models put a lot of emphasis on the distinction between prospects and leads. In fact, lead creation touch attribution models give 100% of the credit to the milestone when a prospect becomes a qualifiable lead so you can pinpoint and understand the critical touch point at which a prospect voluntarily enters their personal information into a form for a webinar, newsletter, etc. and becomes a lead.
Last non-direct click attribution models give 100% of the credit to your customers’ last non-direct touchpoint. Non-direct traffic is all traffic that’s been guided to your website from another source. Your email campaigns, Twitter posts, influencer marketing campaigns, etc. should all be accompanied by a corresponding UTM.
Last < most important channel > touch models are customizable, single-touch marketing attribution models. Last < most important channel > touch attribution models give 100% of the credit for a sale to the last touchpoint of any one single pre-determined channel. This means that your reports will always show one channel as being wholly responsible for all of your sales.
Multi-Touch Attribution Models
This model involves dividing the credit equally amongst all of the touchpoints in a conversion path or customer journey. If there were 3 touchpoints in the consumer journey, each of those points would get 33.33% of the overall credit for that sale.
This model is similar to the “linear attribution” model in that each of the touchpoints are ascribed some credit for a conversion, however, the most recent touchpoints are given more of the pie, and the least recent interactions get a smaller piece.
This model (also called Position-Based attribution) divvies up the credit for a conversion between a customer’s first interaction with your brand and the moment they convert to a lead, with each receiving 40%. The remaining 20% of the credit is spread out between all other interactions that happened between the first interaction and the sale.
Credit is split evenly between the first-touch milestone, last-touch milestone, and the qualified-lead milestone. Each of these touchpoints receives one-third attribution credit in this model.
Z-shaped attribution is a multi-touch model that gives credit to all touchpoints in the customer journey. It’s also a position-based model, meaning that it decides how much credit to apportion each touchpoint depending on its particular position in the sales cycle/buyer’s funnel. The four most important touchpoints in the consumer journey are given 22.5% of the credit, with the remaining 10% of credit split equally amongst the rest of the touchpoints.
Choosing the right attribution model for your business
No two brands have the same marketing strategy so you need to be selective when choosing the appropriate attribution model.
If you’re selling an incredibly high-value good like a car, then this will obviously have a longer sales cycle than if you sell sweaters. As a consequence, your marketing strategy will probably be far more complex–with multiple campaigns, both online and offline, all playing their part.
This means you’ll need a comprehensive attribution model which shows you the ins and outs of each prospect’s buying journey:
- How they first become aware of your brand
- Why they drop off
- What makes them return to your site
- Why they make the final decision to purchase
When choosing an attribution model, you first need to decide on your end goal. Do you simply want oversight into how different campaigns work with each other to push the customer down the buying funnel?
For example, you might want to test out whether customers first become aware of your brand through organic search, before then coming back to your website after having lapsed by seeing your targeted Instagram ads.
Alternatively, you might want to delve deep into the specifics of your campaigns. Not all touchpoints necessarily contribute the same amount towards a customer deciding to purchase, so it’s worth finding out precisely which work best. Doing this will help you work out just how important each touchpoint is, in comparison to the others.
It’s also worth considering your in-house data science capabilities. The most advanced attribution models often require a data scientist to fine-tune how much credit you give to each touchpoint–this isn’t easily worked out, so if you don’t have your own data scientist(s), then it’s probably not worth going down this route. For smaller organizations, a more generic, run-of-the-mill attribution model will likely be best.
Account for online and offline touchpoints
Most attribution models are great at looking at online touchpoint, but don’t take into account any offline interactions a customer has had with your brand.
Something a consumer sees online may prompt an in-store visit, or the other way around–maybe they read some great content you had on your blog, so they decided to listen to your CEO’s keynote address at a conference, which then convinced them to buy from your company.
Blending offline and online touchpoints can be a tricky business, but failing to do so could give you a limited–and potentially false–view of your consumer journey. However, there are potential solutions:
1. Measuring foot traffic
Many attribution companies measure foot traffic by using beacon technology. These radio transmitters attach to bluetooth-enabled devices, like smartphones, to capture location data. If someone who saw your campaign on their cell phone later walks into your store, you then have a way of knowing that their online activity affected their offline behavior.
2. Point-of-sale surveys
Point-of-sale surveys are another idea, though they’re not usually very popular with customers. Briefly asking where they came across your company might reveal some engagement with online campaigns, though this method can be fairly imprecise–sometimes people either don’t remember which specific campaign or channel introduced them to your brand, or they may not even really want to engage.
3. Call Tracking
Call tracking is one highly effective means of effectively attributing both online and offline touchpoints. For instance, say your company launches a series of radio ads, puts up billboards, and sends out a direct mail campaign. If each medium has its own phone number attached–that’s to say, someone who calls having seen the billboard will dial a different number to someone who heard the radio ad–you’ll be able to quickly and easily identify the ROI of each effort.
Evaluating your current attribution model takes time
Your attribution model isn’t there just as a nice-to-have. It’s supposed to help you improve your marketing strategy on an ongoing basis. If you change your marketing strategy multiple times according to your attribution model but don’t see a tangible change in results (i.e. overall sales), then it’s time to find a different attribution model.
Any time you make a change to your marketing strategy, give it some time before assessing whether or not you need to make another. Your prospects’ decision to convert depends on multiple factors–not just your marketing strategy. Therefore, make sure you give each change at least a few months before changing again (unless you see a sudden and otherwise inexplicable drop in sales).
Which attribution model should I use?
This depends on how complicated your average consumer journey is. If you’re a large company then you might well have ads running across a medium of channels: social, television, in-person (billboards), radio, etc.
This means that many customers will interact with your brand several times before purchasing. In this case, it’s worthwhile choosing a comprehensive multi-touch model that takes this complicated journey into account.
However, if you’re a small company who only markets themselves via their website, organic social media channels, and takes out an ad in the local newspaper, you probably don’t need to invest in a highly complex attribution model.
To help you decide, we’re putting together a comprehensive guide to each model: a top-level view, their main benefits, and potential pitfalls.