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Why Attribution is a Serious Problem for Ecommerce Businesses

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You know how difficult it is to attract paying customers to your ecommerce website. You might use half a dozen or more marketing channels to get the word out about your products or services. This means it’s vitally important to decide where to put your limited marketing dollars to maximize your conversion rate and increase your revenue.

So, how do you determine which channels deserve more attention and resources? Attribution.

Attribution refers to determining which marketing channel gets the credit for making a sale. In the early days of the Internet, a single banner ad might’ve been all it took to earn a customer. But that’s not the case anymore – customers require dozens of touchpoints before they finally purchase. So how do you make sure every marketing channel receives credit?

Consider that 98% of visitors to your online store will not make a purchase on their first visit, and 55% will leave within 15 seconds. This makes it vitally important to understand the entire customer journey that leads 2% of customers to make a purchase.

There are multiple attribution models to explore that help you determine the entire customer journey of visitors that become customers. The different attribution models put varying importance on each step in the customer journey. Today, we will explore these models to help you determine which one is perfect for your business.

A Brief Example of a Customer’s Journey

You’re probably familiar with the customer journey, but just so we’re all on the same page before diving deeper, let’s go over a simple example of a customer journey.

Let’s consider Laura, a consumer looking to buy a new smartphone. Her journey might look like this:

  1. Laura has been thinking about buying a new phone for a few months, and then one day, she sees a native ad that compares different phones. She gives it a click and reads the comparisons.
  2. The post didn’t answer all of her questions, so she searched for “best smartphones for photography” to learn more, which led her to read reviews from authoritative sources.
  3. She’s now signaled that she’s interested in a new smartphone, so she started seeing display ads on social media and other sites.
  4. Laura clicks on a few ads, reads up different phones, and performs other searches to hone in on specific features of some smartphones, which leads to even more refined remarketing ads.
  5. Eventually, she decides it’s time to make her purchase, and she searches “buy Google Pixel 6” and heads to your site to make a purchase.

Who should get credit for Laura’s sale? That’s the question that different attribution models aim to answer.

Types of Attribution Models Ecommerce Businesses Need to Understand

It’s important to consider that major technology companies’ increased focus on user privacy has made tracking attribution increasingly tricky. A prime example is Apple’s iOS 15 update which greatly influenced email marketing.

Additionally, if someone visits you from Facebook, they must purchase within seven days to attribute the sale to Facebook. Google is a little more generous at 30 days, but the customer’s journey isn’t always within these timeframes. That’s why a powerful solution that can track attribution indefinitely is essential.

Now, let’s explore the standard attribution models businesses use to gauge conversions. Which one is the best? It ultimately depends on your business goals, so it’s worth learning about each of them before deciding.

Last Click Attribution

This attribution model is relatively standard and calls for giving 100% of the credit to a customer’s last click before reaching your site. For example, Laura’s purchase would be 100% attributed to her Google search, with no credit given to the native ad at the beginning or any searches and ads.

Last click attribution dominated the marketing landscape, and in the early days, it was reasonably accurate. However, as consumers have become more resistant to advertising and increasingly savvy about online shopping, it’s not typically accurate anymore.

First Click Attribution

First click attribution is the exact opposite of last click attribution. Laura’s sale would be attributed to the native ad that made her think more seriously about buying a new phone.

The first click model has the same flaw as the last click – it gives 100% of the credit to the one touchpoint. All ads on social media, Google searches, and even the final click to your store are given no credit.

Linear Attribution

This attribution model gives equal credit to every touchpoint and channel in a customer’s journey. So, for example, Laura’s visit to Cnet to learn more about Pixel’s specs receives the same credit as the last click to your site, and so do all the social media ads in between.

The benefit here is that it provides a holistic view of the success of all of your marketing efforts. While a single customer will reveal the path it took to become a customer, the combined statistics of all your customers will reveal which channels are performing better. It’s only a matter of seeing which touchpoints are commonly found throughout everyone’s journey.

Time Decay Attribution

The closer a marketing channel is to the conversion, the more credit it receives. The time decay model assumes that the touchpoints are increasingly important until they make a sale.

This model has merit, but what about Laura clicking on the native ad? That ad made her think more about buying a new phone, but in this model, it would receive the least amount of credit.

Position-Based Attribution

What if the first and last touchpoints are the most important? That’s the premise behind the position-based model. Each touchpoint receives 40% credit, with every touchpoint sharing the remaining 20%.

This model is popular among marketers because it gives value to the top and bottom of the funnel. However, it assumes the last touchpoint is where they finally decide to become a customer, which might not always be the case.

Custom or Algorithmic Attribution

A custom attribution model is crafted specifically for your business. This model is generally purchased from a third party specializing in creating them. A custom attribution model is widely considered the best choice, but it’s more challenging to set up and manage. In addition, most vendors have traffic requirements.

What’s the Best Attribution Model for My Ecommerce Business?

So, which attribution model is best? It’s all based on your current goals and overall marketing strategy.

Consider Laura’s journey one more time – which steps would be most related to your marketing strategy? For example, are you running native ads to educate customers about what they need to know to become customers? Or are social media ads vital to keeping your business in front of your customer’s minds?

For every attribution model, you need the right analytics solution to track each interaction. You’ll be limited in which attribution models are available without it.

Emarketed offers robust solutions for ecommerce businesses to help them embrace any attribution model they desire. Schedule a call with our ecommerce experts today to see how we can help.

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