Unlocking the Truth Behind Incremental Performance: Why & How Attribution Models Can Make Or Break Your Business

Brayden Cruz
June 13, 2024

In the ever-evolving landscape of direct to consumer (DTC) ecommerce, understanding the true impact of your marketing efforts is paramount. Investing a little here and a little there without a clear cut grasp of what’s actually driving net new revenue growth (and profit) for your business can quickly lead you into a ditch. As marketers, and leaders, we need to be able to understand how to best slice the data we have available to us in a way that helps us reach our revenue targets & profitability goals. Enter attribution models. Attribution models are not just tools—they are the lenses through which savvy marketers can observe the nuanced behaviors of their marketing campaigns. At Northbeam, we are committed to equipping you with these critical insights, ensuring that every dollar spent is an investment toward measurable success. Over the next few sections, we will dive into the specifics of attribution modeling, things to consider first before analyzing your marketing data and finally, the best way to select the model most appropriate for your business.

What Is An Attribution Model?

At a high level, an “attribution model” is simply a formula for dividing up credit across the various touch points in a user’s journey that led to a transaction on your website.

When we talk about “credit”, we are typically referring to revenue & transactions associated with a specific marketing touch point.

Attribution models can come in many sizes, shapes and forms. Not all are created equal. For example, most marketers are typically familiar with a “Last Click” model which is usually what most ad platforms like Meta and analytics solutions such as GA4 will use to assign credit to an individual campaign. Models like Last Click look to give all the credit to the last click a user made prior to visiting your website and purchasing a product. Yet, other models like “Time Decay” look to increase the amount of credit given to a marketing touch point the closer in time it occurred to the user purchasing a product on your website. Many models are plagued by a lack of consistent results across business models, verticals and customer audience segments. Luckily, at Northbeam, we understand that the results live in the nuance of the data. As such, we’ve built our attribution models with this at the forefront of our minds. We will discuss the specific models Northbeam offers in a later section, but before we do, let’s discuss some more pitfalls of most attribution models.

Common Pitfalls of Most Common Attribution Models

Attribution models are essential for marketers to evaluate the effectiveness of their campaigns, but they come with inherent limitations. Especially if you’re relying solely on a model offered by the ad platform themselves as they are often incentivized to over inflate the performance of their own campaigns. It’s important to first understand the lens a model looks to take on your data before leaping into making crucial decisions based off of the insights. Here’s an overview of some general pitfalls associated with the most commonly used attribution models:

Bias Towards Certain Touchpoints

Models like Last Click attribution often disproportionately credit the last click interaction a customer has with the brand. This can lead to a skewed understanding of what is truly driving conversions, often either overvaluing or undervaluing the significance of middle or initial interactions in the customer journey.

Oversimplification of Customer Interactions

Linear Attribution treats all touchpoints as equally influential, which can dilute the strategic value of critical interactions that may play a more decisive role in influencing customer decisions. This equal weighting can mask the true effectiveness of specific campaigns or channels.

Neglect of Long-Term Impact

Models like Time Decay focus primarily on the actions that occur closest to the time of conversion. This approach tends to overlook the foundational interactions that occur earlier in the sales cycle, which may have been vital in setting the stage for eventual sales, thus potentially leading to short-term planning over long-term strategy effectiveness.

Lack of Contextual Flexibility

Position-Based Attribution may assign arbitrary values to certain interactions based on their position in the conversion path, which might not accurately reflect their actual impact on different types of customer behaviors or purchase processes. This lack of flexibility can result in inefficient resource allocation and misguided strategic decisions.

Inadequate Representation of Complex Buyer Journeys

Many common attribution models do not account for the multifaceted and often non-linear nature of modern consumer journeys. This can lead to incomplete or inaccurate insights, as these models fail to capture the complex interplay of multiple channels and touchpoints over time.

Understanding these general pitfalls is crucial for marketers to carefully consider which model, or combination of models, might best align with their specific objectives and the nuances of their target market. It’s also vital to adapt and refine attribution strategies continually as new data becomes available and as consumer behavior evolves.

A Quick Overview Of Each Model Northbeam Offers

At Northbeam, our platform harnesses several cutting-edge attribution models, each serving unique business needs.

Last Touch Attribution: Ideal for short, decisive campaigns where the last interaction amongst your marketing channels is most likely to convert prospects.

First Touch Attribution: Gives credit to the first interaction, valuable for understanding which marketing channels were the initial attractors.

Linear Attribution: Distributes credit evenly across all touchpoints, useful for long-term engagement campaigns with a high number of touchpoints. This model can also be useful for businesses with very even spending across all channels, putting them all on a level playing field.

Last Non-Direct Touch: Gives credit to the last touchpoint in the user journey excluding direct traffic. Great for matching closely to how the ad platforms view things and only focusing in on your paid marketing channels.

Clicks + Views: The most robust MTA model that Northbeam offers. Clicks + Views leverages our proprietary view model in tandem with hard factual click data. It looks to distribute credit in a weighted fashion amongst your marketing touchpoints based on which touchpoints helped drive the conversion initially. This model is best for understanding which channels & campaigns are driving the most incremental revenue to your business.

