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Conversion Attribution and Branding Budgets
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Conversion Attribution and Branding Budgets

April 13th, 2010, By

A core pillar of online marketing is measurement: you want to track and validate your investments for their value and ROI. Is “branding budget” an extra-territorial creature in performance-driven online marketing?

 

I will explain why it should not be! And since it should not be, it should not be treated as “branding budget”. It must be treated as results-driven budget, an integral part of the user path to conversion.

 

Streamlining Digital Budgets

Creating brand awareness and product demand is an integral part of marketing and advertising, online included. Traditionally, budgets were divided between “branding” aimed at raising awareness and creating demand, and “direct response” aimed at hard sell. But in today’s digital world, diligent online marketers should find ways to remove the boundaries between them and streamline activities and budgets – on the way to maximizing ROI.

So how can budgets aimed at creating awareness, be tracked and evaluated by client acquisition metrics?

 

Welcome to the World of Conversion Attribution

Today we have the tools to track better: Omniture, coremetrics, affiliate systems, in-house systems. All these, in correct implementation, can track prior click/impression path of the users who end up converting to customers. While these rely on cookies, and thus vulnerable to cookie deletion and other cookie issues, it is still “good enough to go”. On this same note, achieving a 100% accountability in online marketing is far fetched, but that doesn’t mean that you should demand zero accountability from a significant portion of your budget!

 

So how does Conversion Attribution Work?

By default, nearly all web analytics systems will assign 100% of credit to the “last click”, the click immediately preceding the conversion. However, that usually is not the optimal way to evaluate your traffic sources. Instead, you should design a conversion attribution model that is a little more holistic, and customized to your business. Budgets that generate impressions/clicks in the top of the conversion funnel should get their due credit within a selected framework.

 

Build Your Conversion Attribution Model

Simple models for attribution include credit evenly split between all clicks in the conversion path or all clicks and impressions, splitting it between first and last click, assigning 50% to the last click, and 50% to the rest in the funnel. More sophisticated models may try to weigh in more parameters such as time lag between clicks, engagement, and others. A good presentation on the subject can be found here.

 

In general, you need to think about the nature of your business conversion process and build your model around it.

 

What is your Sales Cycle Length?

Analyze your current data: how consistent are sources on the beginning of the conversion path? If they show consistency they may deserve a higher credit. Stay flexible to adjustments along the way. Bear in mind that no particular system is an absolute truth, only a hopefully useful way to analyze data and allocate resources. You may find an optimization tomorrow that will make your model more useful.

 

So where should “Branding Budgets” go?

After you have a conversion attribution model implemented, and find that your existing “branding budget” is not a significant part of a conversion path, then rethink it.

Options include revising your conversion attribution methodology if you believe that credit is not yet correctly assigned, or directing those budgets to more valuable venues. Those can be other demand-creating or direct response, as long as they can be tracked and shown as part of your path to conversion.