Which Ad Attribution Model Should You Use?

James Green is the chief executive officer of Magnetic. He's charged with driving overall company expansion and building out its search re-targeting infrastructure.

Digital advertising has been known to provide marketers with tangible results, answers to their ad campaign performance, and guidance on where to spend their dollars. However, marketers are now realizing that the most measurable ad medium isn't quite as transparent as we all might have assumed. As a result, pressure is building on brands as they shift their advertising spend to digital, and rely more heavily on data as part of their media strategy.

SEE ALSO: Does Social Media Marketing Really Work?

At the heart of this transition is attribution. Attribution is simply the ability to evaluate the performance of each media channel, and that has become a hot topic in 2012, as marketers look to attribution models for answers. For example, where should a marketer invest? What targeting strategies work? Which ads are driving conversions? Is one channel more valuable than another?

There are several models and companies claiming to answer these questions. However, there are important differences. With this in mind, here is an overview of the most popular attribution models, what you can hope to achieve, and the risks associated with each.

Full Funnel Attribution

Full funnel attribution is typically thought of as a model-solution, when in reality it is a theory. In an ideal world, every brand would choose full funnel attribution because it assigns values throughout different stages of a consumer's experience, providing deep insights into the role that each ad plays.

Consider the breakdown of a sales funnel: Consumers move from awareness, to interest, to consideration, to preference and eventually, to purchase. Some people would argue that the first ad and last ad deserve the greatest credit because they're responsible for initiating awareness and closing the sale. Full-funnel holds that not all ads are created equal, and that brands should understand the impact that each ad has on creating awareness, influencing brand preference, and driving the desired outcome.

Post-Click or Last-Click Attribution

Post-click or last-click attribution is based on the general notion that the last advertising medium to persuade a consumer to click on an ad will receive credit for the entire sale. At first glance, this model appears to be the most logical. After all, why should others receive credit if they were unable to generate a sale after the click? However, if you dig deeper, this model does not take into account the possibility that a consumer might have been motivated by other ads for the same product in advance of the last click. Specifically, it doesn't consider a product's longer-term building of awareness and interest, or the evaluation process that a consumer goes through. Unlike the full-funnel theory that looks at multiple data points, post-click or last-click only considers one data point associated with the last action taken by the consumer just before a purchase is made.

Here is an extreme example of what would happen if last click advertising became the market standard. Consider a consumer who viewed a television ad for a vacuum, and as a result, decided to visit Wal-Mart to make a purchase. Just before setting foot inside the retailer, the consumer was handed a coupon for that very same vacuum. The post-click theory would say that the entire sale should be attributed to the flyer and not the TV ad that was responsible for sending the consumer to the retailer in the first place.

Search marketers tend to favor this model, as it guarantees that there's no confusion if a consumer clicks on an ad and then makes a purchase. However, this model does not take into account the possibility that other forms of advertising might have piqued a consumer's interest first.

Post-View Attribution

According to the post-view model, the last channel to show a person an ad is the channel that receives credit for it. However, this model is even less accurate than the post-click model, as it encourages media partners to plaster ads as widespread as possible in order to take credit for the conversion, even if a consumer doesn't actually see the ad. The benefit to post-view is that it enables marketers to measure if the viewing of the ad actually resulted in an outcome.

However, the risk associated with this model is that not every ad that is shown to a consumer is actually seen. For example, an advertisement might be posted on a window of a store, but that doesn't guarantee that a consumer walking by will see the ad. Similarly, a banner ad on Facebook or AIM might be present on one's computer screen, but might not be noticed. Not all advertisements are created equal.

Equal Attribution

A step in the right direction is equal attribution. This is a form of post-view where equal value is assigned to every single ad placement. For example, prior to purchasing a product, a consumer viewed four advertisements from four different vendors. Each ad is then assigned credit for 25% of the sale. However, the risk is that this model assumes that all ads are created equal. Branding campaigns are typically more likely to utilize an equal attribution model, as this model focuses on reach and frequency, over specific types of metrics.

Some brand marketers choose to forgo an attribution model entirely, which believe it or not, is somewhat similar to equal attribution. In this case, media vendors measure their results directly. As a result, if two vendors show an ad to the same person (who later converts), you then have multiple vendors claiming full credit for the sale. When you add the results up, you appear to have several hundred percent more sales than you actually achieved.

Fractional Attribution

Fractional attribution is probably the best solution available. However, unlike the other options listed above, it's necessary to work with an attribution vendor in order to effectively measure fractional attribution.

Many vendors offering fractional attribution indicate how much duplication is occurring between channels, which helps brands remove repetitive media partners who are not adding value. By highlighting media duplication, it's possible to observe just how far down the sales funnel each media partner is performing. Research shows that the first ad that a consumer views is vastly more important than subsequent impressions. Thus, if one vendor routinely has low duplication and provides the first impression, that vendor can be assigned a higher value because you know that they are responsible for initiating the consumer's interest, and playing a vital role in the conversion.

In my opinion, fractional attribution is the most accurate model available today, and is as close as we can get to practicing full funnel attribution. The trickiness lies in the fact that all companies have different goals when it comes to advertising and whom they are trying to reach. As a result, all attribution funnels are measured differently.

Attribution is only as good as the mind of the marketer who creates the marketing plan, which is another truth of our digital world. The more sophisticated the technology, the more reliant we are on truly smart individuals to plan, implement and interpret.