Clicks Only: A close cousin to Clicks + Views but with some stark differences. For one, as the name suggests, clicks only looks to measure hard factual click data amongst your marketing touch points. It's a conservative lens on things that ignores view data and distributes credit linearly to all click based marketing touchpoints that resulted in a purchase. This is great to use in tandem with Clicks + Views to cross validate the direction Clicks + Views is saying you should go.

Each model offers its strengths, and by leveraging them businesses can illuminate different aspects of the customer journey.

Stop Thinking Like A Marketer - Think Like A Model

Marketers have inherent bias. No matter how immune we think we are, at the end of the day, we all have a subconscious or even conscious tendency to try and draw conclusions in data that either aren’t there or only validate a half truth.

Attribution models on the other hand, especially ones like clicks + views, do not have irrational biases that prevent them from delivering unfiltered insights that can help you make better decisions with your marketing channels.

As marketers, we need to position ourselves in a place of objectivity. Whereby, we rely on the data and the models behind them to lead us down the right path in our efforts to continuously improve our campaigns and drive profitable business growth.

“Thinking like a model” involves understanding what we thought might happen by scaling a certain “good” campaign may have actually had the opposite effect. Maybe it caused over inflated numbers to occur because it was not actually as good at driving incremental first time customers as we might have initially thought or even assumed.

At any rate, level setting your expectations will allow you to be more tactical in your decision making and provide a unique cutting edge lens into your day to day campaign optimizations.

How to Think About Sales Cycles vs. Payback Periods

Understanding your sales cycle's duration and aligning it with the correct payback period is critical when choosing an attribution model. A longer sales cycle might benefit from a data-driven model like Clicks + Views in Northbeam, ensuring that all influential interactions are considered. Conversely, shorter cycles might align better with a narrow model like Clicks Only, capturing the rapid decision-making process typical of impulse purchases. 

Payback periods on the other hand, refer to the following question, “After I acquire a customer, how long does it take for that customer to become profitable for me taking into account my acquisition costs & expenses?” Answering this question relies on having an attribution model that can show which marketing touchpoints deserve credit for transactions that happen later in time. This ties into accounting modes on Northbeam, AKA, whether revenue is assigned to the day the marketing touchpoints themselves occurred, or the day the transaction occurred. 

Generally, when using an accrual accounting mode in tandem with Northbeam’s proprietary Clicks + Views model, customers are able to see precisely when, where and how much revenue is being attributed to each marketing touchpoint along the user journey even past just the initial transaction. In fact, unlike many other attribution tools out there, Northbeam has an indefinite attribution window. That means, if a marketing touchpoint, say, a Meta ad were to be clicked on today and that user converts outside of the normal attribution window set within your ad account (typically anywhere between 7-30 days), Northbeam still sees this user as having first come from this Meta ad. Northbeam will then attribute the appropriate amount of revenue back to that marketing touchpoint taking into account the weighted contribution it had that led to the conversion.

Choosing the Right Model & Window for Your Business & Data

Selecting the right attribution model and window hinges on understanding your specific business context: Start by identifying your measurement goals: are you optimizing for short-term conversions, attempting to understand longer sales cycles, or seeking insights into the most effective incremental marketing channels? Your goals will significantly influence the choice of model.

Next, consider the length of your sales cycle carefully. Businesses with longer sales cycles benefit from a comprehensive view of all influential interactions, making models like Clicks + Views more appropriate. Conversely, shorter sales cycles might align better with models like Clicks Only, which focus on immediate, decisive interactions. Additionally, evaluate the diversity and complexity of your marketing channels. A wide range of channels with varying degrees of influence may necessitate a specific model to capture the full spectrum of touchpoints.

Analyzing historical data is crucial to understanding trends and patterns in customer journeys. This analysis helps identify which touchpoints consistently drive conversions and which models provide the most accurate insights. Aligning your attribution model with your accounting practices is also vital. For instance, using an accrual accounting mode that accounts for revenue on the day the marketing touchpoints occurred, with a model like Northbeam's Clicks + Views, will yield a more precise financial picture.

Attribution is not a one-size-fits-all solution, so it's essential to regularly test different models and attribution windows to find the most actionable insights. Continuous iteration and adaptation ensure your approach stays aligned with evolving market dynamics and consumer behaviors. Leveraging the expertise of attribution experts here at Northbeam can further guide you through the complexities of attribution modeling, ensuring you select the most effective models and windows for your unique business needs.

To wrap this up, Attribution isn’t just about tracing sales back to their sources—it’s about understanding how each marketing element contributes to the overarching goal of profitable revenue growth. Northbeam’s platform provides an unparalleled view into these dynamics, empowering marketers to make informed decisions that drive success.

Navigating the complex world of attribution is no small feat, but with Northbeam, clarity isn’t just an outcome—it’s a guarantee. Attribution is only one piece of the equation. To dive deeper into how our MMM+ tool can revolutionize your approach by maximizing every ad dollar, start by visiting our product page or contacting our support team for a personalized demo.

This article was written by Northbeam Senior Media Strategist, Brayden Cruz. Check out his Linkedin here!

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