The What, Why and How of Online Media Attribution
[if you like presentations, view "Attribution 101" on slideshare]
Anyone who has ever bought (or sold) display ads is painfully aware of the need for new metrics for online media. While “last-click wins” may work for paid search, it fails miserably in measuring the impact of display and other media at the top of the funnel. Hence, the need for full-funnel Attribution, which allocates credit for “assists” in the customer engagement cycle.
By attributing credit to contributing impressions and clicks that precede subsequent visits and conversions, marketers can have a much more accurate and holistic view into the performance of each channel and vendor. While most interactive marketers are familiar with Attribution, many are still trying to understand what it is and how it works.
The Need for New Metrics
While digital is the most measurable medium, the “one-size fits all” approach to online media measurement needs to be re-evaluated. While click-through rates (CTRs), cost per click (CPC), direct conversion rates and cost per action (CPA) may be applicable for search and other “bottom-of-the-funnel” media, these metrics are not appropriate or insightful for measuring performance at the top of the funnel, where demand is created.
Display ads can be very effective in achieving their objectives (driving awareness) without any clicks or direct conversions. A recent Media Math study showed that 80% of post-impression conversions are the result of viewing display ads without clicking and only 20% of conversions are the result of a click. In other words, for every conversion that follows a click on a display ad, there are four (4) post-impression conversions without clicks. The upshot: we need better tools and methodologies for measuring the performance of media at the top of the funnel. This is where attribution comes into the picture.
Attribution is the art and science of allocating credit to all interactions that play a supporting role in the customer engagement process. In other words, it’s the act of giving credit for assists. Rather than viewing results from each digital channel in its own silo (a la traditional web analytics platforms), Attribution requires you to take a holistic approach to analyzing how each touch-point contributes to the overall goal (visits, conversions, etc.).
With the resurgence of display advertising, Attribution is becoming increasingly important for optimizing media budgets. As shown in the Google trends chart below show, searches for “online attribution” have increased 150% over the past 36 months.
Approaches to Attribution
Generally speaking, there are two types of Attribution: Operational and Algorithmic / Media Mix Modeling.
- Operational attribution consists of creating detailed records of every impression, click, visit and action for each visitor to your site, regardless of the source or channel (e.g. display, paid search, natural search, direct navigation, email, social, affiliate, etc.). Data is then organized and reported in such a way that visitor paths and media placements can be effectively (and efficiently) analyzed. By understanding which paid, owned and earned media placements are driving the most effective engagement, you can optimize spend and marketing efforts to boost ROI.
- Media-Mix / Algorithmic Modeling consists of analyzing impression data, search data, email data and web log files to statistically correlate patterns and trends to fine tune campaigns. This “black box” approach is useful but it depends entirely on the hard-coded assumptions and calculations in the model.
We believe operational attribution is the foundation for advanced measurement and analysis of media. The operational approach of giving credit for assists is intuitive, logical and easy to understand. Once the operational attribution model is defined, algorithmic modeling can be used to further optimize the media mix.
Channel Level Attribution
Channel level attribution addresses the relative roles of each media channel in driving traffic and conversions. Attribution requires an algorithm that attributes partial credit to display impressions and clicks that precede visits and conversions. The weighting of impressions relative to clicks will vary based on the type of ad, format, placement and other issues. For example, highly-targeted rich media placements should have higher weighting than Run-of-network animated .gifs. Weightings should be customizable for each vendor and placement.
The channel attribution report below shows the relative impact (last click vs. attributed) of each channel: direct navigation, natural search, referring sites, email, paid search, display advertising and 3rd party email. As shown, attributable credit for display ads may be 50-400% higher than a last-click report would show. It should also be noted that paid search generally sees a net increase in attributable actions as short-tail keywords often play contributing roles in the customer engagement process.
After attributing credit for actions for each channel, spend data can be imported to show the adjusted cost per action for each channel, as shown below. As illustrated, we typically see a 30-80% decrease in attributable cost per action (CPA) for Display, and a slight drop in CPA for paid search (resulting from keyword assists)
Vendor Level Attribution
Looking beyond channel level, we use the same approach to assess the performance of each media buy. Shown below is a sample report showing the cost per action for each media vendor, both last-click and attributable. As shown, some media buys can appear to be very poor performers on a last-click basis, but are in fact very effective for creating demand that is subsequently satisfied through other channels.
Short-tail keywords (category terms, product terms, etc.) often play “assist” roles in the customer engagement process. Just as it’s important to know which display ads precede visits and conversions, assist keywords should also be identified. In many cases, assist keywords may perform poorly on a last-click basis, but perform very well in an attribution report.
The Business Case for Attribution
Attribution is more than just a buzzword – it is an essential part of campaign measurement and a requirement for optimizing media spend. As illustrated below, moving “loser” budgets to the “winning” vendors can produce a dramatic improvement in revenue and return on spend.
Beyond the improvement in media efficiency and ROS, the economic benefits also accrue to:
- Media planners: save wasted time and energy trying to replace ostensibly “bad” buys that are actually quite effective
- Ad Ops and analytics teams who are tasked with aggregating silos of data into massive .xls workbooks (attribution vendors will do this for you)
- Media vendors whose ads are actually engaging customers and creating demand that is satisfied through other channels.
As an industry, we have to do better. We can’t use yesterday’s tools to measure tomorrow’s media. Attribution should no longer be an aspirational goal, but rather a key part of your 2011 digital marketing strategy. The economic returns are compelling and there are numerous vendors (including us!) who would be happy to assist you in taking a more holistic approach to digital media measurement and optimization.
As always, comments are encouraged. And please feel free to share!