Attribution Management is the process of tracking, assembling and properly valuing the entire team of online ads and marketing initiatives that lead to a sale or conversion.  Attribution Management is a foundational component of any robust advertising analytics platform.  Proper attribution allows marketers to accurately measure, improve and optimize the profit and ROI generated from their cross-media advertising investments.

Given the critical nature of attribution management to advertising analytics, we have created the Attribution Management Buyer’s Guide for marketers to use when selecting an advertising analytics and optimization platform.  The Guide is intended to highlight key attribution management features and functionality that should be available in any advertising analytics solution you select.

This is the first blog in a 10-part blog series for the Attribution Management Buyers Guide. This first section focuses on Attribution Variables, which are the key metric(s) by which your advertising analytics solution values conversions and attributes credit across the participating team of ads.

Most advertising analytics packages that offer attribution will attribute credit according to one of the following three metrics: 1) profit; 2) revenue; and 3) conversions. Some packages can attribute all three metrics as well.

There are pros for each one of these variables, and cons for some:

• Profit:
  • Pro - Businesses are in business to do one thing – generate profit. Therefore, anytime you can measure a business activity according to the profit it drives, the better you understand the value of that activity. The same is true for advertising – if you understand the profit a particular ad generates, then you definitively know if that ad is worth continuing to buy or not.
  • Con - There are none, however, we realize that calculating profit can be difficult for some business entities.
• Revenue:
  • Pro - If you cannot get to profit, this is the next best metric. Though revenue does not definitively tell you if you’re making profit on those ads, you could infer that considerable revenue is being made on that ad, so you could continue to invest in that ad.
  • Con - Just because revenue appears to be trending in a positive direction does not mean you are also producing a profit. By not considering your margin and cost of goods sold, you could be misled into investing in ad that is not producing profit.
• Conversions:
  • Pro - Allows you to see which ads were involved in the highest number of conversions. This may shed light on top of the funnel types of ads that generally do not receive conversion credit, and this can help expose the type of value they have to the success of other ads.
  • Con - Since all conversions are not created equal, it’s difficult to understand what impact any ad is having according to conversions on the bottom line. It is nearly impossible to perform accurate attribution with only this metric at your disposal.

As a follow-up, ask the vendor how they calculate profit. In order to be truly accurate, they should be incorporating your cost of goods sold and cost of advertising into their calculation.

This entry was posted on Friday, August 28th, 2009 at 9:26 am and is filed under All Blogs, Analytics, Attribution Management, News, What's New?. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.