What are the best ways to use attribution models for marketing budgets? Our guide explains attribution models and how to use them for marketing success.
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How many more tons of laundry detergent are you selling through this on-pack promotion?
Most marketers are familiar with these or similar knockout questions. Countering managing directors with a winner argument is hardly possible. Data-based attribution of marketing channels is used in only 30% of companies. In this article, we give a compact overview of data attribution models and how they can help you get more from your marketing budget.
Attribution models for marketing budgets help to optimize your budget allocation
Here you identify the most important touchpoints of your target group such as online advertising material, social media, clicks in the online shop or newsletter, trade fairs, TV spots and print materials. You give each touchpoint a value for its KPI relevance and then use attribution to adjust your budget.
Optimizing marketing channels: most business is still in beginner mode
The business landscape is only starting to see corporations and large medium-sized companies use the resources and skills to apply attribution models to analyse their marketing budget. But an increasingly complex media and promotion landscape makes marketing managers more and more insecure. When it comes to optimizing marketing channels, many are still in beginner mode.
Gut feeling and habit are still favoured over attribution models for marketing budgets
“How should we measure whether a trade advertisement for $5,000 brings something?” As a marketer, you would often encounter this fatalism in combination with offline media and B2B companies. “We have been going to this actually inefficient trade fair for 15 years. In marketing, however, we don’t find any arguments against sales.” However, there are very good opportunities in the area of attribution, especially for medium-sized companies, and they can also be adapted on the smaller scale for small enterprises.
Simple attribution models for marketing budgets:
Better than just gut feeling. However, none of these approaches reflect the complexity of the marketing world. The following describes three methods that you can easily use:
Reach-Cost-Quality (RCO)
A mini model for the systematic selection of marketing channels . Reach = R related to total costs = C of the marketing channel . Weighted with a value 1-5 for conversion quality = Q of a channel. A kind of contact quality, but overall very subjective.
Simple, rule-based attribution.
Found in the online area, e.g. B. last click before conversion. This contact point thus receives the entire budget. Pragmatic but arbitrary. No answer to offline questions, e.g. B. what contribution does the print advertisement make?
Marginal utility optimization
Reduces a marketing channel that has too many and too expensive contacts. Gives these contacts a second, more efficient channel (double play). This increases the range. Often used when shifting from offline to online channel, e.g. B. TV display, print or Facebook ads. An experienced media agency is necessary. Only two marketing channels can be optimized at a time.
More complex attribution models:
Statistical models that compare media spending with KPIs such as B. Correlate sales or DB. Much more valid than simple attribution models. Resilient for annual budget planning and CEOs. Partly with medium to high complexity. This makes it rather expensive for medium-sized companies. Requires an experienced media agency or market research institute. Here are 2 methods:
Data-Driven Attribution
Measures all touchpoints of a single user. Achieves more valid results than simple, rule-based attribution (“blue runway”). Calculates which click chains lead to conversion based on mathematical algorithms. Cannot include offline campaigns. Needs data material with high data depth.
Marketing mix modeling
Works with around a dozen variables or touchpoints. Looks at long-term relationships between media spending and KPIs over time. Identifies efficient and inefficient marketing channels using regression analyzes, e.g. B. “Which medium has the cheapest cost per customer in marginal utility?” Relatively high demands on the data input. Service provider necessary for implementation.
Attribution models in real time
- Highly complex, super-precise attribution with big data algorithm
- Handles terabytes of data and hundreds of variables
- Simulation of budget scenarios possible (if-then)
- Adapt communication strategies in real time – high efficiency gains
- Tool for large companies: mainly used in the USA, e.g. at Ford Canada and USA it was used to reduce CPAs by 25%.
Lean Attribution for SMEs
In this section, we discuss the further development of the more complex attribution models. Lean Attribution is similarly meaningful, but at the same time has three significant advantages:
- Lean, significantly cheaper attribution
- Very good explanatory quality thanks to the mapping of offline and online channels
- Calculable without the involvement of service providers such as media agencies or market research institutes
At its core, Lean Attribution is based on data mining using regression analyzes. In addition, the individual logarithm is supplemented by modeling experience curves from 20 years of attribution research. Experience from over 200 product categories increases the explanatory quality of the model. Uses of Lean Attribution:
- Budget planning
- Marketing controlling
- Management reporting
This model is particularly suitable for medium-sized companies that are looking for more precision than the blue runway – a suitable introduction to professional attribution.
