How to Do a Cost-Benefit Analysis to Find the Best Tools

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Monday, March 4, 2019

Marketers will always be on the lookout for revolutionary strategies and techniques that can help them, but that won't require much of a stretch to implement. Attribution Modeling could be one of them.

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As marketers, it can be daunting to even consider bringing in a whole new way of doing business. If you're going to overhaul your ways of working, you want to be absolutely sure first of all that you're heading in the right direction.

The chances are that by now, you've heard of Attribution Modeling as a way of finding which of your marketing activities are adding the most value to your campaign. If you've been thinking of giving this technique a try, you’re not alone; marketers all over the world are being tempted by the potential it offers.

However, many companies aren't really sure if Marketing Attribution is for them. Here we'll take a closer look at Attribution Modeling and how cost-benefit analysis can help you find the best solution. 

What is Attribution Modelling?

It might sound complex, but Attribution Modeling (sometimes called Marketing Attribution Modeling) is really just a way of creating a full picture of a buyer from first-time user to customer and even brand advocate.

The method allows marketers to analyze the impact of and give the appropriate credit to every item of communication they issue, based on how it affected a business's ultimate objectives.

Google Analytics Attribution Model calls each of these events of communication "touchpoints" and refers to the buyer's journey as a "conversion path" - but really they're just talking about how much they influenced the customer to take a step further in your user journey.

American marketing pioneer John Wanamaker is quoted as saying:

"Half of the money I spend on advertising is wasted; the trouble is, I don't know which half."

This is the problem that any cost-benefit analysis such as Attribution Modelling looks to solve.

Once you begin to build a better understanding of how your customers interact with your brand, you can better determine how to assign value to the different points of engagement.

How to implement Attribution Modeling

Before you begin with Attribution Modeling, it's essential to have tracking set up for every element of your marketing campaign. This means that every aspect of the buyer's journey will be recorded and available for analysis.

Once this is done, use Google's Model Comparison Tool, which is free inside Google Analytics, to retrieve your data and see how it influences future marketing. The Assisted Conversions report will allow you to see each digital marketing channel and check how credit has been assigned.

Custom Attribution Models can be created using up to ten parameters at a time so that they are personalized for your business instead of running on the default Last Interaction and Last Non-Direct Click settings.

Firstly you'll need to create a hypothesis determining how your marketing budget could be better spent, and how to test it. Don't be afraid to experiment and build Attribution Modeling into your standard monthly reporting in order to provide better insights into your entire department and beyond.

Different Attribution Modeling strategies

There are a number of different ways in which you can operate Attribution Modeling and decide how you're going to assign credit to your marketing materials.

1. Last Click attribution

Perhaps the most common strategy, this rewards the last piece of marketing material a customer viewed before making a purchase or deciding to download - a page of pricing details, for example.

2. First Click attribution

The opposite of the above, this gives all of the credit to the first 'touchpoint' your consumer saw, such as an advert on Instagram prior to their website purchase.

3. Linear attribution

Under this model, the entire marketing strategy is given equal credit. It might sound fair, but it probably isn't going to help marketing departments trying to make cutbacks.

4. Time-Decay attribution

This model would argue that the most effective marketing activities are those viewed right before a consumer decides to make a purchase and is perhaps most effective in short-term marketing campaigns.

5. Last Non-Direct Click attribution

With this model, the credit would be given to the last marketing material the buyer interacted with before they visited the brand directly, based in the idea that this was what ultimately convinced them to become a customer.

Which model is the best?

Unfortunately, there's no one-size-fits-all approach. The range of Attribution Models was developed because marketers have different needs depending on their brand, their budget, and requirements.

The perfect Attribution Model would see each advertising channel given a value equating to the loss of revenue that would occur should said channel be taken away.

However, since the only way of deducing this is to work it out, with an Attribution Model, the ultimate verification will come as a result of tests and making appropriate changes in campaigns to help achieve business goals.

Carrying out a Cost-Benefit Analysis

If you're really concerned about the advantages versus the disadvantages of any tool connected to your digital marketing campaigns, it may be worth going a little more in-depth with your measurements and carrying out a Cost-Benefit Analysis.

These became popular as a tool in the 1950s but are still in use today and involve adding up the benefits, then comparing them with the costs associated, taking into account the potential payback period.

After all, while digital marketing strategies may be helpful to some, they might not apply to all businesses and you probably want to be reassured that your marketing budget really is helping to bring in new leads.

