Attribution Modeling - Case Study
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One of the crucial trends nowadays will be the growth of attribution modeling. However, many savvy marketers are still missing the opportunity to reap the benefits of attribution modeling, hence this whitepaper is aimed at providing a comprehensive overview of what marketing attribution is all about.
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Attribution Modeling - Case Study
- 1. Attribution Modeling Get the most out of Attribution Modeling - Measure the true value of all marketing channels
- 2. Foreword If we are to summarize the current top 10 marketing topics around the world, attribution modeling must be one of the latest hot topics within the industry. According to the report conducted by Econsultancy and Adobe in November 2012, only 26% of advertisers worldwide and 36% of advertising agencies carried out marketing attribution. It is truly evident that attribution modeling is rapidly growing and its value is being recognized by a vast majority of marketers nowadays. Based on the report, 29% of advertisers that do measure attribution say it has significantly benefited their business while 60% of those realized that it is beneficial. Marketers can better understand their budget allocation, gain insights into affiliate marketing effectiveness and optimize their marketing mixes. However, attribution modeling is still at its initial stage of gaining popularity within China. Many of the marketers are not familiar with attribution modeling and the purpose of this whitepaper is to elaborate on the use of attribution modeling and demonstrate its effectiveness on measuring the success of your marketing efforts. Co-founder of iClick – Ricky Ng 1
- 3. Table of Contents Part One Why do marketers need attribution modeling? - Why do marketers need attribution modeling? - What is the biggest value of attribution modeling? Part Two What is attribution modeling? - What is attribution modeling? - Commonly used attribution models Part Three How attribution modeling creates value to marketers? - Case analysis - How to make use of attribution modeling to analyze your campaign? Part Four An introduction to XMO attribution modeling 2
- 4. Part One Why do marketers need attribution modeling? For many marketers, managing marketing budget and maximizing ROI (Return On Investment) are the biggest objectives of every campaign. With the challenges faced by marketers on the complexity of media channels, it is relatively difficult to conclude the ideal channel to be used. When you plan to utilize your marketing budget for a campaign, will you have the following difficulties? - How to optimize channel mix to maximize ROI? - Which channel is most suitable for my products? - How do you manage the whole media buying process to measure the effectiveness in real time? - Will there be any impact to the channel in the case of adding or reducing marketing budget? - Any difference on user profile from different media channels? - Does this channel truly bring my marketing campaign with the most desirable results? Why does attribution modeling gradually become critical to marketers? Below is an example to help you easily understand: For example, assume 10 successful conversions are received in a week from search engine marketing and display advertising. If marketers could only track the conversions based on last click, then the result would show: Last Click Conversion 1 Search Engine 2 Search Engine 3 Search Engine 4 Search Engine 5 Display Ad 6 Display Ad 7 Search Engine 8 Search Engine 9 Search Engine 10 Search Engine As the above table illustrates, marketers may think that the conversion rate appears to be extremely low for display advertising. In this case, marketers will intuitively allocate more budget to search engine marketing. 3
- 5. However, with end-to-end conversion tracking available, marketers can now better understand the process behind each conversion more thoroughly: Last Click Conversion Conversion Path 1 Search Engine Display Ad → Search Engine 2 Search Engine Display Ad → Search Engine 3 Search Engine Display Ad → Search Engine 4 Search Engine Search Engine 5 Display Ad Display Ad 6 Display Ad Display Ad 7 Search Engine Display Ad → Search Engine 8 Search Engine Display Ad → Search Engine 9 Search Engine Display Ad → Search Engine 10 Search Engine Search Engine Based on the analysis of conversion path, online display advertising has actually assisted 6 out of the 8 conversions made from search engine marketing. Do marketers now have a new perception of online display advertising based on its results? By learning the insights from the conversion path report, marketers can now understand more about the “assist effect” amongst different advertising channels. The main advantage of attribution modeling is to reflect the real value of the contribution made to each channel. For example, if 1 credit will be given only if the channel has contributed in a conversion, in this case, the value of search engine marketing and display advertising will be calculated as follows: Last Click Conversion Conversion Path Search Engine Display Ad 1 Search Engine Display Ad → Search Engine 1 1 2 Search Engine Display Ad → Search Engine 1 1 3 Search Engine Display Ad → Search Engine 1 1 4 Search Engine Search Engine 1 0 5 Display Ad Display Ad 0 1 6 Display Ad Display Ad 0 1 7 Search Engine Display Ad → Search Engine 1 1 8 Search Engine Display Ad → Search Engine 1 1 9 Search Engine Display Ad → Search Engine 1 1 10 Search Engine Search Engine 1 0 8 8 Total 4
