Businesses have a whole host of metrics and KPIs for measuring their marketing efforts, and marketing attribution models are one such tool at their disposal. In this article we’ll cover what marketing attribution is, the main attribution models you should be aware of, and the main benefits and potential drawbacks of using such models.
Understanding marketing attribution
Marketing attribution consists of identifying which marketing channels, touchpoints, or interactions influence a customer’s decision to convert – e.g., their decision to buy something or sign up for a service. Then, credit is attributed to those channels. This is vital for maximizing your ROI in regards to your marketing efforts.
The goal is to understand how different marketing efforts can work together to influence customers’ behavior and, in the end, drive sales. Marketers, through analyzing the customer’s journey, can see which channels (e.g., email, social media, advertising) are most effective at engaging customers and leading to conversions.
Along with things like social listening, this kind of insight can help your business when it comes to optimizing your marketing strategies and allocating budgets effectively. Attribution can be approached with the use of different models, which we will get into in this article, and which assign credit to each touchpoint in varying ways.
Marketing attribution models
A marketing attribution model is the framework used to evaluate and assign credit to the various marketing channels. There are several types of marketing attribution models, including, but not limited to:
- First-touch attribution: All credit is assigned to the first interaction a customer has with a brand.
- Last-touch attribution: All credit is assigned to the last interaction before conversion.
- Multi-touch attribution: Credit is distributed across multiple touchpoints based on set rules, such as linear attribution (equal credit to all interactions).
Here are descriptions of the three models:
1) First-touch attribution
As we mentioned earlier, this is the type of attribution model where the customer’s first touch-point is considered the most important touchpoint in their customer journey. This could be an ad they clicked on, a social media post they engaged with, etc., and it’s given all of the attribution credit.
For example, if your customer is looking for an automated phone system for small business, and they see a paid ad for your product on Instagram that they then click, the first impression of your brand and product was that advert. In this case, that paid ad would get all of the attribution credits, regardless of whatever actions the customer took next (e.g., sign up for a free one-week trial).
The model is ideal when it comes to identifying the channels or marketing campaigns that brought your product and brand to the attention of your customers and prospects. This is great for less complex business cycles where you want to see if your marketing efforts are paying off, such as for small businesses. In more complex business sales processes that span the length of months, this model is less useful because there are more dynamics at play.
2) Last-touch attribution
In the last-touch attribution model, all of the attribution credits are given to the touchpoint right before the customer converted. So, if after clicking on your Instagram ad, they perused your website and then landed on an informative infographic that preceded buying your product, this model would give all of the credit to this infographic.
The rationale behind this model is that the most recent impression was the decisive tipping point, the most important moment in their customer journey. This model can be useful in many scenarios, but again, with more complex and drawn-out customer journeys and campaigns, it could overlook a lot of other deciding factors.
3) Multi-touch attribution
Multi-touch attribution models, unlike single-touch attribution, which assigns all credit to one interaction (either the first or last touch which we saw above), takes into account multiple interactions across different channels, and might be more suitable for business-to-business marketing strategies that take place over longer periods.
There are several common types of multi-touch attribution models that we will cover here:
- Linear attribution
The linear attribution model is one of the most basic approaches to multi-touch attribution, assigning equal credit to each touchpoint that your customer interacts with along their journey to conversion. So, in this model, if a customer interacts with three different marketing channels before making a purchase with you (e.g., different social media channels, email campaign, website), each channel receives one-third of the credit for the conversion.
The advantages of this model include simplicity – it’s a straightforward model that’s easy to implement, making it a solid choice for businesses just starting with attribution. It’s also comprehensive, acknowledging all customer interactions, and giving you a more holistic overview of the customer journey.
However it does lack nuance, since by giving equal weight to all touchpoints, it’s too easy to oversimplify the impact of particular interactions and miss their influence compared to others.
- Time decay attribution
The time decay attribution model assigns a greater number of credits to touchpoints that occur closer to the conversion event. So with this model, the premise is that interactions occurring closer to the moment of conversion are more significant.
So, if a customer interacts with three channels over the course of a week, the most recent interaction might receive 50% of the attribution credit, the middle interaction gets 30%, and the first interaction just 20%. These percentages can vary on the basis of how many interactions there are and the time frame under consideration.
A great advantage of this method is that it generally reflects our understanding of human psychology, aligning well with how customers are actually understood to make decisions, with recent interactions tending to have a stronger influence on their actions. This model also helps marketers understand which interactions are the most powerful when it comes to driving those conversions.
One issue, however, is that it could inadvertently undervalue those earlier touchpoints that helped nurture the lead and did much of the heavy lifting.
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U-shaped attribution
The U-shaped attribution model assigns most of the credit to the first and last touchpoints, and distributes the remaining credit among the middle interactions. So, if a customer’s journey includes three touchpoints (a Facebook ad for a sales enablement tool , a marketing email, and an Instagram ad), the first touchpoint might get 40% of the credit, the last touchpoint 40%, and the middle touchpoint 20%.
One obvious advantage of this model is that it recognizes the importance of both the initial awareness stage (first impression) and the final conversion stage, which can be vital when it comes to understanding customer behavior. First impressions matter a lot, but so does that final push.
It offers a nicely balanced understanding compared with the linear attribution model by giving more credit to the touchpoints that are understood to generally have a higher influence on customer behavior.
Of course, middle touchpoints can end up being undervalued, not fully recognizing the important role of those nurturing touchpoints in the middle that build trust and familiarity with the brand.
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W-shaped attribution
The W-shaped attribution model is not dissimilar to the U-shaped model. It adds a third significant touchpoint—typically the one where the lead is qualified (e.g., they sign up for a demo or consultation). In this model, the first touchpoint might receive 30 percent of the credit, the last touchpoint 30 percent, the middle qualified touchpoint 30%, and the remaining credit gets distributed among other interactions.
By recognizing three key interactions, this model provides a more detailed view of the customer journey than the U-shaped attribution model, and focuses on lead qualification, highlighting the importance of this touchpoint, which can be crucial for B2B businesses.
However, it can be more complex to implement and analyze than simpler models, requiring more sophisticated data tracking capabilities and analysis.
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Custom attribution
Custom attribution models are models that are tailored to the specific needs of your business. Companies can create their own models based on their unique customer journeys, industry standards, and data analytics.
How it works is that a business can analyze its data and decide that certain touchpoints are more valuable based on specific contexts, and adjust the credit distribution in accordance with this data.
Custom models can be designed to fit the unique characteristics of your business and customer interactions, and as a data-driven model, it can be based on actual customer behavior, leading to hopefully a more accurate attribution.
However, this is a resource-intensive process. Developing a custom model requires extra time, knowledge, and resources. This isn’t doable for every budget and business size.
Final thoughts
Different attribution models are suitable for different company sizes, marketing strategy complexities, budgets, and personal preferences. Whether you opt for a first-touch, last-touch, or multi-touch attribution model, this system can help you to identify those channels and areas that most draw customers in and help lead them to conversion.
