{"id":44,"date":"2018-07-17T10:42:55","date_gmt":"2018-07-17T10:42:55","guid":{"rendered":"https:\/\/blog.rontar.com\/?p=44"},"modified":"2024-01-29T13:15:26","modified_gmt":"2024-01-29T13:15:26","slug":"how-to-track-conversions-correctly-six-standard-attribution-models","status":"publish","type":"post","link":"https:\/\/www.rontar.com\/blog\/how-to-track-conversions-correctly-six-standard-attribution-models\/","title":{"rendered":"How to Track Conversions Correctly. Six Standard Attribution Models."},"content":{"rendered":"\n

Nothing is more important for a marketer than correctly tracking the effectiveness of a company\u2019s marketing activities. Are your ads working? Is it worth staying active on social media? Are your email campaigns effective? A properly configured attribution model can answer these important questions.<\/p>\n\n\n\n

However, there are few things in analytics more complicated than setting up a good attribution model. According to a survey, 77.6% of marketers are uncertain if they are using the correct attribution model<\/a>, while 29.7% chose their current model because it was easy to implement<\/a>.<\/p>\n\n\n\n

Given the complexity of the task, it is necessary to answer a number of questions in depth:<\/p>\n\n\n\n

    \n
  1. Which type of attribution model should you choose: single-touch or multi-touch?<\/strong> If you choose the first, should you measure last-click or first-click conversions? If you use a multi-touch model, how can you gauge the contribution of each marketing channel to the conversion?<\/li>\n\n\n\n
  2. How can you measure the influence of display ads on sales?<\/strong> Do display ads make sense at all, if the goal is sales? If so, how can you calculate their impact on specific sales? Should you only count conversions that were made after clicking on the display ad? Or should you also consider conversions by people who saw your display ad, but didn\u2019t click on it? If so, then how?<\/li>\n\n\n\n
  3. What should the conversion window be?<\/strong> The answer to this question will determine both the number of conversions recorded and the accuracy of the data itself. If the conversion window is too much longer than the company\u2019s real sales cycle, then the number of recorded conversions will be inflated. On the other hand, if the conversion window is shorter than the sales cycle, then conversions that actually belong to a certain channel will be \u201cstolen\u201d.<\/li>\n<\/ol>\n\n\n\n

    In order to answer these and many other questions, we will take a good look at the data of Rontar<\/a>\u2019s Big Data platform. This, I believe, is the only guide you will need to configure an effective and complete conversion attribution model for your company.<\/p>\n\n\n\n

    OK, let\u2019s go.<\/p>\n\n\n\n

    Attribution models: definition and types<\/h2>\n\n\n\n

    An attribution model is the rule, or set of rules, that determines the contribution of each marketing channel on the path to conversion. In other words, a properly configured attribution model will let you know whether or not your search ads, retargeting, email campaigns, and other marketing channels affect the total number of conversions \u2014 and, if so, how.<\/p>\n\n\nAn attribution model is the rule that determines the contribution of each marketing channel to a conversion. <\/a><\/span>Click To Tweet<\/a><\/span>\n\n\n\n

    All existing attribution models can be divided into two major categories: single-touch attribution models and multi-touch attribution models.<\/p>\n\n\n\n

    Single-touch attribution models<\/h2>\n\n\n\n

    At present, 39% of marketers use single-touch attribution models.<\/p>\n\n\n

    \n
    \"Single-touch<\/figure><\/div>\n\n\n

    Single-touch models give credit for a conversion to only one of the channels on the path to conversion. Depending on the stage at which this channel came into play, marketers divide single-touch models into the last-click and first-click models.<\/p>\n\n\n\n

    Last-click<\/h3>\n\n\n
    \n
    \"Last-click<\/figure><\/div>\n\n\n

    This model is the default attribution model of most analytical services. Likewise, the majority of marketers, 28.4%, currently measure the success of their marketing initiatives using the last-click model (last cookie wins, last-click attribution)<\/a>. The model gives credit for the conversion to the last marketing channel to engage the consumer on the path to conversion and completely ignores the contribution of other marketing channels.<\/p>\n\n\n\n

