Any digital marketer will tell you that sales or leads are not automatically produced when a user clicks on your online ad or visits your site for the first time.
More often than not, it requires several visits until users are convinced to buy or are willing to be contacted to get more information. Getting users to convert requires being smart about retargeting and figuring out exactly which marketing channel is most effective whether it be digital, word of mouth, or traditional offline channels like radio and television. With so many touchpoints involved in the buyer journey, it makes sense that some channels will influence sales more than others.
Understanding that hierarchy is at the heart of attribution models, the tools that marketers use help focus their targeting efforts and develop strategies to make the most effective use of their budgets.
What is attribution modeling in digital marketing?
As its name suggests, an attribution model is a way for marketers to attribute conversions to marketing channels such as Facebook Ads, SEO page copy, and email marketing. There are several kinds of attribution models, and each one uses various methods to assign conversion credits to each channel.
Such specific insight gives marketers the confidence to create strategies tailored for each campaign, instead of guessing what works and what doesn’t. Attribution modeling is also important for budgeting — why would you spend money on a channel that isn’t producing conversions as opposed to others that are showing better results? Attribution modeling turns the lights on to reveal exactly which channel is successful, why it’s working, and how the different channels and platforms work together to guide the consumer down the funnel to conversion.
It is important to note that each attribution model needs to cover all the marketing channels available to visitors to your website; if not, the insight will likely be inflated. That said, we live in a multi-channel world and have to consider “offline” influence like word of mouth, billboards, or TV.
The difference between ROI and attribution
For some marketers, return on investment (ROI) is a more holistic approach to understand which strategy is working. In a way, it makes sense: Financial gains are the ultimate referendum on a marketing strategy and provide a clear picture into where marketing dollars should be allocated across the different channels.
Whether or not marketers should use ROI or attribution modeling depends on a number of factors. It’s important to consider the overarching business goals, targeted audiences, the number of channels used in the marketing mix, and the main metrics and conversions that the advertiser would like to solve.. Both are valuable measurement approaches, but they answer different questions.
Simply put, ROI stands for “return on investment” and is used when calculating channels’ value and performance, while attribution models are built on data and tactics that affect results across multiple marketing channels. Both answer different questions as well: ROI can help advertisers figure out the profitability of each marketing channel while attribution models can help determine the relationship between different marketing channels and how they contribute to results. Attribution is a more tactical view, while ROI is more about growth.
