Blog 91: What are attribution models, and why are they necessary?
- Idea2Product2Business Team
- Aug 20, 2024
- 3 min read
Updated: May 13
What are they?
Attribution models allocate credit to various channels or touch-points for conversions. Understanding this will help us align our marketing efforts appropriately.
Marketing channels include social media, email newsletters, website etc. and touch-points include blog posts, YouTube ads, emails with discount codes etc. (refer blog 54 for more on customer acquisition channels).
Why are they necessary?
Without attribution models we will not fully understand what drives conversions. And we are unlikely to be able to pinpoint what specifically contributes to a conversion.
How does it work?
Attribution models analyse different parts of a buyer’s journey to assign credit to various channels or touch-points (refer blog 16 for more on customer journey map). Channels or touch-points receiving the highest credit are the ones to focus on. As they drive most conversions.
Types of attribution models
There are two main categories: single-touch and multi-touch. In single-touch attribution models, one channel or touchpoint gets all the credit for the conversion. In multi-touch models, credit is shared across several touch-points.
A. Single-touch attribution models
When to use: Single-touch models are most relevant for products with a short buying cycle (i.e. few interactions needed before a purchase).
A1. First interaction: Customer’s first touchpoint gets 100% credit for the conversion.
A2. Last interaction: Customer’s last touchpoint gets 100% credit for the conversion.
A3. Last non-direct click: Customer’s second-to-last touchpoint gets 100% credit for the conversion. However, this is applicable only if the final touchpoint is a direct action (i.e., prospect converting to a customer).
Let us look at this with an example:
Prospect sees a YouTube ad for online guitar classes. Prospect now opens the company’s website, bookmarks it, and signs up to the company’s mailing list. Prospect receives several promotional emails and continues seeing related social media ads. By the end of the week, he/she receives a discount code via an email. Post which, he/she buys a subscription.
In the first interaction model, credit for conversion goes to the YouTube ad. In the last interaction model, credit goes to the company’s website. And in the last non-direct click model, credit goes to the email with the discount code.
B. Multi-touch attribution models
When to use: Multi-touch models are most relevant for products with a complex buyer’s journey.
B1. Linear attribution: In linear attribution models, every touchpoint gets equal credit for the conversion. Using the same example, the YouTube ad, promotional emails, email with discount codes, and the company’s website all get equal credit.
B2. Rules-based attribution: Rules-based attribution models spread credit across various touch-points by giving a different weightage to different marketing funnel stages (refer blog 42 for more on marketing funnel stages).
B3. U-shaped attribution: First and last touch-points get most of the credit. Rest of the credit is distributed equally among other touch-points. Using the same example, the YouTube ad
(first) and the email with discount codes (last) would each get 40% credit for the conversion.
B4. W-shaped attribution: Top-of-the-funnel, bottom-of-the-funnel, and middle-of-the-funnel touch-points get 30% each. Remaining 10% is evenly distributed. The YouTube ad, the mid-week email, and the email with discount codes would each get 30% credit.
B5. Time decay attribution: Each touch-point receives increasing credit as the customer approaches conversion. Hence, the YouTube ad gets minimal credit, and the email with discount codes would get the most credit.
B6. Custom attribution models: Take a U-shaped or W-shaped attribution model and then customise it to create a new custom model.
B7. Data-driven attribution: Data-driven attribution models use machine learning and predictive analytics to pinpoint the most influential touch-points. This model is suited for products with complex customer journeys and multiple touch-points.
Ultimately, the attribution model we use will depend on our business model, marketing strategy, and budget.
Jump to blog 100 to refer to the overall product management mind map.
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All the best! 😊