    Advantages<\/strong><\/p>\n\n\n\n

    Simplicity. Even a basic report will be enough to help you judge which advertising channels are working and which aren\u2019t.<\/p>\n\n\n\n

    Disadvantages<\/strong><\/p>\n\n\n\n

    The last-click model completely ignores any other interaction the customer has with your marketing channels on the path to conversion.<\/p>\n\n\n\n

    A potential buyer visits a site an average of 9.5 times before making a purchase. In the case of B2B companies, customers may require even more visits: from 7 to 13 or more<\/a>. A customer could interact with your company multiple times over a span of several weeks or even months, but only the last channel in the funnel will receive credit for the conversion. However, there are times when the marketing channels in the beginning or middle of the funnel make the biggest contribution to conversions.<\/p>\n\n\nA potential buyer visits a site an average of 9.5 times before making a purchase. <\/a><\/span>Click To Tweet<\/a><\/span>\n\n\n\n

    Imagine that you sell women\u2019s clothing in medium and high price segments. You have an advertising campaign set up on Facebook to target women between the ages of 18-25. You also use retargeting, which encourages visitors who did not make a purchase to return to the site. In the advertising channel reports on your analytics system, you see the following picture:<\/p>\n\n\n

    \n
    \"\"<\/figure><\/div>\n\n\n

    Most of your site\u2019s traffic comes from your Facebook advertising campaign, but this campaign does not generate profit. Retargeting brings ten times less traffic to the site, but the number of conversions is practically the same as that of the Facebook campaign. The retargeting campaign pays off.<\/p>\n\n\n\n

    On the basis of these statistics, you decide to cancel your Facebook advertising campaign. After awhile, you see the following picture:<\/p>\n\n\n

    \n
    \"\"<\/figure><\/div>\n\n\n

    As soon as you turned off your main source of traffic, the number of conversions from retargeting decreased. The overall revenue of the company decreased as well.<\/p>\n\n\n\n

    The example above is oversimplified in order to present the problem clearly. In real situations, the customer will interact with multiple marketing channels on the path to conversion. Determining the contribution of each of these channels to conversion will be quite challenging.<\/p>\n\n\n\n

    Who should use this model?<\/strong><\/p>\n\n\n\n

    The last-click model is a model of the utmost simplicity, and that is its main advantage. However, the main goal of analytics is to determine precisely what works and what doesn\u2019t. Even though 29.7% of marketers choose an attribution model based on ease of use<\/a>, in most cases, I would not advise sacrificing the accuracy of your measurements for the sake of simplicity. I would not recommend that marketers use this as their main attribution model.<\/p>\n\n\n29.7% of marketers choose an attribution model based on ease of use. <\/a><\/span>Click To Tweet<\/a><\/span>\n\n\n\n

    If your company has just opened, you sell a simple, straightforward product, the sales cycle is short, you only have one or two marketing channels, and your activity is focused on attracting customers here and now, you can try using last-click temporarily. In the future, as you incorporate a greater number of marketing channels, you will need to switch to one of the more advanced models.<\/p>\n\n\n\n

    First-click<\/h3>\n\n\n\n

    First-click, the second most popular single-touch attribution model, is used by 10.5% of marketers<\/a>.<\/p>\n\n\n

    \n
    \"First-click<\/figure><\/div>\n\n\n

    This model is the opposite of the last-click model. The last-click model gives credit for conversion to the last channel in the funnel. The first-click model gives credit for conversion to the very first marketing channel in the path to conversion.<\/p>\n\n\n\n

    Advantages <\/strong><\/p>\n\n\n\n

    Like last-click, the first-click model is extremely easy to use.<\/p>\n\n\n\n

    Disadvantages<\/strong><\/p>\n\n\n\n

    You can be sure that the last marketing channel in the funnel influenced the conversion in some way. However, you can\u2019t be sure that the first marketing channel did. How did a click on a banner ad a month ago affect the conversion of a person who later returned to the site? Obviously, data on conversions will only misguide you and prevent you from identifying those sources that actually influence sales.<\/p>\n\n\n\n

