Understanding Attribution Models Gives Online Paid Advertising the Value it Deserves

As a business owner or marketing manager, understanding the value and return on your paid ads and marketing dollars is a key goal to both profitability and growth. In the modern digital age users will travel through various stages of a sales funnel –  problem aware to solution aware, information seeking to price shopping, brand aware and then on to purchase.

How can you be sure you are providing and aligning the proper value to each marketing channel in your funnel when that sales funnel involves so many touch points?  – The answer comes from attribution modeling, and marketing companies need to be discussing how to value efforts based on the new models of attribution.

The problem has always been a lack of connected metrics and value to prove that effectiveness. A billboard on the side of the freeway is one of the best examples of this. Highway billboards are typically sold based on the potential of how many eyes will see it. But the number of cars driving by, doesn’t have any real correlation to the number of people who will look at the advert, and virtually no correlation to those who saw a billboard and then made a purchase of a service or product.

Digital marketing services have grown in power and use, out of an ability to connect these dots and provide direct data to prove the connection between ad views (impressions), ad interactions (clicks), and actual purchases. Even with this power, there has been a gap that only in the last few years has been possible to overcome. Digital marketing channels often disagree on how much credit they deserve and utilize different attribution models creating conflicts in data reporting. – Ever wonder why your Bing or Facebook ads are tracking more conversions than what is being reported in your analytics? The reason is attribution and differences in the models used.

Independent ad platforms typically want to take an attribution model that favors their service. These models are often set where any touch point (or worse, some use metrics as loose as ad views) counts toward the value of that service, and may be only one touch point in a multi step path to conversion. But there is an inherent value to viewing more than one attribution model.

While last click attribution has been the default attribution model within Google analytics for years, this has primarily been due to limited abilities to effectively view and track a multi-touch user path. Google’s shifts with universal analytics, and more recently cross-device tracking and the new global site tag, along with additions to the Google ads platform now paint a clear big picture view of the user journey including business listings and direction requests for local visits.

If you took this and looked at it as if we were discussing the education system – last click attribution is the equal to giving credit for a child’s entire education to his college graduating teacher. This level of misinformed logic might suggest that grade school teachers provide no value and elementary school funding should be ceased.  A flawed logic based on a view which doesn’t consider the entire journey, or Miss Johnson the second grade teacher who inspired children to become scientists, authors, and doctors. The picture below details a more pertinent scenario that you have probably come across with your digital marketing clients:

last click vs. google ads click attribution model

Last click attribution only gives credit to the final touch in a multi-touch user path. This fails to give credit to the originating source of user traffic, and the value of various other sources (for example social) on content and marketing efforts that create awareness, inform, and alter flow of users from unaware of a brand to brand aware, on to purchase, and potentially returning them as an advocate supporting new customers through review and referral. This becomes particularly true when evaluating brand traffic. How did they learn your brand name to begin with? Was it one of several, possibly undervalued paid sources? Some of the best and biggest brands grew to what they are now by focusing specifically on paying for their own brand – Coca Cola, Budweiser, Chevy, Uber, the list goes on.

This is particularly valuable in ecommerce and business models with high lead volume or frequently returning customers. A paid ad may drive a single transaction of a low dollar value and only be validated by the initial single purchase. With attribution, the ability to see that initial impact on return visits through secondary or direct sources may show a much larger lifetime customer value and return on ad spend for the same initial cost, making the initial expense far more justifiable, even if it is at a lower return initially.

As an example, without looking at the value of attribution, one might make an assumption that email marketing efforts and direct traffic drive the largest lead or revenue value and discount other sources. If these sources are limited or removed – the growth of direct traffic and email as a marketing channel are equally and indirectly affected because the originating source is cut off.

When looking at first click or last ad click we can see that originating sources, or middle sales funnel touch points may be being undervalued. This becomes particularly true when we look at the value of brand terms, and direct traffic or brand lift from paid sources.

Before considering altering your marketing channel mix, spend some time with your vendors and marketing team to understand the hidden value of your advertising channel and how attribution may paint a picture that doesn’t undercut that value to other marketing sources.