Deeper into the Attribution Stack
From Optimization to Strategy: Deeper into the Attribution Stack
Sales attribution is a common diagnostic used in evaluating marketing effectiveness. This involves decomposing a brand’s sales into “Base” and “Media” components. Media is often further divided to attribute sales by distinct touchpoints. The result can be visualized as a stacked attribution chart as follows:
This chart provides an indication of how much touchpoints are lifting sales and therefore can be used to assess the Return on Investment (ROI). A planner may use these outcomes to change the mix, putting more weight into the touchpoint with greater ROI.
Simulation makes it possible to dive deeper into attribution analysis to provide more insights and further guidance on marketing strategy. Here are four more detailed views of the stack that simulation provides:
- Understanding how creative and messaging impact the effectiveness of each touchpoint
- Identifying the synergies and inefficiencies that exist between channels
- Decomposing the base to understand the role of earned media and brand history
- Placing the attribution into a consumer-focused competitive context
Creative Execution and Messaging Emphasis
The concepts of creative execution and messaging emphasis allow us to go beyond the analysis of levels of investment and reach to analyze the effectiveness of media. Creative execution defines how well the ad is created — the production value and how effectively it communicates the message. Messaging emphasis defines what attributes of the product are the focus of the ad. For example, is the ad part of a promotional campaign or a branding campaign? Unlike most marketing mix modeling, simulation allows us to test the effects of different creative executions and messaging emphasis and decompose each individual touchpoint contribution further.
Touchpoint impacts may interact with one another through duplication or social network effects. Inefficiencies occur when reaching the same audience via multiple touchpoints leads to no gain. Synergies occur when messaging on two touchpoints yields better results than using each touchpoint on its own. Simulation can serve as a guide to better understanding and replicating these interactions in the consumer’s mind and provide a platform to test different approaches to fully leverage synergies and avoid inefficiencies.
Decomposing the Base
The “Base” is often the forgotten piece of the attribution stack – an unexplained variance that does not yield any actionable insights. Running a simulation that incorporates the effects of earned media – social networks and product experiences – allows for a better understanding of what drives base sales. Often times, word-of-mouth (new restaurant opens up) and the actual experience of the product (the joy of driving your automobile) play a major role in driving a brand’s performance. Sometimes the base is simply a matter of consumer inertia (think about insurance), seasonality (canned soup), or a brand’s history (Coca-cola vs. Pepsi). Better understanding the base may provide strategic ideas on how to avoid erosion of the base or how to keep it growing strong.
Considering the Competition
Sales outcomes are the aggregate result of many individual consumer decisions. Consumers make choices among a set of alternatives – and so in many cases, a brand’s performance is just as much dependent on what its competitors do as what the brand does itself. Building a simulation of an entire market where simulated consumers choose among competitive alternatives allows for an assessment of how a brand will fare in different competitive environments. If a brand positions itself appropriately, it may rapidly grow by cannibalizing competitive share. If not positioned appropriately, the entire attribution stack may sink into oblivion (think about Blockbuster Video with the emergence of Netflix and Redbox). Considering competition is key to evaluating strategies to boost and maintain market share over the long run.
Conclusion – Moving beyond Optimization to Strategy
The initial view of the attribution stack allows for an assessment of ROI that can guide decisions around how much to invest in touchpoints. However, assessing the stack from the lens of creative messaging, cross-channel synergies and inefficiencies, earned media and brand history, and the competitive environment allows for a richer understanding of how a brand is likely to perform in its market. Simulation provides flexibility in the aperture to plan and react strategically in a variety of ways.