If you’re starting from scratch with Attribution this primer is for you.
What is it?
Marketing attribution is the method of allocating credit to different marketing channels for conversion events – generally measured in revenue or lead volume.
Your company, Qwerky Coffee Swag, sells coffee-related paraphernalia. Your CMO spends money on Facebook, Adwords and Bing, revenue is growing 20% month-on-month and life is good.
So how does your CMO measure performance across these 3 platforms? Well, they could look at ROI by comparing what they spent on each platform versus the results generated by each platform. It’s easy to determine what you spent on Facebook for the month of May, but what revenue number do you compare this with to calculate the ROI? This depends on what model of attribution you use.
The simplest, and probably still the most common way to do this is to use “last-click” attribution. As the name suggests, it attributes revenue credit to the last channel a user clicked on before converting. The thinking here that the last channel was the deciding factor, and thus, should get the credit for the conversion.
Last-click attribution example
Qwerky Coffee’s CMO spends €100 on Facebook ads every month. Google Analytics tells you that last month, there were 50 transactions with Facebook as the session source (or “last-click”), totaling €1000 in revenue. So, Qwerky Coffee’s ROI on Facebook is 10.0 (€1000 / €100) – excellent!
In this example, Qwerky Coffee attributes all of this €1000 to Facebook, because it was the last-click before these transactions took place. The assumption being made here is that for every €1 you spend on Facebook, you get €10 back, independent of other channels.
Is there anything wrong with this assumption?
It ignores the role of other channels and conversion paths. Using the Qwerky Coffee example, imagine if one week before seeing the Facebook ad, our 50 customers had actually clicked on a Google paid search ad for “Burr Grinders”. Perhaps they visited the website, liked what they saw and made a mental note to come back another time and buy something. Consider for a moment the logic of attributing all of the €1000 revenue solely to Facebook. In this example, it’s possible that fewer of these transactions would have occurred without the Google paid search ad.
Absolutely. The vast majority of companies still use last-click attribution to measure performance and that’s where most of our customers start. Depending on your company’s conversion path, last-click attribution may be sufficient to measure marketing performance. There are more nuanced models available (U-shaped, time-decay, algorithmic, etc.) and many companies “graduate” to these as they increase their level of marketing sophistication. But for many, last-click attribution is still an excellent fit for their marketing performance measurement.
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