For Customer Intelligence Professionals

February 13, 2012

Understanding the Cross-Channel Attribution Landscape

by Tina Moffett with Suresh vittal and Michelle Dickson

ExECUt I v E S U M MA Ry
Customer intelligence (CI) professionals are eager to develop a fully integrated cross-channel attribution strategy as a critical first step to optimizing marketing budgets and plans. However, the black box of cross-channel attribution is daunting for most marketers. And with the ever-changing cross-channel measurement landscape, cross-channel attribution becomes increasingly more complex. Forrester talked with a number of cross-channel attribution vendors and other businesses focusing on cross-channel attribution. As a result, we have classified the landscape into four easy-to-track categories. Organizations that wish to succeed at cross-channel attribution must align their marketing resources, understand the attribution methodology, and develop a plan of action. CROSS-CHANNEL ATTRIBUTION A MUST-HAVE FOR MARKETING OPTIMIZATION CI professionals responsible for measuring and tracking multichannel customer communications must manage multiple channels, messages, and target groups simultaneously. But that isnt all they must also determine a low-cost, high-revenue-generating engagement strategy that best uses these channels. Enter cross-channel attribution a holistic approach for understanding marketing performance.1 Cross-channel attribution is top-of-mind for marketers because it helps them:

Identify the optimal engagement path. The traditional marketing funnel is dead.

The fragmentation of consumer devices and fracturing of the Web guarantees it.3 The outcome: Marketers struggle to understand and optimize how consumers interact with the brand. For example, retailers struggle to understand which combination of marketing efforts online, in-store, or print contributes to eventual sales. Simply put, the challenge is to understand the optimal customer journey to conversion.
2

Measure and reallocate marketing dollars. Conventional methods that use last years budget as

the basis for next years marketing plan arent effective in a world of exploding channels and media. Cross-channel attribution strategy helps marketers identify where to put their marketing dollars to improve their top and bottom lines. Additionally, cross-channel attribution provides a clear snapshot of channels and marketing tactic performance. For instance, a financial services provider uses attribution to decide how to divvy up the marketing budget at a channel level search, email, display, direct mail based on true performance and goals for acquisition, retention, and cross-sell effort.

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Understanding the Cross-Channel Attribution Landscape

For Customer Intelligence Professionals

Calculate true customer value. A customer valuation calculation takes acquisition and

retention costs into account. For example, how much marketing cost should an organization allocate to retain profitable customers? Our research reveals that CI professionals are constantly looking for ways to refine their customer valuation approaches. Cross-channel attribution provides a true calculation of costs, resulting in a more accurate customer lifetime value (CLV) calculation. With CLV, firms can focus on profitable customers to increase share of wallet.4

Cross-Channel Attribution Is A Multicredit Problem Marketers struggle with cross-channel attribution because it is a new concept that requires significant data, technology, marketing expertise, and organizational support. But above all, it requires a keen understanding of the customer psyche. Specifically, organizations struggle with cross-channel attribution because of:

Minimal support from the broader organization. CI professionals we talked with indicated

that, while some of the initial cross-channel attribution work was insightful, the results lacked depth to drive ongoing interest. Moreover, departments fear losing budget controls if crosschannel attribution reveals suboptimal channel performance.5

Limited knowledge of cross-channel attribution methodology. Cross-channel attribution is a

technical concept that is difficult to understand. Organizations struggle to 1) identify the right required data; 2) understand the level of analytics rigor; 3) settle on an equitable methodology for giving credit; and 4) support eventual outcomes. Limited methodology knowledge makes attribution an overwhelming task to undertake.

Incomplete knowledge of all marketing exposures. CI professionals struggle with identifying

all exposures to the brand across different channels. Few CI professionals have a good grip on their contact strategies; fewer still understand how their brands show up in a multitude of channels. For example, firms with regional marketing teams have to track national and local campaigns, all while ensuring a consistent message. As a result, marketers run the risk of oversaturation in the market with various forms of content and messages.

Imperfect technology and data. A significant data and technology challenge with cross-

channel attribution is a unique customer ID that links all the disparate marketing data sources together.6 As an example, firms we talked with say that legacy databases lack a common key to connect data. Additionally, attribution vendors find that their clients do not have the appropriate technology to manage an advanced cross-channel attribution algorithm. Not surprisingly, cross-channel attribution efforts are sidelined until the data and technology meet appropriate standards.

February 13, 2012

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Understanding the Cross-Channel Attribution Landscape

For Customer Intelligence Professionals

CROSS-CHANNEL ATTRIBUTION: A TANGLED WEB OF NEW AND OLD PLAYERS Cross-channel attribution vendors help organizations make sense of these attribution problems. Most of the players come from a wide heritage, ranging from data companies to new-fangled measurement startups. We classify attribution providers into four segments (see Figure 1):

Full-service cross-channel attribution vendors. Cross-channel attribution providers seek

to explain the true value of marketing efforts, both digital and offline. This space is fairly new, with faces such as ClearSaleing, Convertro, and Visual IQ. Their core strength is an indepth understanding of technology, engineering, and marketing analytics across all channels. Additionally, this segment understands how to marry off the online and offline data into a single comprehensive algorithm.

Marketing and agency services. The services category includes marketing services providers
(MSPs) and direct marketing agencies, such as Experian Marketing Services, GroupM, and Merkle, that provide attribution strategy as part of their overall offerings. Service providers build and manage large databases, provide advanced analytics capabilities, and manage and analyze campaigns across different channels, so they are familiar with a brands data and marketing efforts. Their unique strengths make them viable vendors for cross-channel attribution development. However, they often lack in-depth knowledge compared with fullservice attribution vendors.

