Evaluating the ROI of a Performance Marketing Campaign
:: By Matt Swan, Affiliate Window ::
The customer path to conversion is a complex journey and one that spans across a number of touch points. As a result, it is becoming increasingly challenging for advertisers to attribute sales to a specific channel.
In order to establish the ROI associated with each channel, it is important to understand the influence of each leading to the customer’s eventual purchasing decision. When looking at executing an effective attribution model, key factors must be considered.
1. Identifying the key touchpoints
There are several touchpoints a consumer will navigate on their journey to conversion. It may begin with reading a review of a particular product, followed by visiting a price comparison site to ensure the best price, and finally completing the transaction having found a reward site offering cash back for the purchase. In addition to the various online channels, purchasing intent may also be triggered by offline media – an advertisement in a newspaper, magazine, or on the TV could initiate this for example. Additionally, operating in a rapidly connected world with the rise of mobile commerce, there are new ways in which consumers are interacting with retailers.
With smartphone penetration expected to reach 75 percent in 2014 and our own network stats indicating that one in every three clicks is now originating from a mobile device, retailers need to understand how online and offline touch points are becoming increasingly blurred.
By understanding the key touchpoints involved in a path to conversion, retailers are able to begin to ascertain the value offered by each.
2. How to track and measure these touchpoints
There are a several third-party tracking providers allowing retailers to monitor cross-channel activity and de-duplicate these channels against one another. Providing full visibility of de-duplication policies is crucial to give complete transparency over the campaign. Instead of looking at each channel individually, retailers should aim to uncover the multi-channel paths most effective at driving conversions.
De-duplication is often used as a way to determine incrementality across the performance channel and is a process for identifying the channel or activity driving the conversion. This allows for spend to be effectively allocated. It is important the logic for the de-duplication policy is centred on the understanding of a customer’s path to conversion and how they have interacted with various touchpoints prior to the conversion.
Retailers should note that de-duplication is not an attribution strategy. It is advisable for retailers to work from attribution toward de-duplication rather than vice versa.
3. Understanding the value of each touchpoint
While a number of retailers are looking to implement a multi attribution strategy, it is arguable that value attribution is a more appropriate model. Multi attribution implies each touch point has a bearing over the final conversion and each should be ‘rewarded’ for their role in the sale. A potential issue with this approach is the fact that a click is an arbitrary measure. There isn’t anything associated with the click to assign a measurement of value behind it. For example, if three publishers are involved in a single sale, there isn’t anything to really indicate who had the most influence over the conversion. By contrast, in a value attribution model, there are additional KPIs in play. Using this model you would know that a customer that typically converts through publisher A is a lot more valuable than one that converts through publisher B, so commission is weighted to represent the value added. By understanding the customer path to conversion, retailers are in a better position to understand the incrementality and value of sales and tie this back to an effective return on investment.
Evaluating the ROI of performance marketing campaigns goes beyond simply looking at the top level figures. While the sales revenue generated is a good indicator of the return, it is crucial for retailers to look beyond this to truly understand the value of the channel. Once retailers can effectively measure the value of their online campaigns, they are better placed to implement and execute a strategy that will see an improvement in ROI.
Matt Swan is a Client Strategist at global performance marketing network, Affiliate Window. He works with advertisers to offer strategic advice to optimize campaigns. He also contributes to new business pitches and is an active member of the IAB AMC.