What You Need to Know about Attribution Models

If you’re responsible for marketing at a small business, you may think attribution models aren’t necessary for evaluating your efforts. But accurately measuring ROI is crucial when making the most of a smaller budget and choosing effective channels for your focus. Here’s what you need to know about attribution models and the best way to measure ROI for your business.

Let’s begin with first touch attribution. In this model, 100% of marketing value is attributed to a lead’s first encounter with the brand. For example, if a new client first became aware of you through a social media ad, you’d attribute the full ROI back to the cost of that ad, justifying the expense.

attribution models

This oversimplifies the process though. Perhaps the social media ad caught their attention, but they didn’t set a meeting with you until they received your email newsletter, and then in-person meeting resulted in the close.

linear attribution model accounts for the many touches required to convert a lead to a client. It typically takes about seven touch points to gain the full trust of a prospective client. In this model, those seven touches are spaced over time and the model allows an even percentage of attribution to every touch point.

attribution models

Returning to our earlier example, the linear attribution model would say the original social media ad, the email, and the in-person meeting were equally important in closing the customer.

This model is oversimplified as well. It makes the most sense for free or low-cost marketing channels, events or meetings, because it’s simply an allocation of time.

Consider though, that you’re paying for social media ads which generate a lot of interest and phone numbers, and you’re paying thousands to sponsor and attend conferences. You may get more leads from social media, but the conference is responsible for brand awareness and introduces you to prospective clients who are closer to becoming customers. The linear model doesn’t account for these nuances so additional attribution models are useful.

full-path or z-shaped attribution may be the best solution. This model evenly weighs ten percent of all touch points, and equally distributes the remaining ninety percent to those conversion touches that got a lead through the main touch points (first touch, lead conversion, opportunity creation, customer close). This allows you to weigh marketing touches in a more meaningful way if you have a more complicated marketing model, like an omni channel model, a mixture of inbound and outbound leads, or a mixture of low cost to high cost then to free or earned.

attribution models

This model works well for professional services businesses. In an industry requiring perhaps six months to develop trust and convert a client, you need many varied touchpoints. A referral won’t simply close because they were referred. But they may after in-person meetings, newsletters, press pieces, or other touches. The z-shaped model accounts for the many steps and complexity between the first touch and the client close. You can take this concept even further to customize how you weight each touch point.

It’s an important methodology to understand because it allows you to calculate your ROI and reallocate resources based on what works, which is how any of these attribution models ultimately should be used, to iterate and optimize your future strategy based on historical performance.

Sound complicated? Take it back a step: consider what success is to you and how you define it. Begin with a simple attribution model and as you define your marketing strategy, the z-shaped path can further assist you in determining your true ROI drivers.

Read our related blog from last week: How to Measure ROI.