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What is "Digital Marketing Attribution" and How is It Calculated?
We have read numerous articles on why the company should go with digital marketing as their form of marketing strategy in today’s fast-paced, dynamic world, but it is time for us to measure the effectiveness of the same. Companies are bombarded with the different benefits that the company will receive if it goes digital, but what are the real numerical benefits that the company is getting from it at present? And what channels are working the most for them in the sense of having the highest conversion ratio?
In today’s article, we will dive deep into the concept of "digital marketing attribution" and the various methods that a company can use to calculate digital marketing attribution.
Concept of Digital Marketing Attribution
Companies are spending a large chunk of their money on various digital marketing activities. As a result, it is critical for them to understand what the conversion ratio is or how much sales each channel brings in for the company. It might seem like a very easy thing to do. So let me complicate it for you.
There are scenarios in which the consumer might see an ad on social media regarding a product or service. The ad was very effective, and it was able to convince the consumer to make a purchase. But since the consumer has certain inhibitions for making payments on social media because of the increased number of fake users, the consumer goes on the browsing website to check on the genuineness of the company. After being assured, he makes a purchase. No, on the surface, this purchase may appear to be the result of an ad on a browsing website, but it is actually the result of social media.
There could be other situations in which the consumer is using two devices to make a purchase and hence two different sites, or the consumer is making a purchase from the account of a different person but has done all its research from his account or other platforms.
As a result, the company must now answer the following questions in order to consider the credit given to various sites' ad strategies −
For how long will the company do consumer backtracking?
Which interactions should the company exclude?
Which interaction or platform should the company give this conversion to? And others.
Different Ways of Calculating Digital Marketing Attribution
Before understanding how to calculate digital marketing attribution, it is important for digital marketers to do their groundwork or homework.
Companies have to keep an eye on the various devices that consumers are using while learning about the product.
The chronological sequence of all interactions between the brand and the consumer to complete the purchase decision-making cycle (discovery of the brand's existence, awareness of the brand and its product, informational search to better understand the product, and finally the decision-making process in which the consumer purchases the product.)
The contribution of each platform during the customer-user journey process
Models for Calculating Digital Marketing Attribution
The rule-based attribution model: this includes simple ways to define which platform will receive credit for the sales done. It is kind of less practical and works upon said rules, but it is easy to follow and calculate. Save a lot of time and expense as well. These are the predefined ways to determine the credit for sales done, and some of them are −
First click attribution method − here the entire credit for conversion goes to the first touchpoint channel between the consumer and the company. Irrespective of other things,
Last click attribution method − in this case, the entire credit for conversion is given to the last point of contact between the consumer and the company. Irrespective of other things,
Linear or uniform attribution method − here the entire credit for conversion goes to all the touchpoint channels between the consumer and the company, equally. Regardless of other factors.
U-shaped attribution method − Here there is a predefined rate for each sub-stage that the customer goes through during the purchase journey, and then the money acquired from the sale is distributed among the channels on the basis of the weights as per the weighted average mean method.
Time decay attribution method − Here, the most recent touchpoint has the highest weight of conversing a sale, and the first one has the lowest weight given to it. Each touchpoint is assigned a weight based on predefined criteria.
Custom-based attribution method − here, the company, instead of using a pre-defined method, understands the entire user journey and the contribution of each journey to the purchase decision-making process. This is a time-consuming process that requires a lot of knowledge and experience.
The Algorithmic-Based Attribution Model
In this method, the major role is played by data and AI. Data is used to calculate or determining the weight for each interaction that happens between the channel and the consumer. The value that each channel has added to the decision-making process determines the amount of credit they will receive. It seems like the perfect approach to calculating unbiased and accurate digital marketing attribution, but on the other hand, it is a very costly affair.
Companies have to buy technologies or develop their own to do this heavy lifting for them. This is going to cost them a lot, and on top of that, purchasing these machines or developing these machining methods because of the heavy amount of data these machines will be using will be a time-consuming method, and the company would have to ensure that there is someone to maintain as well as operate this heavy machine, which is an additional cost. This model is not recommended for medium- or small-scale businesses due to the cost and the fact that the ROI on digital marketing will ultimately fall and suffer. However, big companies that are deep into digital marketing may have these models installed.
Benefits of Calculating Digital Marketing Attribution
It helps the company understand what channels are working best for them and their conversion ratio.
It helps the company understand the various touchpoints of the customer journey and what is leading to its potential downfall.
They can compare this data with industry and competitors’ data to check if the effectiveness of their channel is actually hampered because of the content and effectiveness of advertising.
You can develop potential future strategies for each channel and others.
Companies have to understand that it is not only about investing their money, effort, and resources in digital marketing, but it is also about periodically checking the effectiveness of this money, or the digital ROI, and taking action before it is too late. Companies cannot wait for the year’s end to correct all that has gone wrong and increase all that has done wonders for the company; they have to work on a real-time basis. This might sound like something impossible, but this is what is needed in the fast-paced digital world. We must comprehend, analyze, and act immediately!
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