    Who should use this model?<\/strong><\/p>\n\n\n\n

    The first-click model is the least accurate of all the models and can seriously distort your data. The first-click model leads companies to spend the bulk of their marketing budget on those channels that create initial interest, rather than those channels that really influence conversions.<\/p>\n\n\n\n

    Multi-touch attribution models<\/h2>\n\n\n
    \n
    \"Multi-touch<\/figure><\/div>\n\n\n

    Single-touch attribution models, like last-click and first-click, give credit for a conversion to only one of the channels on the path to conversion. If you have only one or two marketing channels, these models are a fairly easy and accurate way to determine what is working and what isn\u2019t. However, as soon as you begin to add more marketing channels, the data will become less accurate. The more marketing channels, the less accurate the data derived from single-touch models.<\/p>\n\n\n\n

    Multi-touch models are designed to go further. Ideally, they will evaluate the contribution of each marketing channel on the path to conversion.<\/p>\n\n\n\n

    Currently, 61% of marketers use multi-touch attribution, and that number grows each year.<\/p>\n\n\n\n

    Let\u2019s take a look at each major multi-touch model separately.<\/p>\n\n\n\n

    Linear attribution model<\/h3>\n\n\n
    \n
    \"Linear<\/figure><\/div>\n\n\n

    The linear model gives equal weight to each marketing source when calculating contributions to a conversion.<\/p>\n\n\n\n

    This model is the second most popular multi-touch attribution model. B2B companies, especially, use it frequently. This model is used by 8.2% of marketers<\/a>.<\/p>\n\n\n\n

    Advantages<\/strong><\/p>\n\n\n\n

    The linear model can be useful, if you need to maintain contact with a potential buyer throughout the sales cycle. In this case, it will be fine if credit for a conversion is evenly distributed between your marketing channels.<\/p>\n\n\n\n

    Disadvantages<\/strong><\/p>\n\n\n\n

    The linear attribution model is one of the least complicated of the multi-touch models. It does not take into consideration important factors, such as how long ago an interaction with the customer occurred or at what stage that contact took place. If you give equal weight to each of your marketing channels, you risk wasting your allocated budget on a channel that actually has little impact on conversions.<\/p>\n\n\n\n

    Who should use this model?<\/strong><\/p>\n\n\n\n

    Despite its extreme simplicity, the linear model is excellent for B2B companies with very long sales cycles, where it is important to remain in constant contact with potential buyers.<\/p>\n\n\n\n

    Time-decay attribution model<\/h3>\n\n\n
    \n
    \"Time-decay<\/figure><\/div>\n\n\n

    The time-decay attribution model gives greater weight to those marketing channels with which the customer interacted closer to the conversion.<\/p>\n\n\n\n

    Advantages<\/strong><\/p>\n\n\n\n

    The time-decay model is one of the simpler multi-touch models. At the same time, it accurately describes the real behavior of a customer. First, a customer lands on your site. Next, he becomes interested in the goods and service that you are selling. The desire to make a purchase may arise, but only when desire coincides with opportunity does a purchase actually take place. Often, the last stage on the path to conversion takes place long after the first. The closer you get to the purchase, the shorter the distance between stages.<\/p>\n\n\n\n

    If you know the length of your sales cycle, you can fine-tune your attribution model and get the most accurate data on the contribution of each of your marketing channels.<\/p>\n\n\n\n

    Disadvantages<\/strong><\/p>\n\n\n\n

    This attribution model undervalues the contribution of sources at the top of the funnel. These marketing channels are often responsible for sparking initial interest and often drive the majority of traffic to a site.<\/p>\n\n\n\n

    If you use a time-decay model and decide to cancel marketing channels that do not generate profit, be sure to track the number of conversions coming from other channels. It is very likely that canceling the marketing channels responsible for sparking initial interest will cause the amount of conversions from channels further down the funnel to decrease.<\/p>\n\n\n\n

