The acronym ROI means “Return on investment” and is a financial metric that is used to determine the reality of our investments.
In other words, how much money we generate from the actions that we are making.
In this post we will discuss ROI when it comes to your digital marketing.
When someone asks, “is your marketing working?”
What kind of answer can you give them?
Is it asking about generating awareness, foot traffic or sales?
The reality is that today’s consumer’s journey is more complex than ever before, with more touchpoints across more channels than marketers have ever had access to.
But with all these opportunities to reach customers and leads, one big challenge is trying to figure out exactly how much value each of those touchpoints is providing.
It is here where attribution can help.
Attribution is the art and science of attributing value to each one of the touchpoints on the path to purchase.
But wait, it’s not that easy!
Attributing value to each touchpoint can be extremely difficult.
Let’s compare attribution to dating. Just like dating, there may be different contexts or scenarios that lead from date to date. In the case of digital marketing, it would be from touchpoint to touchpoint.
Here is another example:
If you sent out an email newsletter with a specific promotion and someone received that email, clicked on it, and purchased something that’s worth $100.00 to you. You may attribute $100 to that email marketing channel and that specific email campaign.
But let’s dig deeper.
Most likely they responded to some other marketing initiatives prior to being made aware of the brand and were eventually convinced that they should sign up for that newsletter. It could also have been an upper-funnel branding initiative like a television ad or a display ad. They could have a search engine and clicked on a result. They might then have interacted with you on social media, eventually done another search and clicked on one of your paid search ads, and then signed up for that newsletter.
You can now see just how easy it is for lots and lots of interactions to take place prior to a purchase of some kind of conversion event.
So, what do you think? Should that email campaign really have taken `100 % of the credit for the sale?
Well…it depends. Attribution modelling allows us to look at different ways to attribute value to the path to purchase and none are right and none are wrong. They just offer us a different way of evaluating the contributions of each of our marketing channels so that we can make better decisions around how we allocate our budgets.
First, there’s what’s known as last touch or last-click attribution. In that model, the last interaction point, in our case the email campaign, would get all the credit.
There’s also a first-touch model where exactly the opposite is true. That TV spot or the display ad in our example would get all the credit because if it wasn’t for that ad, they would have never found out about us. There are also different models where credit is shared across all the touchpoints. You’ve got linear models that break up the credit evenly, decay models that may weigh touchpoints higher the closer they get to the final conversion, and of course many more, including custom and data-driven models that can be built to reflect your own organization’s situation.
In Conclusion, adding attribution capabilities to your marketing technology stack can be a great strategy for getting insights that will make sure you’re getting the best ROI on your marketing budget.