December 16, 2013

Attribution: The Interaction Matrix

In your typical attribution discussion, there is considerable consternation regarding first-click and last-click attribution ... and everything in-between!

Honestly, most of the talk is theory. Everything, and I mean everything in attribution is wrong. And that's ok.

Since the vast majority of my clients use a hybrid of matchback (first-click) and last-click attribution, I calibrate my simulations around a combination of both.

The "Interaction Matrix" is where I build rules. Since many of my clients are catalogers, folks who execute mail/holdout tests, I get access to some juicy information!

In the mail/holdout tests (for both catalogs and for email), I can identify what happens if marketing is discontinued. This allows me to estimate the importance of support channels, like paid search.

For instance, it's common to see paid search distribute something like this:

  • 50% of all paid search volume disappears if catalogs are discontinued.
  • 25% of all paid search volume disappears if emails are discontinued.
  • 50% of all paid search volume is "dark matter" - unmeasured - but shows up in retail purchases.
I enter these factors into my "Interaction Matrix". This allows me to see what happens to the overall business if I ramp-up catalog marketing or email marketing, for instance.

Here, I'm going to increase my catalog budget by 50%, and increase my email marketing budget by 50%. Look at what happens to the paid search budget:

On a last-click basis, we see that the increase in the catalog budget and email budget resulted in more paid search last-click demand.

We can also see that the paid search budget increased significantly, without interaction on our behalf. In other words, by sending out more catalogs, and by sending out more email campaigns, we drive more customers to Google (which both Google and Amazon heartily endorse). Among the customers not lost to the dark matter of the e-commerce world, we generate more paid search demand, reflected in this simulation.

This is why I like focusing on Attribution Simulations. I get to see how all of these different "omnichannel" marketing strategies interact and play out over the next five years. I'm pretty confident you'd like to have a tool like this, at your disposal, as well.