Have you ever had trouble justifying your marketing budget? As a CMO, do you feel that nobody truly appreciates how much value marketing brings to the company? If the answer to either question is yes, then you’ve probably never explored marketing revenue attribution before.
Marketing revenue attribution is the process of identifying which marketing actions, touchpoints, or assets have contributed to actual bottom-line revenue, and by how much. It has the potential to fundamentally change how you approach marketing within your organization.
Despite this incredible capability, marketing revenue attribution is drastically underused. As of 2015, 38 percent of marketers still lack an attribution model, which could explain why nearly a third of marketers don’t know which channel has the biggest impact on revenue. CMOs have no idea if their hard-earned marketing funds are being spent wisely, and no way to defend their positions once budget cuts inevitably loom.
Why is marketing revenue attribution important?
If there’s one thing sales has over marketing, it’s that sales has little trouble proving its worth to the company. They can simply point to a number and claim, “we did that.”
Marketing, on the other hand, isn’t so cut-and-dry. The return on marketing executions can be difficult to accurately measure. For instance, how can you reliably track how many people saw your billboard in a month?
In addition, the average customer encounters so many touchpoints during a buying cycle that it’s a challenge for a CMO to confidently state their contributions to annual revenue. Many marketers can’t tell whether it’s a trade show appearance that made the sale, a Twitter share, or a product review on Capterra. This lack of accountability is a death sentence in today’s highly competitive environment, from both an employment and a market perspective.
Marketing revenue attribution directly addresses this by creating a system that accurately gives credit where credit is due. Not only does marketing get its slice of the pie, but the executive team can also get visibility into which channels contributed the most. Compare that against marketing expenditures, and you’ll be able to make a strong case for raising next year’s marketing budget.
How does revenue attribution work?
Over the course of their buyer’s journey, prospects come in contact with various marketing touchpoints such as webinars, marketing emails, and product videos. Each encounter will be tracked as the prospect goes through their deliberation process and eventual purchase.
In the past, marketers had to rely on agencies like Nielsen to assess the effectiveness of their advertisements. Modern marketers, however, have numerous tools and technologies that can help track views, clicks, and downloads.
Martech tools like marketing automation are able to electronically recognize individual prospects the same way you’d identify a regular at a store. These systems can track which digital assets they consume and when, and record it in a CRM for further analysis and use.
As this information is collected, dedicated marketing revenue attribution tools assemble reports that zoom out to show overall campaign performance or drill down into channel-specific metrics. Thus CMOs can determine which assets deliver the most impact to the company bottom line.
Why choose the multi-touch attribution model above the rest?
There are many revenue attribution models, each of which have their own unique ways of sharing credit between touchpoints. The two main categories of these models are last touch attribution and multi-touch attribution.
The last-touch attribution model only credits the last touchpoint the customer encountered and nothing else. This can be incredibly misleading, as it’s usually a combination of touchpoints that sway a customer’s decision to buy, and not a single defining moment.
Over 19 percent of marketers still use a last-touch attribution model. This indicates that the marketing strategies of nearly a fifth of B2C marketers might be fundamentally flawed. This kind of lapse is inexcusable. CMOs simply cannot afford to base their decisions on wrong assumptions and misleading data.
Contrast this with 21 percent of marketers that use multi-touch attribution, and an additional 18 percent who use the first-and-last-touch model, and you can see that last-touch attribution is not seeing as much widespread use as those models that rely on more touchpoints.
The reason multi-touch revenue attribution comes so highly recommended is that the model properly accounts for all touchpoints a customer encounters over the course of the buyer’s journey. Ideally, it would also portion out the amount of credit relative to the amount of influence the touchpoint had towards the sale. This gives marketers the best possible visibility into which channels are worth investing in and which need to be reduced, reworked, or removed.
How do you choose an attribution model?
As I said before, there are multiple types of attribution models, even within the category of multi-touch attribution. Each has a different focus and approach, and not all of them may be a fit for your company.
Let’s look at a few examples:
- Linear attribution
This is the simplest of the multi-touch attribution models. It evenly applies credit to all touchpoints in the buyer’s journey. On the plus side, it tracks all touchpoints for your review. The downside is that one touchpoint might be getting the same credit as another touchpoint that contributed more.
- Time decay attribution
This model assigns more credit to touchpoints closest to the point of sale. Its weakness is that it will never give proper credit to top-of-funnel touches because they will always be furthest from the conversion.
- Position-based attribution
This model focuses on lead generation. It emphasizes two particular touchpoints: the first touch and the lead conversion touch. The rest of the credit is distributed evenly among the remaining touchpoints. It’s ideal for marketers that emphasize converting leads and don’t do any other marketing.
- W-shaped attribution
This model is a variant of position-based attribution, but prioritizes an additional third touchpoint for when a prospect becomes an opportunity. That way, more key points in a traditional sales funnel are covered: discovery, lead conversion, and opportunity.
- Z-shaped attribution
Z-shaped attribution takes the w-model further by adding a final touchpoint: customer close. This attribution works best if your organization continues to market to existing sales prospects, and there is close cooperation between our sales and marketing teams.
- Social and content attribution
This social-focused attribution model connects top-of-funnel interactions to bottom-funnel conversions on your website and landing pages. It is excellent for monitoring performance across all of your digital media channels and assigning values to the previously-murky area of social media.Take a look at this example from TrackMaven:
In all examples, you need to examine your company’s goals and process and pick the model that fits appropriately.
Prioritize your search for a marketing revenue attribution solution
It’s tempting for CMOs to just leverage your current marketing metrics or marketing automation tool and “modify” it to act as a marketing revenue attribution tool, but there are inherent flaws in that approach.
First of all, most marketing metrics tools don’t track enough touchpoints. How can Google Analytics track a tradeshow contact, for instance? At best, they track website visits and form conversions, but not much beyond that.
Second, marketing automation tools are excellent at middle-funnel touchpoints, but do a poor job (if at all) of relating it to sales behavior.
Dedicated CRMs and attribution tools are your best bet for implementing a viable marketing revenue attribution process. They can connect to your CRM and all the other marketing tools you use to gather the required data, and take it a step further and compare that information against bottom-funnel activity.
The result: true top-down visibility into your marketing department’s performance, and visible evidence of how you and your team are bringing value to the company.
Proving the value of social media and content is difficult — but not impossible. We created The Marketer’s Field Guide to Social and Content Marketing Attribution to show you how to prove your impact. Get your free copy now!