De-mystifying attribution analysis and econometric modelling

You might have heard marketing data analysis experts talk about ‘attribution modelling’ and ‘econometrics’ as two powerful tools that help businesses understand and optimise the performance of their marketing campaigns, but what are they and how do they differ?

What is attribution modelling?

Attribution modelling is a method of analysing and attributing credit to the various touchpoints in a customer's journey from their first engagement or research to a completed sale or other action, such as completing an enquiry form. This helps businesses understand which marketing channels, campaigns, and tactics contribute to overall sales or leads, which channels are most effective at driving conversions and how every campaign and channel are working together to generate revenues.

Attribution modelling typically involves using data and statistical models to assign a value to each touchpoint in the customer journey. This value represents the contribution that the touchpoint made to the conversion and can be used to optimise the allocation of marketing budgets and resources. One drawback of attribution modelling is when valuing a customer for what they are doing in the now, you are ignoring any value they hold outside of a specific point in time or click which means you are unable to understand the true long term value of your audience.

What is econometric modelling?

Econometrics is a branch of economics that uses mathematical and statistical methods to analyse historic data and make predictions. It is commonly used to study the relationship between different variables, such as the effect of marketing campaigns on sales under different economic conditions, for instance, and as such gives a big picture view of likely outcomes.

Looking at past data is important, and econometric models can help remove bias from this data but an overreliance on this type of modelling can be misleading as these models are reliant on all factors remaining equal over time.

Attribution modelling vs econometrics: the key differences

While attribution modelling and econometrics are similar in many ways, there are some key differences that are worth noting. Here are a few examples:

• Attribution modelling focuses on the touchpoints in customer journeys, while econometrics focuses on the relationship between different, disparate, and intangible variables and is based on economic theories.
• Attribution modelling assigns a value to each touchpoint in the customer journey through data analysis, while econometrics uses regression analysis to model the relationship between variables.
• Attribution modelling is typically used to optimise marketing budgets and resources, while econometrics is used to make predictions and understand the impact of marketing and the economy on sales and other metrics such as brand recall.

So which model is better?

Both models have their strengths and limitations therefore it is difficult to say which approach is ultimately better. It all depends on your specific business and goals. At equimedia we look at a combination of data from the past and present to predict the future. This is achieved through merging attribution and econometric models with advances in technology across both media platforms and analytics tools, which are beginning to be able to value conversions over time. For example Lifetime Value targeting now available in paid search gives us the ability to bid towards conversions based on the lifetime value the user represents to a business rather than based on a single interaction.

As in most things, the value of any marketing modelling comes down to the skills of the person creating the model and their understanding of the data generated. As digital specialists, we are experts at delivering models for clients that include all the nuances of fragmented customer journeys and provide guidance on how to maximise your Return on Marketing Spend.

If you'd like help maximising your Return on Investment in 2023 please get in touch!