- 6. The biggest value of Attribution Modeling The above example demonstrates the importance of attribution modeling. Not only it helps the marketers with the ability to monitor performance of different media channels, but it can also increase ROI (Return On Investment) significantly by re-allocating budget amongst channels. With some critical points mentioned above, more and more marketers are willing to adopt attribution modeling in the long run. 44 % 54 % % 58 63 % 72 % Attribution Modeling - Benefits to Marketers Able to reallocate budget across channels and improve ROI Better understand how digital channels work collaboratively Gained valuable insights into consumer makeup and behavior To provide objective reasons to justify more marketing budget Data Source: Google analysis <Marketing Attribution: Valuing the Customer Journey> 5 Increase understanding on the role of online/offline media interactions
- 7. Part Two What is Attribution Modelling? Attribution modeling is a set of rules that determines the sales or conversions assigned to each touch point in conversion paths. - Savvy marketers understand that you don’t attract your customers with just one simple message, just one image, or just one ideally positioned advertisement. It is a complicated process of planting the seed, nurturing it and at last harvesting the fruits of your marketing efforts. - Right before your customers buy or convert, they may encounter various parts of your online marketing campaign including paid and organic search, email, affiliate marketing, display ads, mobile placements, etc. Each of these factors has a significant impact on the campaign results. - In the past, the value of the marketing campaign is only determined by the last click of the users in the media channel. But when you think thoroughly, the user may be affected not just on his/her last click but also in other areas during the conversion. Attribution Modeling offers a series of different methods to determine the role that channels play throughout the conversion journey. Day 1: User views ad on website............................................................................ Cause Day 2: User search for “smartphone”...................................................................................................... Promote Day 4: User clicks on Banner Ad.................................................................... Promote Day 35: User sees a video ad of a smartphone brand.......................................................................... Promote 20 mins later: User searches for that smartphone brand........................... conversion Before the user completes a conversion, they will usually encounter with various advertisements many times. Some media channels help to expose the ad to the users, while others may use to assist conversion. 6
- 8. Commonly used attribution models To optimize the use of attribution modeling, marketers must first clearly understand and identify its marketing objectives regardless of whether to increase conversion quantity, increase user registration or download discounted coupons, etc. In the meantime, marketers should also understand how credit should best be assigned to each conversion funnel. Below are the most commonly used attribution models and its appropriate use: Last-Touch Attribution 0% The Last-Touch Attribution Model attributes 100% of the conversion 10 value to the last referring channel with which the customer comes across before purchasing or converting. This model is extremely common among most marketers, hence it is a great baseline for comparison with other models. Appropriate use: If your advertisements and campaigns are developed to drive customers traffic at the time of purchase, or your business is mainly transactional with a sales cycle that does not involve a consideration phase, the “Last-Touch Attribution” model The direct conversion value to the last referring channel PAID AD DIRECT conversion value 100% 10 0% may be ideal. Last-Touch Model ORGANIC REFERRAL SEARCH First-Touch Attribution The First-Touch Attribution model attributes 100% of the conversion value to the first channel with which the customer comes across. Appropriate use: If your advertisements or campaigns are developed to maintain awareness with the customer, this model fits you perfectly. For example, if your brand is not commonly known, you may primarily focus on exposing your brand to customers through keywords or different channels. 7 First-Touch Model ORGANIC REFERRAL SEARCH conversion value 100% PAID AD DIRECT Credits received from organic search is based on the first interaction.
