Attribution Part 3 - Why do we need attribution and why don’t more have it?

Marketing attribution is based on what may be the most ironic quote of all time. Certainly, it is in the top ten.

“Half of my marketing spend is wasted. I just don’t know which half.”

The sentiment is not ironic; it has been felt by every marketer since William Caxton wrote the first ad in the late 1400’s. The irony is that this quote has been attributed to two different people. If you come from America, you think it was uttered by John Wannamaker a Philadelphia based retailer. If you come from the UK however, this was first said by Lord Leverhulme, founder of Lever Brothers. Unfortunately, there is no evidence that it was ever uttered by either. It is pure urban legend.

Either way, business leaders need to know that the investments they make in people, plant and equipment, IT systems and marketing are improving the bottom line of the business. Those investments that are not paying off need to be stopped, while those that are helping drive performance need to be maximised.

The simplest attribution model looks at marketing spend as a function of sales to determine return on investment (ROI). 

Total Sales - Marketing Spend)/Marketing Spend = Marketing ROI

Yet according to Kantar-Millward Brown’s Getting Media Right Report 2018, only 56% of marketers are able to track the ROI of most or all of their marketing activity. So why do so many marketers continue to struggle to have a clear understanding of which half is wasted?

We will discuss the various attribution models in more detail in a future post, but this formula is too simple. Any business more complicated than my daughter’s lemonade stand, will introduce additional variables which cannot be captured in this top line ROI formula. Regardless of your opinion as a marketer, the business development and sales teams have a significant impact on sales in a B2B environment. Your website has a huge impact on conversions for your ecommerce site. This does not even begin to look at other factors like physical locations, above the line activity, multiple marketing channels, etc.

Regardless of the complexity of the model, it is significantly easier to build if all of the data is in one place. Marketers rarely have this luxury. Your sales data could be in multiple places such as your ecom platform and you point of sale system. Many B2B marketers find much of their sales detail inaccessible in the CRM or in the finance system. Not to mention, much of your marketing spend and performance data is in various channel specific systems.

Even if you can get all of your sales and marketing data into a single platform, you really need to be able to match sales to the individual customer to be able to understand the customer journey prior to the sale and which touch points led them to purchase. What started out as a marketing exercise quickly becomes a whole business digital transformation project.

Unpicking all of this complexity requires finding the right balance between accurate and easy. As models become more accurate, they tend to get more expensive to implement and harder to use. On the other end of the spectrum, models that are easier to implement and easier to use can lead to bad decisions.

In part four, we will begin to look at the most common attribution models in detail.