With the COVID-19 pandemic disrupting product marketing and sales paradigms for the foreseeable future, marketers everywhere are taking a hard look at all campaigns to reallocate marketing spend and adapt efforts accordingly.
Given the current unstable environment, it is more important than ever for this analysis to be based on data-driven KPIs and less on initial reactions to uncertainty. Marketing attribution is a critical tool that can help determine the effectiveness of prior campaigns and serve as the basis for the constitution of new campaigns designed for the unique COVID-19 economy.
Armed with market attribution information, executives and managers can reformulate marketing budgets – particularly ad spend – and set expectations going forward.
What is Marketing Attribution?
Marketing attribution analyzes which marketing tactics are leading to conversions. Marketers engage their target audience via a bevy of marketing vehicles; marketing attribution is the practice of evaluating each of them to determine their efficacy, and further, which of many is most effective – or not.
This is done through the application of one or several attribution models, which serve as the framework to determine the effectiveness of marketing campaigns. Which model to use will depend on the nature of each business and how products or services are marketed. Single-touch models are generally less useful as they only take into account a single touchpoint/event, while multi-touch models and tools more closely mirror today’s online marketing paradigms and give deeper insights into user behavior.
Multi-touch attribution models range from linear, which gives equal weight to each touchpoint the target engages, to time-decay, which gives more credit to the touchpoints closer to the conversion. U-shaped and W-shaped models weigh touchpoints at either end more heavily, spreading the remainder amongst the touchpoints in the middle. By combining one or more of these models with more traditional marketing mix modeling, companies can gain more insight into the performance of multi-channel marketing campaigns.
How COVID-19 Has Affected Overall Spend
As of November 2019, more than 80 percent of U.S. B2B buyers said they were concerned about a recession in 2020. Now that it appears the recession is here – and one considerably deeper than anyone could have foreseen – business owners are focused on mitigating the worst effects, including layoffs and, sadly, shuttering business altogether. The spread of COVID-19 has caused most companies to rapidly rein in their spending and establish a holding pattern while they consider how to retool to survive and even thrive in the COVID-19 economy. However, it’s clear that the winners are going to be relatively few and far between. According to a recent survey from Influencer Marketing Hub, Two out of three companies believe that COVID-19 will harm their domestic business.
Some broader trends are becoming clear, with 69 percent of brands expecting to decrease ad spend in 2020, and 38 percent saying that they may need to lay off at least some workers due to the worsening economic conditions. The Influencer Marketing Hub survey was conducted the third week of March, so it’s likely that these numbers will increase as the impact becomes clearer.
Taking these numbers into account, it’s no wonder that companies across the spectrum are considering minimizing spend in every category. While some companies will find fortunate synergies given the B2B product and service demand brought about by these circumstances, this is bad news for those who find themselves with a portfolio filled with nonessentials. Even companies whose offerings include some essential products will need to examine their marketing spend with an eye toward optimization given the changing behavior of their target audience.
The Importance of Marketing Attribution in the COVID-19 Era
One demonstrably effective means by which to reallocate marketing spend is via marketing attribution. Marketing mix modeling is primarily used to analyze offline marketing methods, with multi-touch marketing attribution models called upon to measure the effectiveness of digital marketing campaigns holistically. While the results of marketing mix modeling can take months to fully collate, multi-touch marketing attribution models are more nimble and can provide actionable data much more quickly. This data can then be used by companies to target their digital marketing spend more effectively.
As COVID-19 forces a reallocation of marketing spend, proper utilization of marketing attribution models and tools will be critical to concentrating available resources where they’ve been proven most effective.
Marketers will be challenged by the temptation to cut out touchpoints that seem superfluous under certain models. Last-touch attribution operates under the premise that the last touchpoint the target encountered was solely responsible for the conversion. This may prompt managers to consider eliminating several prior touchpoints. However, in many situations, it’s those prior touchpoints that led to the eventual choice to buy after engagement with the most recent touchpoint. Models that only take into account the first touchpoint the target encounters are similarly flawed. Misreading buyer behavior in this way could have serious consequences upon deployment of the retooled marketing strategy.
Marketers would be wise to consider the more holistic models that give credit to first and last touchpoints as well as throughout the entire path to purchase. The time-decay model may be an appetizing happy medium between attribution solely focused on the last touch and linear attributions that give equal weight to all touchpoints the buyer encounters. But since time-decay modeling gives short shrift to the initial touchpoint, a U-Shaped or W-shaped model may provide the most useful data.
The data generated through marketing attribution will eventually need to be combined with data culled from marketing mix modeling to comprehensively evaluate the performance of current marketing strategies and suggest new ones. The unique properties of the company’s sales space also need to be taken into account. There’s no substitute for experience gathered through years of various forms of marketing, and no single attribution model is going to be perfect. Effective analysis is likely to consist of multiple model references for online and offline marketing.
Given the current circumstances, the stakes around properly conducting a market attribution analysis couldn’t be higher. While it may be tempting to perform this analysis in-house to keep costs down, turning it over to seasoned marketing strategists may be better for a company’s bottom line in the long term. The result may very well dictate a company’s ability to keep afloat during this period of unprecedented uncertainty.
In the COVID-19 era, it’s more important than ever to maintain a methodical approach to allocating company resources.
Reacting impulsively to evolving circumstances could seriously hinder a company’s ability to remain in business. In the marketing sector, with budgets being squeezed and expenses being re-evaluated with an eye toward eliminating anything nonessential, it becomes more important than ever to utilize formalized marketing attribution models when determining how to allocate marketing spend.
While it may be tempting to utilize simpler models that minimize the importance of initial and mid-stream touchpoints, it will be critical to gain a holistic understanding of the effectiveness of all touchpoints to formulate the most cost-effective marketing strategy. In this way, companies can eliminate duplicative touchpoints while maintaining the most effective conversion drivers.
The resulting marketing strategy will hopefully enable a company to navigate the perilous COVID-19 economy and perhaps establish a new marketing paradigm that can be used as a long-term performance benchmark.
Over the last decade, Lucas has worked with hundreds of organizations and marketers to set up their attribution and help them get useful insights from their data. As director of marketing for LeadsRx a marketing attribution software), he currently focuses his energy on understanding and optimizing their own cross-channel stack as well.