Analytics consultants. Analytics consultants, such as iKnowtion and Mu Sigma, work with

organizations to build and customize analytics solutions from segmentation schemes to targeting models to measurement planning. Its a natural fit for them to work with brands to build highly customized, advanced attribution models.

Marketing-mix modeling firms. Attribution is one step in the overall marketing mix for firms

such as ThinkVine and MarketShare. Their strengths include the ability to track a fragmented media landscape and optimize spend.7 Providers in this segment are a good alternative because of their deep understanding of marketing channels and optimization.

February 13, 2012

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Understanding the Cross-Channel Attribution Landscape

For Customer Intelligence Professionals

Figure 1 Cross-Channel Attribution vendors

Vendor type Full-service attribution players Marketing and agency services Description Authority in developing attribution strategy across multiple channels Example ClearSaleing, Convertro, Visual IQ

Procient data and analytics vendors, including Experian Marketing MSPs and agencies. Both are comfortable with Services, GroupM, analyzing large amounts of data and driving insights Merkle iKnowtion, Mu Sigma

Analytics consultants Experts in advanced analytics methodology development, which may include attribution development Marketing-mix modeling rms Leaders in tracking and optimizing the media landscape

MarketShare, ThinkVine

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Source: Forrester Research, Inc.

Focus On Methodology And Approach To Find The Best Fit Organizations need to work with vendors with a proven cross-channel attribution methodology. But they cant cede complete control to the external provider that brings technology, domain knowledge, analytics, and best practices to the table. To ensure success, firms must:

Determine the overall business problem. For attribution to work, organizations must define

the business and marketing objectives. For example, a credit card company that wants to increase applications should use cross-channel attribution to better understand which channel drives the most application approvals. Understanding the overall business objective will help organizations better manage the attribution strategy.

Assess data and technology cross-channel attribution readiness. Successful cross-channel

attribution engines are dependent upon the readiness of the systems and data. Details such as a technology integration plan, a data pathing approach, and a data audit methodology are essential for a successful implementation of an attribution algorithm.

Understand the attribution algorithm model. Exhaustive methodology development is the

backbone of the attribution strategy. Ensure that the attribution model is customized to fit the organizations business needs, including all relevant internal and third-party data; that it is tested and validated; and that the final algorithm is housed in a secure environment where its updated and tested. Understanding these details helps validate model results and provide a clear action plan.

Take ownership of the attribution strategy. Ownership of the attribution strategy rests

within the organization, while the vendors do most of the data and analytical heavy lifting. The organization must drive the development of the attribution strategy from setting the
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February 13, 2012

Understanding the Cross-Channel Attribution Landscape

For Customer Intelligence Professionals

business rules to determining the inputs of the model to managing the results. For example, organizations we talked with have marketing and customer intelligence teams dedicated to developing their attribution strategies.

R E C o M M E n D At I o n S

INVEST IN AN ATTRIBUTION STRATEGY ONLY IF YOU CAN SUPPORT IT

Developing an attribution strategy is half the battle. you need internal and vendor support to continually manage and refine it. For your organization to be successful at cross-channel attribution, you must:

Align the marketing organization. Attribution success is dependent upon support from
the different marketing channels. Engage all the key resources early on and outline roles and responsibilities to ensure attribution success.

Understand the intricacies of the attribution methodology. Attribution model

success is dependent upon your teams understanding of the intricacies of the attribution methodology. Understand the data and model details, the technology support, and the data algorithm. Hold your resources accountable for the ongoing management and further development of the attribution strategy. Its imperative to ensure that the methodology is constantly updated.

Develop a plan of action. Congratulations! you have a cross-channel attribution strategy

now what? Ensure there is a plan of action once the cross-channel attribution algorithm is in place. Use the results to manage your marketing dollars. Also, calculate customer value based on your newly attributed marketing costs.

ENDNOTES
1

To learn more about cross-channel attribution, see the January 11, 2011, The Cross-Channel Attribution Blueprint report. Forrester believes that the funnels value as a framework is finished, and a new model the customer life cycle provides a better fit with modern marketing, as it puts the customer at the center of the effort, involves the entire brand experience, and describes an ongoing relationship with the customer. See the October 28, 2010, Its Time To Bury The Marketing Funnel report. The Internet is splintering across proprietary platforms such as the Apple iPhone and Google Android. See the January 26, 2010, The Splinternet report. Customer lifetime value (CLV), a forward-looking indicator of customer profitability, became common parlance as relationship marketing gained momentum. See the June 3, 2011, Navigating The Customer Lifetime Value Conundrum report.

February 13, 2012

2012, Forrester Research, Inc. Reproduction Prohibited

Understanding the Cross-Channel Attribution Landscape

For Customer Intelligence Professionals

Forrester has written about organizational involvement with attribution efforts. See the January 11, 2011, The Cross-Channel Attribution Blueprint report. To read more about attribution and data, see the January 11, 2011, The Cross-Channel Attribution Blueprint report. For more about marketing-mix modeling and vendors that specialize in that space, see the September 21, 2011, The Forrester Wave: Marketing Mix Modeling, Q3 2011 report.

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 28 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 2012 Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRankings, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective owners. Reproduction or sharing of this content in any form without prior written permission is strictly prohibited. To purchase reprints of this document, please email clientsupport@forrester.com. For additional reproduction and usage information, see Forresters Citation Policy located at www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. 61077