In order to do a CBA, first be absolutely concrete about what your goals are for this digital marketing strategy, or you won't be weighing up the advantages accurately.

For digital marketing campaigns such as email marketing, some plus points include being able to reach a carefully targeted audience and having the ability to effectively measure results. What is this worth in terms of a monetary value?

You might also want to add the fact that brand loyalty and immediate sales increased, if that was the case for your particular campaign, and what the financial worth tallied up to.

On the opposite side, it's worth remembering that coming up with digital marketing campaign material takes time, as does outsourcing skills for aspects such as display ads, for instance. Any money spent in salaries or time may need to go down in your costs.

You can then simply compare one figure with the other to see if they roughly tally, or even carry out the equation 'total cost/total benefits' to work out the estimated payback period and see if it's worth your investment.

Strategizing in this way can help you to really see the most cost-effective concepts and work out alternatives to those that are weaker, potentially boosting your ROI and any future campaigns.

Another plus point is that they can be used on almost anything you want to measure the efficacy of.

However, it is worth remembering that some digital marketing strategies have a more long-term impact to a business goal, rather than an immediate effect, something that may not be recognized by a CBA.

As you can see, Attribution Modeling is essentially a method of carrying out a CBA within digital marketing, or at least helping you to work out the monetary value of communications in terms of their contribution to the wider objective so you can do the calculations yourself.

How to report Attribution Modeling

Once you have carried out your Attribution Modeling, it's important to be able to use this data and learn from it rather than simply viewing it and forgetting about it.

By really seeing the conversion path of each buyer, marketers can highlight and understand the exact efforts that led them down the funnel to make a decision. And if there is a report to show it off in black and white, it's possible to quantify each traffic source's contribution and therefore justify its continuation.

We have covered attribution reporting in detail before, so if you want more in-depth information, check out our previous article here.

In case you simply need a quick reminder, you can find your attribution reports by opening your AdWords account in Google Analytics and clicking on 'Tools' followed by 'Attribution' (in newer models it may be inside settings, then 'Measurement' and 'Search Attribution').

For those working in Hubspot, the reports are in 'Reports' and 'Reports Home', followed by 'Create a New Report'.

Attribution Modeling vs Customer Relationship Management

You may already have written Attribution Modeling off, assuming you don't need it because you already have Customer Relationship Management (CRM).

Actually, most marketers could significantly improve their processes if they integrated CRM with Attribution Modeling to build a better picture of their clients.

For example, some individuals may only be ticking boxes with CRM, such as dutifully recording client call information on software instead of using it to influence future marketing decisions. This is where Attribution Modeling could come in.

What should I know about CRM?

Most people think of CRM as simply a sales tool, but it's more of a strategy tool that informs professionals about how to better manage and nurture their relationships. In its most simplistic form, CRM software records customer contact details and can store information about clients' personal communication preferences.

It creates a comprehensive record to help companies stay connected with customers and make it a more personalized experience, meaning the relationship will organically be better understood over time.

Gartner has predicted that by 2021, CRM technology will be the single largest revenue area of spending in enterprise software.

Why? Because it allows marketers to use real customer data to optimize each marketing channel and create a better customer experience. And where have we heard that before? Attribution Modeling. These two make the perfect partners.

How to integrate CRM and AM

If you can integrate CRM with multi-touchpoint Attribution Models, you can send the attribution reports you generate straight into the sales machine.

When attribution solutions are integrated with CRM, information about calls, emails and blog post views is stored in the touchpoint reports right next to the marketing data, creating an accurate picture of the buyer's journey for each whole account.

After deals have closed and the result of the account is recorded in the CRM software, the Attribution Model can calculate the revenue credit across all of the touchpoints. This can in turn be analyzed to find out what worked for each customer and what didn't.

In short, marketing teams can use CRM to make simpler and more accurate forecasts using customer acquisition cost, payback period and lifetime value data. At the same time, effective tracking using attribution reports helps businesses to understand which marketing activities are effective within a single glance.

Campaign tracking in this way can make it easier for marketers to maximize their budgets and deliver better ROI.

Hopefully this has helped you to build a better picture of what Attribution Modeling really is and how it could be built around systems you are already using for maximum results.

Carry out a cost-benefit analysis on Attribution Modeling now and you may find that the potential advantages far outweigh the risks in terms of making your marketing budget go further.

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