- 9. Time-Decay If the sales cycle involves only a short consideration phase, then this model may be appropriate for you. It will assign the most credit to touchpoints that occurred closest to the time of conversion. Appropriate use: If you run one-day or two-day promotional campaigns, you may wish to assign more credit to interactions during the promotion. In this case, interactions that occurred a week before have smaller value as compared to those touchpoints near the conversion. The “Time Decay” model may be appropriate for assigning 5% 15 % 30 % 50 % touchpoints during the day or two to generate conversions. Time-Decay Model ORGANIC REFERRAL SEARCH 5% DIRECT 30% 15% PAID AD 50% Position-based This model allows you to use a combination of “First-touch Attribution” and “Last-touch Attribution” models. Other than assigning all the credits to either the “First-Touch Attribution” or “Last-Touch Attribution”, you can easily allocate the credits between them. One commonly seen scenario is to assign 40% credit each to the first and last interactions, and assign the remaining 20% credit to the middle interaction. Appropriate use: If you primarily value touchpoints that sell your brand to your customers and final touchpoints that 10 10 % % 30 % 50 % resulted in sales, you can simply use the “position-based”model. Position-Based Model ORGANIC REFERRAL SEARCH 30% 8 DIRECT 10% 10% PAID AD 50%
- 10. Part Three – How attribution modeling creates value to marketers? Case Analysis - Customer: Vertical e-Commerce - Objective: To increase online conversions - Cost Per Acquisition (CPA): $380 - Promotional Period Oct to Dec 2012 - Promotional Results See below Channel Consumption Conversion Share CPA Google – Paid Search $512,236 1,980 31.9% $259 Google – Organic Search - 138 2.2% - Baidu – Paid Search Baidu – Organic Search $1,403,232 2 3,123 - 29 Ad Network $308,983 Ad Exchange Grand Total 50.3% 4 3 1 $449 0.5% - 178 2.9% $1,736 5 $63,459 760 12.2% $84 6 $2,287,910 6,208 100.0% $369 Assume the marketer has no assist from attribution modeling, the results on every channel will be indicated as follows: 1. Google – Paid Search: CPA is ideal, but recommend to increase budget 2. Google – Organic Search: Low conversion channel generating poor performance 3. Baidu – Paid Search: Key conversion driver, but CPA exceeded and then require to lower CPA 4. Baidu – Organic Search: Low conversion channel generating poor performance 5. Ad network: High CPA but low conversion, exceeded the target CPA, hence recommended to drop this channel 6. Ad exchange: CPA is ideal but low conversion and require to increase budget Note: The performance figures are specific to this particular case study only. It does not represent the actual performance of the advertising channel in general. 9
- 11. But with the data provided by attribution modeling, the conversion value of each channel will be truly reflected as follows: Conversion Channel Effective Consumption Conversion Share CPA Conversion Share Real Conversion CPA Google – Paid Search $512,236 1,980 31.9% $259 2,099 33.8% Google – Organic Search - 138 2.2% - 287 2 4.6% - Baidu – Paid Search $1,403,232 3,123 50.3% $449 2,820 3 45.4% $498 Baidu – Organic Search - 29 0.5% - 233 4 3.8% - Ad Network $308,983 178 2.9% $1,736 590 5 9.5% $524 Ad Exchange $63,459 760 12.2% $84 179 2.9% $355 6 Grand Total $2,287,910 6,208 100.0% $369 6,208 100.0% $244 1 $367 Main changes of each channel: 1. Google – Paid Search: CPA remains ideal, and effective conversions increased slightly 2. Google – Organic Search: Effective conversion has increased, in other words, this channel can assist other channels for conversion 3. Baidu – Paid Search: Effective conversion has lowered, in other words, this channel relies heavily on other channels for conversion 4. Baidu – Organic Search: Effective conversion has increased, in other words, this channel can assist other channels for conversion 5. Ad network: Effective conversion has increased significantly, in other words, this channel is mostly used for assisting other channels 6. Ad exchange – CPA has increased significantly, indicating such channel belongs to the last part of the conversion funnel 10
