Blog 91: What and why do we need attribution models?
- Idea2Product2Business Team
- Aug 20, 2024
- 3 min read
What are they?
Attribution models is a framework for determining how to credit different channels or touchpoints for conversions. Because by knowing this we will direct our marketing efforts in the right direction. Marketing channels include social media, email newsletters, website etc. and touchpoints include a specific blog post, YouTube ad, email with discount code etc. (refer blog 54 for more on customer acquisition channels).
Why are they necessary?
Without attribution models we will not fully understand what drives conversions. And we are unlikely to be able to pinpoint what specifically contributes to a conversion.
How does it work?
Attribution models analyse different parts of the buyer’s journey to assign credit to different touchpoints (refer blog 16 for more on customer journey map).Touchpoints that receive the highest credit are touchpoints to focus on. As they drive most conversions.
Types of attribution models
There are two main categories: single-touch and multi-touch. In single-touch attribution models, one channel or touchpoint gets all the credit for the conversion. In multi-touch models, credit is shared across several touchpoints.
A. Single-touch attribution models
When to use: Single-touch models are most relevant for products with a short buying cycle (i.e. few interactions needed before a purchase).
A1. First interaction: A customer’s first touchpoint with a company gets 100% of the credit for the conversion.
A2. Last interaction: A customer’s last touchpoint with a company gets 100% of the credit for the conversion.
A3. Last non-direct click: A customer’s second-to-last touchpoint gets 100% of the credit for conversion. However, this is applicable only if the final touchpoint is a direct action (of converting into a customer).
Let us look at this with an example: A prospect sees a YouTube ad for online guitar classes. From the ad, the prospect opens the company’s website, bookmarks it, and signs up the company’s mailing list. The prospect now receives several promotional emails and continues seeing related social media ads. By the end of the week, he/she receives a discount code via email. After receiving the email with the discount code, the prospect accesses the company's website from the bookmarks and buys a subscription.
In the first interaction model, the credit for conversion goes to the YouTube ad. In the last interaction model, the credit goes to the company’s website. And in the last non-direct click model, credit goes to the email with the discount code.
B. Multi-touch attribution models
When to use: Multi-touch models are most relevant for products with a complex buyer’s journey.
B1. Linear attribution: In linear attribution models, every touchpoint gets equal credit for the conversion. Using the same example, the YouTube ad, promotional emails, discount email, and the company’s website all get equal credit.
B2. Rules-based attribution: Rules-based attribution models spread credit across different touchpoints by giving different weights to the different stages of the marketing funnel (refer blog 42 for more on the marketing funnel stages).
B3. U-shaped attribution: The first and last touchpoints get most of the credit. The rest of the credit is distributed equally among other touchpoints. Using the same example, the YouTube ad and the discount email would each get 40% credit for the conversion.
B4. W-shaped attribution: The top-of-the-funnel, bottom-of-the-funnel, and middle-of-the-funnel touchpoints get 30% each. Remaining 10% is evenly distributed. The YouTube ad, an email in the middle of the week, and the discount email would each get 30% of the credit.
B5. Time decay attribution: The credit given to each touchpoint grows exponentially as the customer moves closer to conversion. Hence, the YouTube ad gets minimal credit, and the discount email would get the most credit for the conversion.
B6. Custom attribution models: Companies typically take a U-shaped or W-shaped attribution model and then customise it to create a new custom model.
B7. Data-driven attribution: Data-driven attribution models use machine learning and predictive analytics to pinpoint the most influential touchpoints based on customer data. This model is suited for products with complex customer journeys and multiple touchpoints.
Ultimately, the attribution model we use will depend on our business model, marketing strategy, and budget.
Jump to blog 100 to refer to the overall product management mind map.
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All the best! 😊