The Problem With Channel Attribution: Developing Marketing Metrics for Future Spend and Budget Allocation
"Fractional Allocation," which counts revenue only once and distributes the dollars proportionately to the appropriate channel to avoid double counting, is the preferred method. It provides the clearest view and takes into account activity across channels.
Testing helps marketers determine the impact of multiple channels on purchase and response rates, as the results may vary by company. However, for some this may be too complicated or they can't afford a system that does it for them.
Fractional Allocation can be quite complex. The good news is that marketers can still find answers to their questions by planning simple tests up front so they can track beyond a single mailing to count all of the media being received for a period of time in a controlled setting.
For example, during a 3-month period, Group A received one direct mail, 12 emails and 10 targeted ads, generating Y dollars. ROI is measured by totaling all costs and burdening it against all sales generated by that group. If the overall performance of Group A exceeds the performance of another test group with a different media/contact mix (Group B, Group C, etc.), then the marketer can compare the ROIs of the different strategies and choose the strategy that best meets his need.
We encourage our clients to leverage data about consumers to reach them across a variety of channels, when and where they want to interact with the brand. The same approach should be leveraged for attribution, whereby data is the key to understanding how each touch has impacted the relationship and ultimately purchase behavior. This data includes promotional history and advanced order placement details which can be maintained in a marketing database. As we look ahead and think about budget allocation, channel attribution should be a critical driver of your marketing decisions.