- 12. How to make use of attribution modeling to analyze your campaign? When marketer gained a better idea of the actual conversion value from each channel through attribution modeling, how he/she should practically apply the insights to optimize the campaign? Attribution modeling goes beyond just the first step of optimization for marketers. In the next step, marketers should look for relevant insights from other reports. In this case study, the marketer has the following insights and actions: Insight 1: Conversion Channel Effective Consumption Conversion Share CPA Conversion Share Real Conversion CPA Google – Paid Search $512,236 1,980 31.9% $259 2,099 33.8% $244 Google – Organic Search - 138 2.2% - 287 4.6% - Baidu – Paid Search $1,403,232 3,123 50.3% $449 2,820 45.4% $498 Baidu – Organic Search - 29 0.5% - 233 3.8% - Ad Network $308,983 178 2.9% $1,736 590 9.5% $524 Ad Exchange $63,459 760 12.2% $84 179 2.9% $355 Grand Total $2,287,910 6,208 100.0% $369 6,208 100.0% $367 The actual amount of conversion has decreased in Rank Baidu Paid Search after analyzed by attribution 1 Baidu – Paid Search 143% modeling, in other words, the conversion from this 2 Google – Paid Search 32% channel has in fact benefited from the contribution by 3 Google – Paid Search → Ad Exchange 9% other channels. According to the XMO conversion path 4 Ad Network → Baidu – Paid Search 4% 5 Baidu – Organic Search → Baidu – Paid Search 3% 6 …… report, 7% of the conversion comes from Ad Network and Baidu Organic Search to Baidu Paid Search. Hence, Conversion path report Share …… the focus of the optimization should lie on the basis of Baidu Organic Search - Search terms report (Simplified version ) these two channels instead. Search terms Cost Conversion should take place as below : Online Shop $ 54,935 184 3.5% $299 Baidu Organic Search: Online Shopping Site $ 54,618 137 2.6% $399 Shopping Discounts $ 30,702 74 1.4% $415 Free Delivery $ 18,205 58 1.1% $314 Discounted coupons $ 10,135 47 0.9% $216 Auction $ 17, 691 37 0.7% $478 Other Search Terms $ 1,729,183 4,733 89.8% $365 Grand Total $ 195,468 5,270 100% Based on the keyword search report on the left, marketers should ensure conversion driven keywords are included in the paid search campaigns so as to keep a constant conversion rate. 11 Conversion Share CPA $363
- 13. Ad Network: Ad Network Conversion Performance report Region As Ad Network is defined as the top-notch “assisting Cost Conversion Share CPA channel”, it is mostly capable of arousing brand Beijing $ 372,417 1,247 20% $299 awareness to acquire new customers. Shanghai $ 336.163 1,093 18% $308 To enhance the effectiveness of Ad Network, marketer Guangdong $ 332,110 963 16% $345 Chengdu $ 312,168 749 12% $417 Other $ 953,052 2,156 35% $434 Total $ 2,287,910 6,208 100% $369 can re-allocate their marketing budget based on conversion district, as such to allocate more budget to cities with higher conversion rates such as Beijing, Shanghai, etc. Insight 2: Conversion Channel Effective Consumption Conversion Share CPA Conversion Share Real Conversion CPA Google – Paid Search $512,236 1,980 31.9% $259 2,099 33.8% $244 Google – Organic Search - 138 2.2% - 287 4.6% - Baidu – Paid Search $1,403,232 3,123 50.3% $449 2,820 45.4% $498 Baidu – Organic Search - 29 0.5% - 233 3.8% - Ad Network $308,983 178 2.9% $1,736 590 9.5% $524 Ad Exchange $63,459 760 12.2% $84 179 2.9% $355 Grand Total $2,287,910 6,208 100.0% $369 6,208 100.0% $367 After the analysis of attribution modeling, the actual Rank conversion coming from ad exchange platform drops 1 Baidu – Paid Search 143% from 12.2% to 2.9%, which means such channel 2 Google – Paid Search 32% benefits from other channels in order to get the 3 Google – Paid Search → Ad Exchange 9% conversion. 4 Ad Network → Baidu – Paid Search 4% 5 Baidu – Organic Search → Baidu – Paid Search 3% 6 …… Conversion path report Share …… From the conversion path report, we can derive that the Google Paid Search is mainly the assisting source for ad exchange platform. Although Google Paid Search itself is an extremely effective channel, there are still some users who fail to be converted through this channel alone. Hence, it is recommended to adopt search retargeting to ensure the campaign running in ad exchange can capture the losing users from Google Paid Search. 12