    Who should use this model?<\/strong><\/p>\n\n\n\n

    The time-decay model is one of the best multi-touch models and is excellent for companies with fairly short sales cycles. I recommend this model, rather than last-click, for the majority of online stores.<\/p>\n\n\n\n

    Position-based attribution model<\/h3>\n\n\n\n

    The position-based attribution model is the most popular multi-touch attribution model. This model is used by 12.2% of companies<\/a>.<\/p>\n\n\n

    \n
    \"Position-based<\/figure><\/div>\n\n\n

    This model is a cross between the last-click and first-click models. Instead of assigning conversion value to the last or first channel only, the position-based model distributes credit equally between them. For example, the contribution of the first channel might be considered 40%, the contribution of the last channel is also 40%, and the remaining 20% is distributed equally to all channels in the middle of the funnel.<\/p>\n\n\n\n

    Advantages<\/strong><\/p>\n\n\n\n

    In most cases, the first and last contacts do play the biggest role on the path to conversion. The first marketing channel is designed bring new visitors to your site. The second is designed to persuade potential buyers to make a purchase. If these two stages are clearly defined in your business, this model will work well for you.<\/p>\n\n\n\n

    Disadvantages<\/strong><\/p>\n\n\n\n

    The position-based model undervalues the importance of sources in the middle of the funnel and overvalues the importance of sources on the top and bottom. Use this model only if you are absolutely sure that the first and last points of contact are the ones that are vital for your business.<\/p>\n\n\n\n

    Who should use this model?<\/strong><\/p>\n\n\n\n

    This model works well if both the channel that sparks initial interest and the channel that directly leads to conversion are of equal importance to you. However, if you want a more accurate assessment of the contribution of each channel on the path to conversion, I recommend you consider other models.<\/p>\n\n\n\n

    Data-driven attribution model<\/h3>\n\n\n
    \n
    \"Data-driven<\/figure><\/div>\n\n\n

    All of the models that we have discussed thus far use pre-defined rules. That is, either you or your analytics system decides what weight to assign to each channel. The model then bases its statistics on these preset values. Unlike these rule-based models, the data-driven model uses your own data to evaluate the real weight of each marketing channel on the path to conversion.<\/p>\n\n\n\n

    Advantages<\/strong><\/p>\n\n\n\n

    This model reflects your business and your marketing channels with a high degree of accuracy. Your data forms the basis of the model itself. Likewise, the model uses this data to calculate the contribution of each channel. For these reasons, this model is the most accurate model available.<\/p>\n\n\n\n

    Disadvantages<\/strong><\/p>\n\n\n\n

    There really aren\u2019t any. However, since this model is built on data, you need to have a fairly large quantity of conversions in order to produce an accurate model. Unless you have an adequate number of conversions, your analytics system likely won\u2019t allow you to use this attribution model. If it does, your model will turn out to be inaccurate.<\/p>\n\n\n\n

    Who should use this model?<\/strong><\/p>\n\n\n\n

    Since this model is built on the basis of data about visits to a particular site, it works for everyone. You should use the data-driven model, if you have sufficient conversions to do so. You will always know the exact contribution of each of your marketing channels no matter how many channels you have or where they are located on the path to conversion (at the beginning, middle, or end). In the future, this information will help you decide which channels you should invest in and which aren\u2019t worth your time and money.<\/p>\n\n\n\n

    Unfortunately, marketers use this model only 5% of the time<\/a>. More often than not, though, this is due to the fact that a site lacks the volume of conversion data necessary to produce a viable model.<\/p>\n\n\n

    \n
    \"The<\/figure><\/div>\n\n\n

    An example of how to calculate the contribution of marketing channels depending on the attribution model<\/h2>\n\n\n\n

    Imagine that you are the owner of an online electronics store. A visitor first lands on your site, having clicked on an ad in AdWords. After some time he returns, this time arriving through your Facebook profile. Later he searches \u201cbuy a TV\u201d, and returns to your site again. Finally, he makes a purchase after clicking on a retargeting ad. The various attribution models will calculate the contribution of each of channel in the following way:<\/p>\n\n\n\n