• by Roger Barnette , July 9, 2010

Many marketers and their agencies continue to track and optimize media based on last-click attribution.  But changing consumer behavior demands that smart marketers shift away from this outdated model for optimizing their online media.

Consumers go through a process before making a purchase.  You do it.  I do it.  Various acronyms exist to describe this process, but it basically involves awareness of a need, research on what to buy, comparison shopping, and finally the purchase.  Increasingly, consumers are going through this entire purchase cycle online.  When they're ready to purchase, they often go to their search engine of choice and type in the brand name of the product they wish to buy.  But how did they arrive at that action?

That last click on the brand term is important -- but certainly not the most strategic or thoughtful interaction with media during the purchase cycle. For example, a leading travel marketer in the U.K. saw clear evidence of changing consumer behavior: it received 20% of its reservations online in 2007, but now receives 70% of reservations online.  It's critical for its business to understand their customers' digital journey that leads to a reservation and optimize accordingly. We helped the company follow a five-step attribution process:

1.  Analyze the number of touch points in the online marketing mix and how they interact. Analyze what's happening across and within all of your online media channels.  For example, the company found that for reservations credited as occurring due to paid search only, 58% of those customers had actually seen another form of online media, such as display, prior to making their reservation.

2.  Define channel prioritization. Based on your cross-channel media analysis, define how you want to prioritize different channels in the attribution process. This is unique to every marketer, their goals and marketing mix.

3.  Distribution.  Once the channels are prioritized, determine how credit for a single reservation is distributed across multiple exposures (clicks and views).  Typically marketers place the most value on the last click and then give diminishing value to the media channels that came before it. This can be driven by exposure sequence or time to conversion.

4.  Insights.  Apply these newly defined attribution settings across a historical data set so you can see how the effect of these new settings works in comparison to the last-click attribution model you currently have in place. 

5.  Apply insights to optimize through portfolio optimization technology. Apply these settings on your live campaign and optimize in each marketing channel accordingly.

The travel company found significant year-over-year improvements in CPC, ROI and revenue within the paid search channel after this new attribution methodology was put in place. Company strategists now have confidence that their online advertising budget is being tracked, attributed, measured and spent more accurately to optimize ROI.  Against a backdrop of a 4% decrease in paid search spend, they saw a 14% decrease in CPC, 28% increase in overall bookings, 43% increase in overall revenue and a 54% increase in ROI in paid search. 

The attribution process is difficult and time-consuming to set up, but the rewards are great.  What is the cost of not going through this process?  That's the salient question for marketers today.