When it comes to sales attribution, the marketing and advertising space has done a pretty poor job of demonstrating bottom line effectiveness. For those of us who work in a marketing or media capacity we know this, and understand this, but choose to only speak of it at only a whisper, and for very good reason… our budgets depend upon it.
Every brand understands and accepts the importance of marketing, branding and advertising, but attributing monetary values against these activities can be an enormous challenge, and can also be very misleading if done incorrectly.
A cautionary tale
I’ll never forget working with a small ecommerce client (who shall remain nameless) many moons ago that began to question the merits of their paid search, display and social campaigns. Directly trackable conversions were low against all three and were showing a low direct Return on Ad Spend (RoAS). After much debate, the Head of Marketing (a digital skeptic) decided to cut the digital spend to almost zero and reassign budget to additional offline activity as a test over a three month period. This offline activity came in the form of magazine advertising and direct mail brochures.
You’ve probably guessed already what happened next, within two months total sales had plummeted by over 30%. Yikes! And virtually all sales were coming from existing customers on their database.
There was then a panic to get digital activity live again, which we did, but the damage had already been done and it took over nine months to recover the ground we’d lost in the previous two. The truth is if you’re out of sight, you’re out of mind and winning back that attention isn’t simply a case of pressing an on/off switch.
The moral of this story is simple, unless you can be sure that the data you’re seeing is the complete picture, be very careful about making hasty decisions.
The dilemma of today’s environment
Traditionally marketing campaigns have been set up to cast as wide a net as possible. In the pre-digital age campaigns were focused on delivering ads in volume, through mediums such as print and TV, to huge audiences in the hope that by casting a giant net into the ocean we’d be able to catch a few fish.
There was no way to directly track the performance of these campaigns so success was largely based on deliverability metrics and overall sales uplift within the timeframe of delivery. Obviously, if you had multiple campaigns running simultaneously it was extremely difficult to judge which one had driven the superior sales performance, or if they had any effect at all.
Digital marketing has changed all of this because we now have the technology to track individual campaigns and how they resonate with specific audience segments, even down to the level of tracking individual targets.
This means that the budget gatekeepers are demanding far more evidence that marketing and ad spend is driving a direct return on every dollar spent. In theory this shouldn’t be a problem, but let me show you why this isn’t as straightforward as it seems.
Let’s take the example of an online retailer:
Scenario 1: Selling only on a first party sales channel
In this scenario we have an online retailer selling exclusively on their own website. The journey is simple, a user sees an ad, clicks through to the website or visits the website (without clicking) during a set timeframe, and when a sale occurs it is attributed to the ad they originally saw.
This looks straightforward enough, however, even this simple journey has some drawbacks when it comes to tracking. Firstly, more often than not you’re limited to an attribution window, and if a sale doesn’t occur within that window it doesn’t get attributed to the ad. Now that may seem fair enough, but you have to remember that customer journeys have to start somewhere, and if the first point of that journey was an ad but the user purchased outside of the window, the ad lays forgotten from an attribution perspective.
Secondly, it doesn’t necessarily tell us which ad from which campaign actually helped drive the sale. Going back to my cautionary tale, sometimes a user may purchase a product not just because they’ve seen your latest ad for your latest product, but because they’ve seen a whole series of ads for multiple products which has put your brand to the front of their mind. Data doesn’t always tell us the whole story, in fact I’d argue that it rarely does.
Thirdly, due to regulatory pressures and users adopting cookie blocking technologies, tracking and attributing purchases sometimes isn’t even possible. This is a growing trend and something digital marketers are going to have to contend with on an increasing basis going forward.
Scenario 2: Selling in a multi-channel sales environment
Ok, so we’ve seen how even a single-channel online sales process can be problematic when it comes to tracking purchases, but let’s now take a look at a multi-channel digital sales environment. Here is an example of what a journey may look like – a user sees or clicks on an ad to a website but then opts to purchase on a third party retail outlet.
This is where the picture starts to get even murkier, and this is without even beginning to think about offline sales in bricks and mortar stores.
When a user sees an ad and then visits and purchases the advertised product from a third party retail outlet, it is close to impossible to directly attribute that purchase to the ad. This is because third party retailers, for the most part, will not allow you to place tracking tags on their websites. Please note that Amazon is an exception here since the roll out of the Amazon Attribution service.
So in theory your ad could be working extremely hard for you, but with only trackable sales to directly attribute to that ad, it isn’t necessarily going to get the credit it deserves and decisions will be made based on the observable evidence.
Why is this a problem?
For those of you working in a marketing capacity, sales attribution will no doubt be blinking on your radar and you’re likely getting a huge amount of pressure put on you from finance departments, senior executives and clients to prove that you’re making a difference.
This is the age old problem within marketing and advertising. Is what you’re doing working? And do we dare turn it off if we can’t prove that it is?
When I started out in my digital marketing career the focus was always placed on traffic. Whatever you were doing, it needed to be driving traffic somewhere and this was the key indicator of success, which is why CTR is still used as a main KPI when conducting media deals. Over the years this has evolved to factor in engagement to answer the question of “how are audiences engaging with our ads and our content?”
The expectation now is that everything you do must prove sales attribution because the budget gatekeepers want to know if they spend $1 what will they get back as a return on investment for that dollar.
Whether the marketing and advertising industry likes it or not, this is where we’re now at and this is what is expected of us so we have to adapt.
The challenge that awaits us
This is a huge challenge because of the very nature of the business environment we’re working in. The data landscape is hugely fragmented. Content and media is delivered across a large number of platforms where a huge amount of data is gathered, the trouble is none of these platforms like to talk to each other so you end up with your data being siloed, and that’s before you even begin attempting to track sales performance at the end.
Then you have the tighter regulatory restraints that are now rolling out such as GDPR and ePrivacy that is making the free flow of data increasingly difficult. Also, as I’ve previously mentioned, you have a growing trend of users taking action to block your ability to track them (and for good reason seeing as this privilege has been massively abused over the years) and big tech companies are now making it easier for users to do this. Apple and Google are good examples here where they’re giving users the tools to block you and switching tracking off as a default setting in web browsers making it almost impossible for third parties to gather the data they need to prove out sales attribution.
Is there light at the end of the tunnel?
I’m going to be honest with you, there is a long road ahead that is going to take you massively out of your comfort zone. However, there are some things to consider before you begin writing your resignation letter to start a new life as a nomad.
First of all, we’re all in the same boat. In my experience when industries start moving abruptly in a certain direction solutions emerge, and who knows, you could even be one of the pioneers to provide those solutions. Periods of great change present great opportunity and the marketing departments or agencies that adapt the best will benefit the most.
Also, in my experience brands are pragmatic and have no desire to shoot themselves in the foot, and as a result will likely work closely with you to find workable solutions to build out attribution models that all parties can agree on. I don’t believe there is ever going to be a solution here that solves this problem 100% so the answer likely lies in data modelling and agreed attribution methodologies.
Something else to consider is the fact that some platforms are already working on solutions for this. At Dialect we’ve been using the Amazon Attribution service to report back conversion data on users interacting with our ads and our content and then purchasing products on Amazon. At the time of writing this it is only available in the US and the UK but is certainly a step in the right direction and provides us with an additional reference point to take back to our clients.
The thing not to do here is to bury your head in the sand and hope that this all goes away. Start researching what measures you can take within your industry and formulate a plan. If you’re able to get to a point where you can prove sales attribution for your marketing activity start winning additional budget.