Making Sense of Attribution Modeling

June 26, 2017

For ecommerce stores, understanding the value of each marketing channel and campaign is a critical component of making sure you are focused on channels that drive sales and grow revenue.  Attribution modeling, as it’s called, helps you measure the value of each marketing channel along the customer journey so that you can make sure you are spending your marketing dollars wisely.  In today’s ecommerce landscape, every buying cycle is different. Shoppers take multiple paths to find your store and measuring the impact of each step in the complete buyer journey is becoming increasingly challenging.

ROI Driven Attribution Modeling

When it comes to accurately measuring the ecommerce ROI of your digital channels, many of the traditional attribution models fail to properly account for customer lifetime value. To help solve this problem, Glew developed an attribution model that is designed specifically for online sellers.

Glew’s model credits sales and conversions to the channel that brought customers to your site for their first purchase. All orders after that are attributed to that channel. It’s called First Order Attribution and is a model that helps ecommerce stores see the true return on ad spend through a customer-centric lens.  For example, if a shopper clicked on one of your Paid Ads, landed on your online store and made a purchase, Paid Search would get credit for that purchase.  If any future purchases were attributed to organic search or direct entry, Glew would attribute those orders to Paid Search since that is what brought the buyer to your site in the first place. It would give deserved credit to the channel that first exposed a shopper to your store and eventually led to future purchases.  Our model is based strictly on profitability, a formula that makes sense to our customers and delivers the most value.  Our customers tell us they have a much better understanding of how each marketing channel is performing which helps them make informed decisions about future marketing spend.  

Google Attribution

There are other tools to help you take the guesswork out of attribution modeling and add to your bottom line.  Google Analytics just announced the release of its new Google Attribution solution. The new tool is a free solution that can pull in data from Google Analytics, AdWords or DoubleClick Search to provide a more holistic view of conversion actions across channels for attribution modeling information.  The solution will reduce the use of ‘last click attribution’ with insight into how earlier ad dollars performed.  Google Attribution uses machine learning to assign a weighted value to every touchpoint along the path to purchase. The goal is to make sense of ad dollars' effectiveness across different channels and devices.  Here’s how it works:  While multi-touch attribution has been around for years, Google Attribution will be more accurate and faster than existing solutions. It's also free in the version designed for small and medium-sized businesses.  

Common Attribution Models

If you’re looking for a solution available in the tools you already have, here is an overview of the five most common attribution models:

First Click Attribution Model

  • In the First Click attribution model, the first touch point receives 100% of the credit for the conversion.
  • First Click is most effective if your advertising is limited to one or two channels. Because you know a customer has limited options for finding your store.

Last Click Attribution Model

  • In the Last Click attribution model, the final touch point before the sale would receive 100% of the credit for the conversion.
  • Use this model to most effectively measure the decision factor that results in sales. Last Click works best for businesses with shorter sales cycles.

Linear Attribution Model

  • In the Linear attribution model, each touch point on the conversion path shares equal credit for a conversion.
  • The Linear Attribution Model is effective to measure overall brand awareness and to see which channels are consistently influential during a customer journey.

Time Decay Attribution Model

  • The Time Decay model gives more weight to channels closer to the conversion point and less to channels earlier in the funnel.
  • Since the Time Decay model credits every touch point, it works well for stores with many repeat purchasers. Since these customers are exposed to different advertising and marketing methods, using the Time Decay model can help find what is driving repeat customers.

Positional Based Attribution Model

  • The Positional Based model favors both the first and last touch – typically giving them each 40% of the credit – while dividing the remaining 20% amongst the middle touchpoints. The model can drastically undervalue the middle, especially in a long path.

First-Order Attribution Model

  • First-order attribution means that all orders from a specific customer are attributed to the first channel that originally brought them to your business.
  • For example: if a customer purchases from you three times, and the first sale came from paid search, while the second two came from direct traffic, Glew would attribute all three sales to paid search. We believe first-order attribution is the most relevant for sellers because it highlights where your customers originally came from, and tells you how much those channels are ultimately worth to you.

 An informed attribution strategy helps ecommerce marketers decide when and where to best spend their dollars across the customer journey. While choosing the right attribution model for your business comes with a variety of challenges, it can be a very rewarding project to undertake. By moving beyond a basic attribution model marketers and business owners gain valuable insights about the efficacy of their marketing channels and where increased effort should be applied to drive more revenue.  

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