What attribution means in marketing

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According to Gartner, more than two-thirds of the average advertising budget is dedicated to online channels. Any company that invests significant money in advertising campaigns suspects that not all these investments are profitable. Therefore, companies are beginning to wonder how to assess the effectiveness of investments in online and offline marketing.

In this article, we look at what attribution is in marketing, how it helps companies, and what mistakes and difficulties marketers and analysts typically encounter when working with attribution.

Defining attribution in marketing

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“An attribution model in web analytics is a set of rules that define each channel’s contribution to sales or other targeted actions.”

Vlad Flaks,
CEO ,
OWOX

So, what is attribution in marketing? The purpose of attribution is to determine which advertising channels and campaigns have the greatest effect on the customer’s decision to buy or move to the next step of the funnel.

Companies use different attribution models to define how, where, and when a buyer interacts with a brand. With this data, marketers modify and improve advertising campaigns by increasing return on ad spend (ROAS).

Note: According to a 2017 Ad Roll report, four out of five companies in Europe, North America, and Asia use attribution in marketing, and 51% of organizations consider attribution the most important part of marketing.

Why use attribution?

In an ideal world, customers would shop immediately after viewing ads for the first time. In reality, however, things are significantly more complicated. For example, one possible scenario looks like this:

  • Familiarity with the brand — The customer sees an ad, follows the link to the site, and signs up for the newsletter. Then they get distracted and close the site.
  • Purchase thought process (conversion window) — The customer selects a product, looks at reviews, and compares items. At the same time, they receive a newsletter from the company and see advertising on social networks (for example, Facebook, Instagram, and Twitter).
  • Purchase (conversion) — The customer returns to the site (the transition can be direct, via a saved link, from an advertising channel, or from organic search) and finally makes a purchase.
  • Re-purchase (customer retention) — For this purpose, companies often use remarketing and remind customers about their products through emails and social media posts.

How do you know which channel led to the purchase? This is where attribution comes in handy. It’s what will help you understand how advertising channels affect conversions. By choosing the correct model for your company, you’ll see how you need to allocate your advertising budget to enhance ROAS. Accordingly, this will help you increase revenue and reduce costs.

There are more than a dozen attribution models that can be divided into the following categories:

  1. Single-channel (Last Click, First Click)
  2. Multi-channel (Linear, Time Decay)
  3. Position-based (Time Decay, Position-Based)
  4. Algorithmic (Data-Driven, Markov chains, Funnel-based, Shapley vector)

Note: You can find a detailed comparison of different attribution models in one of our previous articles.

If you want to try the Funnel Based OWOX BI model, which distributes value based on a channel’s effect on a user’s movement through the funnel, take advantage of the free 14-day trial.

    Discover the real contribution of advertising campaigns with OWOX BI!

    Problems with attribution

    According to Ad Roll research, 59% of companies have tried to work with attribution but stopped due to a lack of knowledge. In reality, most marketers have little understanding of it and have difficulty working with it. A report by Ad Roll also indicates that 70% of companies find it difficult to properly use insights obtained from attribution data. And this is why:

    More than 35% of companies cannot correctly determine customer touchpoints. For successful work, you need to evaluate all the channels involved. And given the omnichannel nature of marketing, it’s quite difficult to control every channel.

    The fact that one person often uses different devices also adds complexity. On the one hand, such a network of connected devices presents opportunities for marketers. On the other hand, how can you track all of this?

    But there are other difficulties when working with attribution:

      1. Manually collecting data from different advertising platforms. You need to know hundreds of nuances about how to correctly download data from each service and how to consolidate it in a uniform database.
      2. The market demands synchronous changes to existing models. Outdated models just can’t adapt to new business requirements.
      3. Fixed budgets and partner contracts with the same advertising agencies make it hard to quickly change strategies. Besides, it’s necessary to consider the time spent assessing marketing efforts, searching for and interpreting insights, and developing a strategy for improving campaigns.

      As you can see, there are enough difficulties in applying attribution. However, this doesn’t mean you should avoid it. Because with one, you can take marketing to a new level.

      Benefits of attribution

      Despite the difficulties in creating an attribution model, its purpose is very simple – to assess the effectiveness of advertising channels. With the results of this assessment, you can determine how efficiently you spend your advertising budget.

      Key benefits of attribution:

      1. Improved personalization. Derived insights can be used for more effective advertising.
      2. Increased ROI/ROAS. The correct model helps marketers know which channels and channel bundles are the most efficient so they can redistribute the budget and increase conversions and ROI.

