I’m always interested when one specific area of our world gains traction, at the moment that seems to be measurement and attribution.
Over the last few weeks and months, I seem to have been having an increasing number of conversations focussed on marketing measurement and attribution, and we’ve seen the release of DMA’s “CMO Measurement Toolkit”. Most recently I had a really interesting conversation with Julian Berry and Jo Young at Unifida, whose statistical approach to Marketing Attribution, as well as Marketing Sustainability, is fascinating.
Why is marketing measurement getting increasing focus, and why now?
As consumers, the cost-of-living crisis and rising daily costs has impacted every one of us and the net effect is that many consumers are being a little more selective about how they spend their money. This is turn puts increasing pressure on businesses, and on us as marketers, to maintain our existing relationships and hopefully encourage people to come to us.
Unfortunately, during economic downturns, it’s often marketing and HR that have their budgets cut to account for other areas of the business – although this trend is changing. In part, the marketing spend for many businesses (but not all) is an intangible cost of the business, and hard to directly identify the specific revenues or value generated. This puts us, as marketers, in a difficult position of trying to, for want of a better word, “justify” every pound we spend.
Attribution is more than justification
Attribution is more than simply understanding and justifying our existence, it enables us to:
- Measure ROI accurately for marketing activities
- Make data-driven decisions for marketing strategies
- Optimise campaigns based on attribution insights
- Understand customer journey and preferences more comprehensively
- Align marketing efforts with revenue generation and sales teams
The challenge we face is that it’s rarely easy to attribute revenue to a specific marketing event or activity. Consumer buying decisions are often made over multiple events, with multiple contacts, channels, and other influencing decisions. A customer journey, with three emails, an SMS, a “My Account” offer and even a call, have variable costs associated with them. So where does the final customer spend get assigned?
Approaches & Considerations
When attributing revenues to marketing activity, we have to consider several key points to ensure accurate and effective attribution.
- Clear objectives and KPIs: Establish clear marketing objectives and key performance indicators (KPIs) aligned with revenue goals. Define what constitutes a successful outcome and the metrics that will be used to measure it.
- Attribution models: Choose an appropriate attribution model that best reflects your business and marketing strategies. Common models include first touch, last touch, linear, time decay, and multi-touch attribution.
- Multi-channel tracking: Implement tracking mechanisms across various marketing channels and touchpoints to capture data on customer interactions and behaviours. This includes online channels (website, social media, email) as well as offline channels (in-store, phone calls, events).
- Data integration: Integrate data from different sources, such as CRM systems, web analytics tools, advertising platforms, and sales databases. This integration provides a holistic view of the customer journey and helps attribute revenues accurately.
- Time lag and latency: Recognise that customer journeys may span different time periods, and there can be a time lag between marketing activities and revenue generation. Consider the latency period for different marketing channels and touchpoints when attributing revenues.
- Incrementality and control groups: Establish control groups or conduct experiments to measure the incremental impact of marketing activities. By comparing the performance of a test group exposed to marketing efforts with a control group that is not, you can estimate the true effect of marketing on revenue.
- Attribution windows: Determine the appropriate attribution window or timeframe during which marketing activities are considered influential in driving revenue. This can vary depending on your industry, product lifecycle, and customer buying behaviour.
- Data quality and accuracy: Ensure the accuracy and reliability of data used for attribution analysis. Implement data validation processes, monitor data integrity, and address any discrepancies or inconsistencies promptly.
- Continuous optimisation: Attribution is an ongoing process that requires continuous monitoring, analysis, and optimisation. Regularly review and refine your attribution models and strategies based on feedback, new data, and evolving marketing trends.
Revenue attribution is a complex and continually evolving field, and the key points mentioned above provide a starting point.
It is also important to note that we cannot measure and attribute every transactional value directly to the marketing activity a consumer has been exposed to, as we cannot always measure who has seen our non-targeted content (billboards, in-store branding, tv ads).
For more information about measurement and attribution, get in touch.