Attribution Modelling: Definition, Types And Benefits

Indeed Editorial Team

Updated 30 September 2022

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Marketers often use multiple methods to convert prospects to customers and improve their growth performance. Attribution modelling is one of the strategies that helps them determine the credit required for each marketing channel and customer touchpoint. If you are a marketing professional, understanding this strategy can help you develop marketing strategies, customise advertising efforts for different customers and increase your return on investment (ROI). In this article, we discuss the definition of attribution modelling, list various models and outline its benefits and limitations.

What Is Attribution Modelling?

Attribution modelling is a marketing strategy that helps marketing professionals determine and allocate credit to marketing touchpoints for clicks, conversions and sales. It can be challenging to determine the mix of keywords, advertisements and search engine optimisation (SEO) for lead generation that can efficiently move through the sales funnel and conversion path. The goal of this strategy is to provide marketing teams with a comprehensive view of each customer journey from the point of entry to the point of purchase.

This includes all the digital channels such as social media, organic search and paid search, email and referrals. Various attribution models are available for determining which marketing efforts are responsible for the most sales leads.

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8 Types Of Attribution Models

The following are eight common attribution models:

1. First interaction attribution

A first interaction attribution, also known as first click or first touch attribution, is responsible for converting prospects into paying clients. This model gives 100% credit to the campaign that prompted the first interaction someone has with the business. Marketing professionals who focus mainly on demand generation and do not rely on conversions may benefit from the first interaction model. The model emphasises the campaigns created to introduce customers to the brand, regardless of their success.

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2. Last-touch attribution

According to the last interaction model, the final click or interaction preceding the conversion accounts for 100% of the buying decision. It is similar to the first interaction model in that the last interaction model focuses on the most important customer touchpoint, namely the most recent interaction with the business. This model may overlook other significant interactions with the customer that influence their decision to make a purchase. Businesses with short sales cycles or customers nearing purchase can benefit from last-touch attribution.

3. Last non-direct click

It is a variation of the last interaction model that attributes 100% of the credit to the last direct encounter before conversion. The model does not give credit to interactions that preceded the final interaction, which makes it difficult to understand the overall impact of a multichannel marketing strategy. The last non-direct click model is suitable for products with a short purchasing cycle.

4. Linear attribution

Linear attribution is the first step towards multi-touch attribution, where all touchpoints receive the same credit regardless of where they appear in the sequence or their influence on the purchasing process. As compared to other models, linear attribution is easier to convey to clients or stakeholders when evaluating marketing campaigns and channels. Brands can also use linear attribution models to demonstrate how each marketing channel contributes to conversions.

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5. Time decay attribution

The time decay model is an essential component of multi-touch attribution analysis, since it gives more credit to conversions resulting from interactions. In this model, sources or touches closer to the conversion receive the most credit. This model works particularly well for businesses selling high-consideration purchases, such as the ones that sell cars or jewellery where building long-term relationships is a key step in the sales cycle.

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6. Position-based attribution

Position-based attribution models emphasise the importance of the first and last interactions a client has with a company before conversions. Using this model, marketers assign a fixed credit for each conversion to the customer's first and last points of contact with the brand. The position-based approach gives 40% credit to the first and last touches and every other touch in between receives the remaining 20%. Businesses with multiple interactions may benefit from a position-based attribution model that evaluates both specific touchpoints and conversion orders.

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7. W-shaped attribution

A W-shaped model gives emphasis and credit to the first, last and mid-funnel touchpoints before a conversion. It then gives equal credit to the remaining touchpoints. 30% of the credit goes to each of the three key touchpoints, which includes the first touchpoint, opportunity creation touchpoints and lead conversion. Additional engagements account for the remaining 10%.

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8. Custom attribution

Companies can use custom models to adjust the weights of position-based interactions, give more credit to higher-value touches and maximise the effectiveness of their campaigns through optimisation of outcomes. They can integrate successful marketing attribution models into one model. Using a custom attribution model to track data can be beneficial for businesses with many consumers, channels and campaigns.

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Benefits Of Attribution Modelling

Selecting the right attribution model among various single-touch and multi-touch categories can play a crucial role in creating successful marketing campaigns. Here are some benefits of this strategy:

Improved ROI

Companies can use attribution models to understand what channels are the most effective in converting leads into customers for their business. A company can determine the effectiveness of its marketing tactics by calculating the return on investment (ROI) of its sales campaigns. This strategy helps in investing in marketing tactics that work and avoiding those that do not. By optimising campaigns, the models can increase the revenue per rupee spent on marketing.

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Enhanced marketing strategies and campaigns

Based on attribution models, marketers can determine which marketing channels, messaging styles, design elements and other critical aspects can result in prospects becoming paying customers. It can help them focus on developing and perfecting the most effective marketing strategies. This also aids in generating reports about successful marketing touchpoints for clients and company executives.

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Improved customer experience

Companies can enhance their user experience by using the attribution model. These models can help brands sort through various customer data and make informed decisions about the future of their marketing efforts. This can aid in making key customer touchpoints more accessible and user-friendly by determining which ones have the greatest impact on the customer journey.

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Limitations Of An Attribution Model

Attribution models range from simple rules-based models to complex algorithms. Sometimes they may show issues that are difficult to solve. Some limitations of the attribution model include:

Integrating offline data

Attribution models often ignore the interaction between offline and online channels. It can be challenging to include offline data related to conversions, such as in-person networking events or interactions. The process of collecting and analysing offline data differs from that used for digital data. When models fail to take online activity and offline sales into account, it may cause a digital signal bias. The optimisation decisions marketers make for offline and online sales require taking both online and offline data into account, not just data measured digitally.

Ignoring consumer behaviour and brand perception

Attribution models may overlook consumer behaviour. When marketers lack a thorough understanding of their attribution model, they make decisions based on incomplete information, devaluing brand building. It is important that marketers ensure their attribution models detect the relationship between brand-building initiatives and conversions.

Collecting data across channels

Identifying which interactions to include and determining their value is the primary challenge of using an attribution model. Businesses face this challenge when they utilise different platforms, channels and vendors for marketing. This can reflect in collecting data and measuring external factors such as brand equity, seasonality, pricing, word-of-mouth and competitor activities.

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