Spotify’s Dave Birckhead recently laid out the risk that marketers face when they don’t properly use data to figure out how their marketing dollars are performing.
Specifically, in Play Ball: Why Data-Driven Attribution Is a Home Run, Dave addresses the problem of erroneous campaign attribution data. It’s a challenge that famed digital strategist (and coiner of malapropisms) Yogi Berra described succinctly as, “If you don’t know where you are going, you might not get there. ”
But first, what the heck is data-driven attribution, and why is it a big deal? Here’s a summary of Dave’s piece, plus our take on why attribution matters.
What Is Data-Driven Attribution?
As Dave describes it, data-driven attribution refers to “the process of assigning credit to marketing events across multiple interaction channels.”
It’s the part where you go beyond measurability to figure out which of your marketing investments or techniques got you the sale, the referral or the registration. For most companies, however, it’s early days yet and it’s still common to see the last touch get all the credit– which may well be inaccurate attribution.
Data-driven attribution matters because it helps companies develop marketing programs that cost less and deliver more.
In fact, it’s been estimated that data-driven attribution can boost ROI by as much as 20-40% for marketing groups that do it right. Another study has shown that top-performing marketing organizations are five times more likely to use advanced attribution models.
Why Data-Driven Attribution Is Important for Marketers
There are two primary reasons why it’s become so important:
1. Changes in consumer behavior.
Consumer behavior has shifted dramatically in the past few years. McKinsey estimates that 56% of consumer journeys now include multi-channel, multi-device interactions.
The traditional concept of the marketing funnel is now ancient history. It has been replaced by the decision journey—the non-linear, multi-channel and consumer-driven path to purchase.
2. Access to data and capabilities for measurement.
Companies now have both the data and the capabilities for better understanding how marketing influences purchase behavior, and to evaluate marketing’s effectiveness.
Today, marketers can measure how campaigns perform for different customer segments and optimize their media buys and creative elements over time to improve effectiveness. As Dave puts it, the digital world’s ‘inherent measurableness’ is one of the factors that makes it great.
Additionally, cloud computing, big data technologies, and the growing ranks of data scientists can produce data visualizations and algorithms required to do data-driven attribution more precisely than ever before. Because the cost of these capabilities is falling, even mid-sized and small companies can benefit.
The bottom line is that data-driven attribution makes it possible for marketers to guess less and know more when it comes to allocating finite marketing dollars. Further, it can help make marketing more efficient, effective and customer-focused. And who wouldn’t like that?
In the next post in this two-part series, we’ll highlight how to get started with data-driven attribution programs so you can begin to realize these benefits.
Guide for Data-Driven CMOs
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