      With attribution, you can see value from both channels that bring in regular customers and channels that bring in new users. 

      To avoid difficulties in working, it’s first necessary to exclude manual work with data. The OWOX BI Pipeline service will gather all information from your various advertising campaigns and import it into a single database to provide a wide range of opportunities for further analysis. In particular, you can use this data to set up accurate reports and find useful insights.

      If you use specialized services such as OWOX BI Attribution, you can avoid most problems with implementing it.

      Configuring OWOX BI Attribution does not require in-depth technical knowledge, and the Funnel Based model takes into account all customer touchpoints, considering both online and offline data from your CRM system.

      If you need a custom solution, OWOX BI analysts are always happy to help.

      Example of setting up a model with OWOX BI Attribution

      Not only the evaluation of advertising channels but also the execution of your company’s sales plan depends on the model you select. That’s why it’s so important to make the right choice.

      To choose an objective model for evaluating advertising channels, it will be useful to first learn about the advantages and disadvantages of standard and algorithmic models of attribution. And for those who don’t have time to read a long and detailed article, these are the two key considerations:

      • Transparent calculation logic for confidence in results
      • Reliability of calculations (the objective contribution of each channel should be taken into account)

      The advantage of OWOX BI Attribution is that these requirements are met if the software is properly configured. With the Funnel Based model, you can assess the contribution of online advertising campaigns to sales in physical stores and learn which campaigns bring profit and which need to be turned off immediately.

      To experience all the benefits of OWOX BI Attribution in your work, set up the model by yourself. You can use the service free for 14 days.

      TRY OWOX BI FOR FREE

      To create models in the Attribution block, got to the main page of OWOX BI Attribution.

      main page OWOX BI Attribution

      1. Provide access to Google BigQuery for your project.

      creating of attribution model

      2. Identify the source of user activity data.

      creating of attribution model

      The data source can be:

      • Data from Google BigQuery (uploaded from Google Analytics or Google Analytics 360)
      • Custom events (manually collected data from your CRM, call tracking systems, and any other sources)

      Note: You can read more about custom events in the official OWOX BI Help Center.

      3. Click Create Model. Everything’s ready!

      After you select the model, you have to set it up and start running calculations based on the data.

      The settings for the model in OWOX BI look like this:

      creating of attribution model

      You can use this tab to configure:

      1. Conversion window
      2. Steps of the conversion funnel
      3. Transfer of session values by source

      You can read more about the advanced settings of the attribution model in the OWOX Help Center

      Once your model parameters are approved, it’s time to run calculations. To do this, click the button at the top right that says Calculate Model.

      calculate attribution model

      To get started, select the start and end dates for the transaction window during which the conversion values will be distributed in the model calculation.

      transactional window

      After starting the calculation, all that’s left is to make yourself a cup of coffee, snap back in the chair, and wait up to 30 minutes for it to complete.
      Note: The calculation time depends on the model parameters.

      The final calculations are displayed in the Results tab, where you can:

      1. Get ready-made reports in Smart Data
      2. Get results as a Google BigQuery dataset
      creating of attribution model

      If you want to set up automatic calculations, you can read about how to do that in the Help Center. 

      After discussing the theory and creating models, let’s look at a real-world example from an OWOX client.

      Increase ROI 2.5 times while cutting ad costs in half — Doctor Ryadom case study

      Implementing the OWOX end-to-end analytics system helped Doctor Ryadom change their marketing strategy. They not only saved money and time but also established a mutual understanding between the marketing and financial departments. In addition, they managed to increase the ROI of individual channels by more than 2.5 times and cut the cost of targeted advertising in half while maintaining the same sales volume. 

      As you can see from practical examples, attribution brings real benefits to businesses. You can try an attribution model from OWOX BI free for 14 days.

      Key takeaways

      • You don’t have to start with advanced attribution models that require a lot of time and investment. You can use services like Google Analytics or OWOX BI to familiarize yourself with one.
      • Don’t forget what’s important: attribution helps you effectively redistribute your budget.
      • Consider not only the marketing team but also sales and customer support. Doing so will make it clearer to you not only what to evaluate but how.
      • Don’t rely on a long-standing model. To be successful in today’s market, you should use a model that takes into account your marketing needs in evaluating channels.

      If you still have questions, ask them in the comments below :)

      And if you want to learn more about attribution and more, subscribe to our newsletter with the most useful tips for modern marketers and analysts:

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