Attribution Vs Econometrics. The same thing, but different?

There has always been a variety of ways to measure and manage digital adspend, but as channels, customer behaviour, and the landscape evolves, fewer management frameworks continue to make sense in the modern marketer’s world.

In short, attribution places direct value to the each channel, ‘awarding’ the channel sale based on a traditional measurement method, for example last click or first click. It may also split the award across touch points in the customer journey, but often heavily weighted on which channel ‘won’ the sale. Invariably, this causes a challenge to properly fund the rest of the journey funnel when budgets often heavily weighted to the bottom end of the funnel, where the value comes clear.

Econometrics takes a wider impact assessment and measurement of all the activities a retailer is doing at the time. For example, branding exercises which may not directly result in conversions are accounted for, as well as on-and-off site promotions, such as end of season sales, discount codes and free product.

Where simple attribution simply looks at the conversion by value and the channel that delivered the sale, econometrics seeks to value the entirety of the journey and external factors.

As an example, where a retailer is advertising a discount code, the affiliate channel may often be the significant conversion driver during the period the code is available. While attribution will reflect in the share of voice the channel receives in the marketing mix, it would be incorrect to disseminate the channel will remain strong after promotions have ended.

However, employing marketing mix modelling (MMM) through econometrics, the model would be to increase spending through conversion-active channels like affiliates when a code is on offer, and reduce when there are no active promotions. This helps funnel spend to the right areas at the right time for maximum impact.

While ultimately both attribution and econometrics are both MMM strategies, one works post mortem of the activities taking place to inform the future decision making, while the other – econometrics – understands the relevance of the wider business, taking into account efforts outside of simple adspend.

Retailers wishing to understand the value of their channels often rely on Google Analytics or other simple analytics tools, but this simply doesn’t tell the full picture of your customer journey, nor the true value of each channel. Those engaging in attribution strategies, without econometrics in place often lead to misplaced budgets considering the one-dimensional view from simply equating channel value by conversion.

SB&T employs intelligent econometrics methodologies