Attribution-Based Marketing Optimization

by Anto Chittilappilly, May 9, 2012, 9:34 AM

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Recently, Forrester Research published the research reports that ranked marketing attribution product providers for interactive and cross-channel attribution.  It’s important for a marketer to understand that attribution is a means to the end, and the report stressed that marketers must make use of all of their data to utilize attribution effectively. The final goal is marketing optimization that produces incremental marketing return on investment. Attribution accurately measures the marketing performance, and attribution-based optimization accurately allocates marketing dollars so that the marketers get the best incremental return on their marketing investments. It would be interesting to see some optimization scenarios -- let’s explore some.

Tripling the Doors

Imagine the owner of a physical store in a mall who is dissatisfied with the foot traffic he’s getting, and as a result the sales and revenue the store is generating.  One day an ingenious idea strikes him.  All his customers are coming through his front door. He decides to pay a carpenter to make three doors at the front of the store, figuring that triple the number of doors will produce triple the foot traffic and triple the sales. In the process of paying for new doors, the store owner spends all of the money that he typically spends on local radio ads. 

This concept sounds absurd, but marketers who optimize their marketing dollars by relying on last click are actually making a similar mistake without understanding the irrationality of their choice.

This short-sightedness can also be demonstrated by an attribution novice who looks at just one dimension of what attribution’s insights reveal. This leads to spending too much marketing budget on a single tactic, while failing to realize that multiple tactics work in harmony with each other to produce an overall result.  Bottom line: there still needs to be money invested at the top of the funnel to feed results achieved at the bottom of the funnel.

Multi-Dimentionality

One of the beautiful things about marketing optimization based on attribution is that it is multi-dimensional, and that it discovers and quantifies affinities between tactics, as well as uncovers the optimum mix of tactics required to produce the most desirable outcomes. As a result, if a marketer plans to change one component of his marketing mix, advanced attribution functionality can predict the impact that change will have on overall performance.  He’ll know that cutting too much online display budget will hurt the number of search marketing conversions produced, or that cutting too much search marketing budget will limit the effectiveness of display to drive search conversions. 

He could also learn that the optimal mix of tactics includes an email sent after the first display impression, or that TV drives improved conversion performance of all the other channels.  It’s all about the appropriate mix, and the balance of investment between the various dimensions of one’s marketing mix.

The Big Picture

Let’s say the store owner who tripled the number of doors also then put up a big sign outside his store. Naturally, everyone who entered the store saw the big sign and he assumed that since everyone who bought from his store had seen the sign, that it had a huge impact on every one of his sales.  In this case he was trying to incorrectly use multi-touch attribution by providing a factional credit to the ad that all buyers were “forced” to be exposed to. Once again, true multidimensional attribution will be able to isolate the factors that truly contribute to an organization’s marketing performance, which do not, and in what proportions.  Your attribution provider should be able to clearly articulate the importance and weight of each dimension to you, as well as be able to provide a mechanism for predicting the impact of any change that you’re considering on all the other dimensions in your marketing ecosystem.

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