With the Online Marketing Rockstars Expo behind us, we thought we should break down the masterclass our COO Robert Schneider held into a five-part series, to reiterate and delve deeper into the key points of what he said of attribution and how it is applied in e-commerce. Over the five instalments, we will discuss the necessities for attribution, the extent of your data that makes sense for attribution and the questions you need to ask when evaluating your current state of attribution.

For a start, let’s examine the purpose and role of attribution in your organisation, the factors that influence attribution in your organization, and shine some light on the various terms used in the industry.

 

The purpose of attribution

From our perspective, attribution really serves two primary purposes:

  1. To determine the effectiveness of marketing channels
    This means the perfect attribution model evaluates every touchpoint of the customer journey exactly proportional to its influence on the customer to achieve a marketing goal, such as a sale. It is key for marketers and CMOs to understand how their marketing activities have been performing to evaluate the present marketing strategy.
  2. To optimise marketing objectives
    e.g. marketing expenditure, number of customers won, sales generated
    In this case, attribution is viewed as the transfer process of the customer’s decision-making process to a valuation model for marketing activities. This is typically important, not only when marketing reports their results to sales and other teams, but also because individuals’ KPIs are tied to it.

In both cases, attribution is a part of a larger technical process that needs to take place in full, in order for these goals to be achieved.

 

The role of attribution in the technical process

 

This tracking process begins with the clicks and ad impressions of each touchpoint that are strung together into a customer journey, which end with the conversion or transaction.

This then undergoes attribution where the winner(s) of the customer journey is determined per the defined model and rules, rating where the winner(s) get evaluated per defined cost models, and validation of the sales and revenue of the transaction.

 

Factors that influence attribution

In the analysis of the marketing strategy and investments, any data and insight needs to be analysed with both the consumers’ and the organisation’s choices taken into consideration. After all, attribution is surrounded by complexity and it’s best to understand it before simplifying it.

Consumers’ decision-making process

Every purchasing decision is subject to a psychological process which can be influenced by many external (e.g. social norms, peer pressure) and internal factors (e.g. basic needs, past experience). Marketers attempt to steer the decision-making process in their favour and even build up brand loyalty to minimize repeated decisions for similar products or services.

Although psychological decisions can be influenced by different factors, they can be generalized in patterns. The role of marketing is to then get to know these patterns and thus control the influence of every advertising channel and activity on the decision-making process. This is practically done by collecting, organising and structuring masses of data from contact points, and thereby analysing and optimising budgets, sales and earnings.

Your organisation’s decision-making process

It’s easy to forget that even the marketing experts themselves are important to attribution – just as technology, strategy and budgets are. After all, the methodology behind the chosen attribution is always a human-made decision on behalf of the organisation.

This psychological decision-making process of an organisation can be influenced by hierarchy, competency (or the discrepancy between the two), personal interests (e.g. in the career), and implementation conflicts (e.g. company strategy, dependencies of third parties, quality of service of service providers and partners).

 

The diverse world of attribution

While every tracking solution enables attribution nowadays, marketers demand more; Transparency and flexibility over attribution rules and mechanisms has become a necessity, leading to increasingly diverse attribution approaches. These include:

I. Deterministic attribution

“I define a set of rules based on a clear intention.” If the company’s strategy is to expand market presence through affiliate partners, marketers will set a larger budget for affiliate partners and rank them above other non-paid campaigns in their attribution rules, so they can better attribute the success to each of their affiliate cent.

II. Algorithmic attribution

“I have lots of data concerning customer interactions with all my marketing channels.” Here, marketers make use of statistical mathematical models, with which data is continuously evaluated. The algorithmic system is solely dependent on the quality of the data and the capabilities of the algorithm.

III. Heuristic attribution

This is a mixture of deterministic and algorithmic attribution, as it tries to formulate valid results despite limited information. This is used when strategic constraints are too important to leave attribution results to an algorithm, and there is simply too much data to recognize the most relevant and to take decisions.

At the end of the day, it depends on what organisations learn from its own experience, and the constant tweaking and optimising of its own attribution rules, models and methods to achieve the best for itself. But the best analysis is only as good as its data!

 

And that was part 1. In the next instalment, we will be discussing the most important things you need to know about data collection. Stay tuned!

Here is part 1 of the masterclass by COO Robert Schneider. The masterclass was held in German.

Catch up on the rest of the Attribution in E-Commerce Series: Part 2 | Part 3 | Part 4 | Part 5