I recently sat down with Bill Macaitis. I’ve been a big fan of Bill’s since we brought him in as CMO at Zendesk. He has since gone on to be CMO at Slack. In an age where product gets most of the attention, Bill is the kind of marketer founders crave. He knows exactly what impact his marketing efforts are having. He makes it easy for a founder to expand his budget. And he’s able to build a predictable growth engine.
How does he do this? The key, Bill would say, is marketing attribution–being able to evaluate how each marketing channel is contributing to growth. Many startups haven’t considered just how difficult it is to accurately track ad and marketing performance (the last ad clicked is not the whole story.) Or, many startups believe the analytics that come with marketing attribution is better left for when a company reaches scale. Bill firmly believes it needs to be put in place early. Why start any marketing if you can’t measure what’s working? In this post, we share ten years worth of learning and experiences Bill has amassed with marketing attribution–what it is, why startups should do it, and how they can best put it into place early in their company’s life.
What is Marketing Attribution
In social psychology, attribution is the process of inferring the causes of events or behaviors.Marketing attribution has been defined as “the science of assigning credit or allocating dollars from a sale to the marketing touchpoints that a customer was exposed to prior to their purchase.” Bill Macaitis, CMO of Slack and formerly CMO at Zendesk has a much simpler view:
A simplified example: let’s say you have a customer who first saw your display ad but didn’t click. Weeks later they saw your Facebook ad, clicked through and read several of your blog posts. Still weeks later, they clicked on one of your Google ad words and ended up signing up for a free trial. How do you value each of these marketing channels? If the display ad hadn’t been seen, would it have mattered? Would they have found their way to your site without the Google ad word? Which blog posts resulted in the highest value signups?
A simplistic last-touch model would give all the value to the ad word and undervalue earlier touchpoints. A first-click model would give too much credit to the first click, the Facebook ad. Equally or linearly spreading the value across all channels would just be guessing. To get a much more accurate view of each channel’s role and be able to optimize your spend, you need an attribution model that analyzes all of your data–who viewed what, who clicked what and what actions did they take–and algorithmically determines the impact of each touchpoint.
Why You Need Marketing Attribution
As you ramp up marketing and start using different channels, you need a more sophisticated approach than simple click tracking to follow your buyer’s journey and know what’s working, what’s needed when, and where your spend is paying off. This is especially important for a more considered purchase, such as a B2B sale where it can take months and five, ten or more touches across various channels before your customer takes their first action with your company.
Bill has been building marketing attribution systems for almost 10 years–first at Salesforce, then at Zendesk, and now at Slack. At each company, marketing has become a huge competitive advantage. These companies, once they found product-market fit, were able to generate hyper-growth in large part because they knew they were spending their money efficiently and could thus scale up aggressively. It’s meant the difference between 40% to 50% growth per year, to over 400% growth per year.
But, how does a startup approach this? Don’t you need complex systems and data scientists to get this right? Don’t you need a large marketing spend? Not necessarily. Luckily, we live in an age when marketers, even at startups, have more data at their disposal than at any other time.
A New Era of Marketing Attribution
It used to be all we could really do to understand the impact of our marketing spend was to track the first or last click to a paid conversion event using simple referral links. This worked well, for a while, especially when SEM was the majority of most companies’ digital spend. But, as digital channels expanded we needed a way to recognize the influence of these other channels. Along came rules-based attribution which allowed multiple channels to be tracked and weighted. But, the accuracy of a rules-based approach was limited because the values of each channel were inputted by the marketer. Intuition was still driving what each channel was worth, rather than data.
Today, algorithmic attribution has become the best practice for data-driven marketers and companies. We can now utilize all the available data collection, tools and models to take in all different touch points and make predictive, algorithmic attributions. When set up properly, we can track each touch point and all downstream funnel metrics. And by weighting proportionally across a very large data set, we can determine with much more accuracy and precision what should get the credit–including both online, offline, performance-based and brand advertising.
It’s not perfect, and it’s not easy. It gets difficult with word of mouth referrals, dark social, and other “hidden touches.” But, it drives a much deeper understanding of the buyer’s journey and which of your marketing efforts are paying off.
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