Is Your Ad Effective? Why This is The Most Important Question for Attribution Measurement.

Attribution is the certainly the topic du jour in online advertising (as it has been for several years). The good news for the industry is that firms are finally emerging to address the challenge. The call to move beyond the last-click is finally being answered! The problem, though, is that attribution measurement is fragmented and inconsistent (typical of any new industry). Many proposed solutions exist to the same problem, and the diversity tends to undermine the effort, and delay adoption of the best solution.

We have thought long and hard about this at media6degrees (m6d), and being scientists, we felt compelled to develop our own proposal for what attribution should look like. We postulated three core concepts for multi-touch attribution: 1. standardization, 2. ad effectiveness, and 3. goal alignment. This post is the start of several in a series that we will be putting out to answer the question: what should good attribution measurement look like? We will be discussing in more detail these three points in future posts. The whitepaper is a bit math-y, but the intuition is certainly there between the formulas. If that is not your style, this post and the posts to follow will cover the core concepts without getting to heavy on the technical jargon. Enjoy!

Attribution is measurement, and measurement should be standardized.

Imagine you are a busy ad industry executive (probably not too far off) and you have to juggle a schedule that involves sales calls, vendor meetings, internal strategic planning, investor sessions and the like. Now imagine that everyone you meet with defines an hour differently. Internally, an hour lasts 60 minutes, but your clients and investors (admittedly important people in your life) define an hour as 50 minutes and 75 minutes, respectively. Whether it’s you or your assistant who has to coordinate with everyone, wouldn’t it be easier if you could all agree that an hour lasts 60 minutes?

This is what the attribution landscape looks like right now. Some vendors offer heuristic attribution allocations based on position in the marketing funnel. Some offer differing statistical approaches. Many even have different definitions of what constitutes an ad exposure. Most parties tend to agree that last-touch/last-click attribution is flawed. But what is stopping us from moving beyond it full force? Lack of standardization seems to be the culprit. So let’s explore what standardization might look like.

Attribution is first and foremost an ad effectiveness problem.

Going back to our role-playing scenario, you, the busy ad exec, have to decide on compensation for your sales staff. You have one sales person who made lots of calls. You have another who made fewer calls, but brought in several seven figure accounts. You likely gave the bigger bonus to the sales person who brought in more revenue. This same compensation strategy should apply to attribution. A good attribution system, plain and simple, rewards advertising strategies that drive conversion. The tricky part is knowing who is driving conversions. This is why causal ad effectiveness measurement is a prerequisite for good attribution measurement. Whether it is through A/B testing (such as that proposed by Collective Media or statistical modeling (such as that done by m6d, attribution systems need to credit the strategies that create real value, and reward them accordingly.

Attribution is what ultimately aligns brand marketer and advertiser goals.

This brings us to our final point — incentives. Online advertising can fall victim to the principal-agent problem. Brand marketers contract advertising agencies and their vendors to serve ads on their behalf. The marketer wants ROI and the vendor wants credit. The oft-cited problem with last-touch attribution is that it motivates vendors to game the system, where they optimize towards their own credit allocation as opposed to creating value for the brand. This ultimately causes a misallocation of the the brand’s advertising budget. In this scenario, both the brand and the advertising ecosystem suffer as value-takers flourish at the expense of value-creators.

Every attribution system should be designed with incentive alignment in mind. By creating an attribution system that is based on commonly accepted principles, one of which being that attribution is at its core an ad effectiveness problem, a standard can finally emerge that serves to align the goals of brand marketers and the agencies and vendors serving them.