Funnel Based Attribution Model
The attribution model used in your project is at the heart of evaluating your advertising channels and managing the marketing budget. Therefore the quality and reliability of the attribution model have a direct effect on the implementation of the sales plan and overall business growth.
If your attribution model gives you incorrect numbers, you must have encountered unexpected steep peaks in CPA or dips in ROAS while managing your advertising campaigns.
In one of our previous articles, we reviewed in depth the shortcomings of the most popular attribution models. In this article, we’ll review the logic and benefits of the attribution model based on the data about a customer’s journey through the conversion funnel. This will help you get an objective evaluation of advertising campaigns based on their mutual influence.
Even in Google Analytics reports, one can easily see that only a small minority of customers place orders during their first session on the website.
This means that, to correctly distribute each particular order value (income or revenue from an order), one needs to evaluate each session of a buyer’s, not only the final one. By evaluating each session, you can easily find out the true value of your advertising campaigns. To do this, you only need to group sessions with the same advertising campaigns.
As a result, if a user interacted with several advertising campaigns before placing an order, each of the campaigns will get its own portion of the order value.
The key question is how to distribute the value of a particular order to sessions that have contributed to the order?
To solve the attribution challenge, let’s remember that an order is not a goal in and of itself — there is a conversion funnel in any business. For example, the following steps are usually identified for online stores: useful visit A visit during which a user has viewed 2 or more pages or performed an action. Such visits do not increase Bounce rate. , product page view, adding to the cart and placing an order.
The efficiency of advertising campaigns is different at different stages of the funnels. For example, display advertising is effective in attracting new visitors at the upper stages of the funnel, retargeting is effective in returning the visitors, while emails motivate them to make a purchase.
Therefore, it’s necessary to evaluate each step in the conversion process, not only the final one (ie. a purchase). This will allow for calculating the value of even those sessions during which orders weren’t made, but which helped move onto the next step.
The calculation procedure is the following:
- Calculating the value of the progression through each step of the funnel.
- Evaluating the sessions that helped move through the step, considering the value of the step.
- Grouping the sessions by advertising campaigns and obtaining the value of the campaigns.
Now, in order to determine the value of progression through the funnel steps, let’s remember one more important detail — not all steps are equally easy to move through. For example, the image below shows that the probability of the Product Page View is higher than the Adding to Cart. The probability (highlighted in red) shows the proportion of users who progress to the next step from the previous one. The more difficult to move through this step, the lower the probability, and consequently, the higher the value of the session which helped to do it.
Here and below, for more clarity, the calculations are given for one of the thousands of possible funnels.
- Of course, on any website there are hundreds of user segments, and the probabilities of progression within the funnel are different for each of these segments. For example, the probabilities differ depending on the users’ location and type (new or returning).
- Important: it’s important to use only users’ properties in setting up funnels. It would be a mistake to use session properties (eg. device type) or advertising campaigns (eg. keyword). The reason is that, one user may use multiple devices on their journey to making an order, or visit the website from different keywords. For us, it’s important to compare the efficiency of using advertising budget across different advertising campaigns.
The value of steps, based on the probability of progression through the step, can be calculated by a few different methods. After hundreds of experiments, we chose the method which has proven a very good resistance to noisy data Corrupt or incomplete data in web analytics systems. If not properly processed, this data may lead to less accurate conclusions. , and excellent results even with projects with a small number of visitors.
The method is that each step of the funnel gets a score that equals 1 minus the probability of the progression through the step. The lower the probability, the higher score the step gets. The value of the step is calculated as a proportion of its score in the total score of all the steps:
- All the calculations are based on real customer behavior and will differ for each particular website and customer segment. This eliminates human error which might occur if the attribution model is based «on feelings».
- The lower the probability of moving on through a certain step, the higher value assigned to this step. In our case, the Adding to Cart step, which is the most difficult for users to move on through, got 36% of the total order value.
- The total attributed value is always 100%. In contrast to the assigning of value with help of associated conversions, or individual attribution models, we do not distribute more value than we have obtained.
- It’s easy to note that the probability of a Useful Visit equals 1 minus the bounce rate. Therefore for segments of first-time buyers, the value of the first visit is higher than for returning buyers. This is fully consistent with the interests of business.
On the image below, the numbers highlighted in green show the portion of value for progression through each of the steps in the funnel.
Now that we know the value of each step of the funnel, we need to evaluate each session. This is simple: the value of the the session is the sum of values of steps that were passed through for the first time during this session.
The value is only assigned to all the sessions that helped a user move on through one of the steps in the funnel, with the whole journey resulting in a purchase. Knowing the source of each session, we only need to group the sessions by advertising campaigns. As a result, we’ll obtain the value of advertising campaigns, considering their impact on users’ progression through each step in the funnel, not only the final one.
The value (profit or revenue from orders), assigned to advertising channels as a result of implementing Funnel Based attribution, will be different from the results of the Last Non-Direct Click attribution model.
The reason is obvious — with Last Non-Direct Click attribution, the order value was attributed to only one session. For example, if a user first visited a website through the Display channel, then returned and found the product thanks to retargeting, and then completed the purchase by clicking a link in an email, the Email channel got 100% of the order value. With Funnel Based attribution considering the impact on the conversion process, the value will be distributed across channels that drove the user to the purchase on each stage of the funnel.
The difference in the attributed value will be even greater if you build reports for advertising campaigns, not channel groups:
The reason for the greater discrepancy is that, campaigns within a channel may affect the funnel in different ways and compensate each other. With campaign-level reports the difference will immediately become obvious.
The described attribution method is based on two beliefs:
- The goal is to lead buyers throughout the conversion process, to a purchase.
- The more difficult it is to move through a certain step of the funnel, the more valuable for business it is moving through this step.
It should be mentioned that, although calculations for one segment or one order can be easily made in Excel, you won’t be able to make such calculations for all of the website visitors. The reason is, there may be hundreds of different segments on a website. There may not be enough information for obtaining statistically significant results for each segment, even on high traffic websites. Therefore when implementing the model, one can not do without programming. In our experience, Google BigQuery is best suited for implementing the model. Google BigQuery allows for collecting unsampled data, even if you don’t have Google Analytics 360.