Attribution Alchemy: Mining Your Sales Funnel
Many online advertisers find themselves in the never-ending and seemingly unattainable quest to achieve the best marketing mix across all channels, including paid search. They continually struggle with monetizing paid search in terms of sales and customer engagement, wondering how to measure real ROI against these two metrics. However, most marketers don’t realize that the right tools and models can not only make ROI measurement easier, they can actually improve ROI across the board. The trick is to apply a complete revenue attribution model across your entire marketing program—both online and off.
Internet sales typically account for 5%-20% of a company’s revenue (depending on the industry), but influence on average 37% of sales, according to the J.C. Williams Group “Start Sampling Multi-channel Report” (2006). Therefore, measuring the bidding process in relation only online transactions significantly under reports SEM’s overall contribution to company revenue. Also, remember that paid search conversions are influenced by more than just the last click; many times a conversion happens a few hours, days or weeks after a series of clicks and searches. So how do you measure and analyze paid search’s contribution to offline conversions that may account for equal—if not more—revenue than online sales?
The key is understanding the full sales cycle by incorporating data from advertising events that happen further up the funnel, but which still play an important role in leading to that final sale. Start with upstream, top-of-funnel influencers such as newsletter subscriptions and store locator searches. The cycle should then be followed all the way through, ending with downstream, bottom-of-funnel influencers such as call center conversions and returns.
To better illustrate this fundamental shift in revenue attribution and tracking, let’s take a closer look at Extra Space Storage Inc., a leader in the self storage rental industry.
Extra Space knew many of its shoppers were looking online to rent storage space, but would ultimately finish the transaction offline by calling the 800-number or driving to their local storage facility. Extra Space quickly realized that under-tracking revenue resulting from online actions like “facility address look-ups” drove down both bidding and volume across their paid search program, and ultimately reduced sales and revenue at their retail locations. They knew they had to find a way to more accurately measure revenue and they found a method using activity attribution.
Extra Space identified website activities that influenced sales. These activities happened early in the sales cycle, and were either good predictors of future revenue, had intrinsic value, or both. The activities were:
- Product Detail/ Storage Unit Locator Page: Prospect visited the page of a certain facility to get the address.
- Hold: Prospect entered name and address to reserve a unit at a facility.
- Reservation: Prospect provided a deposit on a unit.
- Revenue generating conversion: Actual rental of storage space.
Extra Space surveyed their customers, analyzed the CPM market, and lined up sales data in context of the above activities. With this analysis complete, they applied discrete values to the four activities, independent of an actual conversion. Using the activity attribution method enabled them to:
- Correlate keyword assists to discrete web activities for smarter bidding.
- Smooth out sparse sale data by relying on more frequent activities that occur earlier in the sales process.
- Gain earlier insight into the sales cycle and changing market conditions.
- Understand which keywords contribute to a sale, even though they may not be the last click.
Avinash Kaushik, Analytics Evangelist for Google, depicts activity attribution as mapping portfolio of keywords to different success metrics (this is based on John Dewey’s seminal “How We Think” (1910). The following diagram, proposes a similar mapping, using consumers behavior lifecycle for the left column 2.
For more on this concept see Avinash Kaushik’s post, Paid Search Analytics: Measuring Value of “Upper Funnel” Keywords.
By leveraging keywords and web site activity that occurs earlier in the sales cycle, Extra Space provides a more reliable stream of conversion data to its SEM team. This consistent conversion stream creates a more accurate picture of future revenue, and conversion rates allowing for smarter keyword bidding.
In addition, the earlier insight into changes in the auction environment allowed the bidding algorithm to react during the first few days of the sales cycle, eliminating inefficient spend while maintaining conversion volume. Most importantly, Extra Space took activity on their website and created actionable data for reporting and bidding purposes. As a pioneer in activity attribution, Extra Space’s approach drives increased ROI from their search campaigns.
Next time, I’ll delve into the specifics of how to value each activity, how to compare to revenue attribution and show the results, so please stay tuned.
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