Mo’ Money: Attribution Modeling
I was doing some research on attribution modeling today. Eric Krell from C3 sums it up nicely via a simple online purchase example. This can be applied to display, search, affiliate, email.
Imagine a simple Internet purchase: a $100 transaction from Zappos.com. A reader on The New York Times website sees a display banner for Zappos. It makes her think about sandals. She surfs on Zappos and other sites. After a beach weekend, she decides to order the sandals she looked at by typing “Zappos” into Google, and makes a purchase. One hundred percent of this advertising credit goes to the paid brand search ad, which was simply the endpoint before checkout, not the starting point: the ad that first stimulated her purchase. The marketing executive running the Zappos’ Internet advertising budget gets a false read, with misleading data on which advertising expenditure truly drove revenue.
Today, Internet ad tracking systems are predominantly the same legacy systems from the late 1990s. The problem with these systems: They erroneously give 100 percent credit for a transaction to the last clicked Internet ad, or the last viewed Internet ad. No credit is given to ads that create or cause a purchase and consequently no credit is given to actual revenue drivers. This “last click” attribution misleads advertisers as to where to allocate Internet ad dollars.
“Last click” is the problem that attribution modeling solves. In short, attribution modeling is the process by which fractional credit is assigned to ads bought by online advertisers at a transaction level.
~ Zorilla City