How many of you are married to a Supermodel? Apart from Tom Brady reading this (of course online media advertising and attribution modeling is his hobby), not many.
The question we’re often asked about an attribution model’s formula is one of perfection. Namely, “We want to launch with the perfect formula!”
But for the sake of Tom Brady, who’s just a hobbyist when it comes to full funnel attribution in online media…we’ll step back and survey the problem…and then the solution.
First, the problem…
Imagine you’re overseeing a multi-million dollar online advertising budget. And imagine one day, you discover every measurement metric of success was entirely wrong.
Well that day…is today.
Welcome to the outdated online ad tracking systems where most Internet measurement metrics give 100% transaction credit to the very last clicked or last viewed ad before an online transaction.
Example: if four Internet ads contribute to a transaction; today’s outdated systems allocate entire credit to the fourth, last ad–ignoring the first three ads, which actually drove the revenue.
Zero credit to revenue drivers. 100% credit to the last ad placed.
Now, the solution…
Enter full funnel media attribution systems (disclosure…I’m the CEO of C3 Metrics). Robust media attribution systems recognize that credit should be assigned to a team of Internet ads versus just the last one.
At a basic level, C3 assigns credit to Originators, Assists, and also Converters within a transaction.
Attribution models should capture all online media sources from the top of the funnel where sales are originated, all the way to the very bottom of the funnel. So for a $100 transaction, an Originator would receive a fraction of the $100 attributed to them—and the Assist and Converter would get their fractional credit of $100 respectively attributed to them also.
Thus, 100% of revenue credit is attributed and split among Originators, Assists, and Converters—accounting for the actual drivers of revenue. This their respective attributed split of revenue is matched to the cost of those media sources, producing a single, easy-to-use numeric ratio used to cut low performers and scale hidden, high performers.
Now back to the question we often get asked: starting with the perfect algorithm. C3’s standard algorithm allocates 40% credit to Originators, 20% to Assists, and 40% to Converters…but we expect each client to always change their weighted formula after several months of data burn in.
We know this because: each online advertiser’s business is different.
Advertisers ad deals are structured differently. The timeline from consideration to purchase in the sales funnel varies from financial institutions, to car manufacturers, to retailers. The revenue from new customers versus return customers varies. And we see advertisers using 40% credit weight for Originators, and others using 65% credit weight for Originators. Each business is different.
So, our process is this. When starting full funnel media attribution…before making any decisions, and changing weights for Origination, Assist, and Converter credit–let the data burn in. Once a system like C3 is first set up, simply do what you’ve always done. Execute your online media campaigns, and for several months measure them with your current systems; but you’ll also begin to evaluate attributed revenue-to-spend ratios in a full funnel attribution system.
Then, after a few months of data burn-in from display banners, affiliates, comparison engines, and keywords…begin adjusting the weights in what C3 Metrics calls its ‘data sandbox’.
In the data sandbox, the raw data from which ads were viewed and clicked never change (robust attribution systems should capture an unlimited number of touchpoints on an individual transaction level). So the only things that change in the C3 data sandbox, is the formula and how your Originators, Assists, and Converters are weighted. When you run scenario analyses in the sandbox, you will discover the final weighting that works for your business, and your media partners and in 60 seconds, set that formula from the sandbox to your attribution system. Burn, analyze, set.
The results? Eric Petersen has stated that hundreds of millions of online ad dollars are wasted due to last click measurement models. We concur. After deploying full funnel attribution, one C3 client saved seven figures in profit. In the second year, that same client saved eight figures in profit.
So can you begin looking like a perfect Supermodel from day one? No.
But an attractive figure…perhaps seven or eight figures in savings? Oh yes.
There’s a new model getting attention.