- 14. Insight 3: Conversion Channel Effective Consumption Conversion Share CPA Conversion Share Real Conversion CPA Google – Paid Search $512,236 1,980 31.9% $259 2,099 33.8% $244 Google – Organic Search - 138 2.2% - 287 4.6% - Baidu – Paid Search $1,403,232 3,123 50.3% $449 2,820 45.4% $498 Baidu – Organic Search - 29 0.5% - 233 3.8% - Ad Network $308,983 178 2.9% $1,736 590 9.5% $524 Ad Exchange $63,459 760 12.2% $84 179 2.9% $355 Grand Total $2,287,910 6,208 100.0% $369 6,208 100.0% $367 From the data analysis combining attribution modeling Rank and conversation path, it is obvious that Google Paid 1 Baidu – Paid Search 143% Search is a highly effectively channel, whether it serves 2 Google – Paid Search 32% as a conversion channel itself or assists other 3 Google – Paid Search → Ad Exchange 9% advertising channels to convert. 4 Ad Network → Baidu – Paid Search 4% 5 Baidu – Organic Search → Baidu – Paid Search 3% 6 …… Therefore marketer may consider to focus on the optimization effort for this single channel, for example, to perform keyword expansion to boost the traffic volume. 13 Conversion path report Share ……
- 15. Conclusion: Attribution Modeling may not be able to answer all the questions arose from online marketing. Marketers should make use of other in-depth data analysis and continuously try out different optimization methods in order to constantly improve their campaign performance. Below are some suggestions for the marketers: Identify your marketing objective Establish a clear and solid marketing objective is the first step to success. Is your primary objective based on attracting new users, improving conversion directly or increasing the return rate of existing clients? Different objectives determine different attribution models to be selected. Refer to other reports to generate practical insights Attribution modeling does not mean automation of all optimization procedures. Marketers should review other reports (such as conversion path, conversion keyword reports, etc.) to conclude a feasible optimization solution. Attribution modeling can help understand their product’s conversion funnel Apart from increasing the conversation quantity, we suggest marketers to try shortening conversion time, for example, add redirect function, or offer discounts to those returning users generated from the ad as to increase the chance of conversion. Keep trying out different optimization strategies Invest time to try out different optimization strategies and study their effectiveness instead of focusing on building a perfect attribution modeling. 14
- 16. Part Four An Introduction to XMO attribution modeling iClick’s cross-channel optimization platform, XMO is capable to generate predictive analytics to assist marketers in marking data-driven marketing decisions. Our product design aims at every detail from ad tracking, data analysis to optimization. Our product edge include: - Tracking code: Capture every interaction of the user, from their first exposure to the ad until the last conversion completed to allow marketer to better understand customers’ online behavior. - Integrate conversion path with cross-channel analysis: Provide channel assist report to analyze the relationships among different channels so as to understand the real value of the channels. - Provide multi-dimensional and customized conversion funnel analysis: Marketer can customize their unique conversion funnel to cater to different features of their promotional products, aiming at increasing the relevance of data analysis. - Various types of attribution modeling: Use different attribution modeling on different promotional products, allowing the data analysis to better reflect the actual performance. XMO user can download attribution modeling reports from a range of attribution modeling 15
- 17. Assist Effect Report – Better understand the real value of channel conversion Conversion Path – Understand the frequent conversion path can allow channel conversion About iClick iClick is the leading digital buy-side platform in Asia that integrates search, display, social media and mobile marketing capabilities to allow marketers to plan and manage their cross-channel campaign in one single destination. Harnessing the power of programmatic buy and ad technology, the proprietary platform XMO (*Cross-marketplace Optimization Platform) is designed to deliver maximum ROI and greatest efficiency to marketers. Visit www.i-click.asia and follow us at weibo.com/iclickasia Sales enquiry: [email protected] 16