If ROI is the fire that drives marketing, attribution is the fuel. Without one you can’t have the other. Yet there are many different ways to measure and understand attribution as it relates to ROI.
If you’re not sure where to start when it comes to quantifying and evaluating your ROI, this blog is for you. Follow along as we redefine attribution, provide models to follow, and establish attribution matters in relation to ROI.
Attribution Plays into ROI in an Essential Way. Here’s How
ROI and attribution are two of the biggest buzzwords in B2B marketing. After all, attribution determines impact, impact drives ROI, and ROI is a major factor in determining everything from marketing budget to strategy to hiring plans. Indeed, marketers who calculate their ROI are 1.6x more likely to be awarded higher marketing budgets than their counterparts.
But how should marketers understand the relationship between the two? Here’s how we define these two important terms:
- ROI looks at the full scope of all the resources that have been invested to produce impact.
- Attribution is a subset of that ROI equation, measuring performance on a specific level by looking at certain sections of the demand generation strategy and its success at converting leads.
Since attribution inevitably leads into ROI, it’s essential to create an attribution plan that accurately and effectively measures the right channels, campaigns, and marketing efforts that you want reflected in your ROI measurement.
Indeed, ROI as a holistic metric is becoming less important when it comes to determining marketing budgets during times of economic uncertainty and inflation. Rather, multiple metrics should be analyzed to determine value. Jason McNellis, Senior Director Analyst at Gartner Marketing, explained that moving beyond ROI alone is essential for CMOs who need to defend their marketing budgets to executives.
“Maximizing ROI generally leads to smaller marketing budgets that drive less sales. CMOs need to rationalize across multiple metrics as ROI is likely less important here than gross margins attributable to marketing,” McNellis says.
Marketing Attribution Models
In order to understand the relationship between ROI and attribution, it’s important to understand the various types of attribution that marketers can apply to their programs. These are typically split into two groups: single-touch attribution and multi-touch attribution.
Here are a few examples of both models, with pros and cons for each approach.
Single-touch attribution models
- Last-click attribution.
- First-click attribution.
- Single-touch attribution is easy to measure.
- It demonstrates effective touchpoints for conversion.
- With a complicated customer funnel, it ignores mid-funnel insights and tactics.
- First and last-touch might not be what led a customer to convert, so the metrics are a bit arbitrary.
Multi-touch attribution models
- Time-delay or time-decay attribution (give credit depending on the time distance between channels when a sale goes through).
- Last-channel attribution (give the majority of credit to the final conversion channel, but still share attribution with initial channels).
- Linear attribution (divide the credit for conversion touchpoints equally among all channels).
- Position-based attribution (a hybrid of single- and multi-touch attribution, this gives the majority of credit to the first and last-touch channels, but still leaves some credit to channel inbetween).
- Multi-touch attribution gives full insight into all marketing activities that impacted the customer journey.
- It is customizable and flexible, and also gives more data that can inform marketing strategy.
- Determining weight is somewhat subjective and can impact attribution outcomes.
- It can be more difficult to calculate and track effectively.
Which model is right for your organization?
Now that we’ve reviewed both models and their varying approaches to measuring attribution, how will you determine which model is better for your business? Remember, the model you choose will inevitably affect your ROI. Our advice?
If you have a short and simple marketing funnel, choose a single-touch model.
If you’re marketing on various channels and have many touchpoints, choose a multi-touch model.
That way, you’ll ensure that your attribution model isn’t missing any vital information that you need in your ROI calculations later on.
Need Help With Planning, Attribution, or ROI? We’ve Got You Covered.
Inverta exists at the intersection of strategy, activation, and technology. When it comes to ROI and attribution, it’s key that your strategy accounts for the right metrics, your execution is rooted in data, and your technology is set up to help you measure attribution and ROI correctly.
We assist companies with planning and strategy by providing a 12-month roadmap of priorities, accompanied by revenue modeling to help you align your marketing plan to overall business goals. We’ll help you create great attribution models that prove both ROI and overall business outcomes.
Learn more here!