The average company now spends $75,000 every year on digital marketing, a whopping 35 percent of their total marketing budget.
However, even though many businesses are throwing large wads of cash toward digital advertising, the direct ROI from these initiatives may be less than satisfactory.
Digital ads are currently undergoing a critical examination after a number of statistics have called their utility into question.
Although these advertising metrics paint a grim picture for the future of online advertising, we take a more optimistic approach.
While you may not be seeing the results that you expect in terms of number of clicks, that's hardly a reason to write off the entire ad campaign. In this article, we'll propose an alternative argument for measuring the value of your digital ads.
The Problem with Last-Click Attribution
Much of digital marketing is dominated by a paradigm that's generally known as "last-click attribution." Only the user's "last click" before reaching your website (for example, Facebook advertising or Google search) is given credit for the sale.
Although the "last-click" model is easy to measure, however, it isn't able to capture all the subtleties involved with digital marketing.
Users often visit and revisit a website multiple times before they're ready to convert. On average, 92 percent of visitors to your website aren't actually there to make a purchase; they're still in the process of evaluating and considering their options.
This means that your digital ads may play a critical role in the buyer's journey without you even knowing about it.
For example, users may decide to search for a product that they've already seen on display advertising – but without clicking on the ad itself.
Other customers might decide to reply to your sales email that they received a few weeks ago after being reminded of your company via a Facebook ad.
In both cases above, the ad itself is responsible for driving customers to your business, even if that fact isn't captured by the "last-click" model. So what can your business use instead to measure the value of your digital ads?
What is Multi-Touch Attribution?
In 2017, Google announced that a new product dubbed Google Attribution was under development, aiming to solve many of the problems associated with last-click attribution.
The Google Attribution software uses artificial intelligence and machine learning to weight the importance of different touchpoints along the buyer's journey.
Suppose that a customer's last action before visiting your website was to click on a search ad – so that ad should get all the recognition, right?
Not according to Google Attribution, which tries to mete out the appropriate amount of credit to different channels and devices.
For example, your company may have targeted the customer in an earlier email campaign, which was the reason the customer ran the search in the first place.
This is the essential concept behind "multi-touch attribution," a marketing concept that's all the rage these days.
Multi-touch attribution models attempt to determine the value of each interaction that a customer has with your business before the conversion occurs.
The goal of multi-touch attribution is to understand the relevance and importance of different channels and campaigns so that organizations can better allocate their advertising dollars.
How to Implement Multi-Touch Attribution
Unlike last-touch attribution, there are actually many different multi-touch attribution models. The most popular include:
• Linear – All touchpoints are weighted equally.
• Time decay – Touchpoints closer to the conversion in time are given more weight.
• U-shaped – The first and last touchpoints are given the most weight, and those in the middle are given less.
• W-shaped – The first touchpoint, lead creation touchpoint, and opportunity creation touchpoint are given the most weight.
• Custom – You can define a custom multi-touch attribution model based on the specific details of your marketing initiatives.
No attribution model is perfect when it comes to digital ads – after all, you can't read your customers' minds. However, multi-touch attribution is significantly more accurate than models such as first-touch and last-touch, and implementing it is well worth the effort.
For the greatest chance at successfully using multi-touch attribution, follow best practices such as:
• Identifying a project leader who can take the initiative seriously and advocate for its importance throughout the organization.
• Educating key stakeholders about why multi-touch attribution is necessary.
• Picking the right actionable metrics for your business goals that will be used across your different marketing channels.
• Understanding your enterprise data resources: how you collect, update, and analyze data about your customers and advertising campaigns.
• Starting small with a single channel or campaign in order to make adjustments before deploying across the organization.
Multi-touch attribution is a more sophisticated model of how customers proceed along the buyer's journey. As such, it provides you with the opportunity to better comprehend and optimize your digital marketing campaigns.
By tweaking different elements on a granular level, you can find out what really matters to your customers and start seeing better results from your digital ads.