Understanding Attribution and Cost of Acquisition

RYAN KOONCE, CEO, SAAS MANAGEMENT GROUP

@Kissmetrics

#KissWebinar

@thuelmadsen

Thue is the Kissmetrics Webinar Wizard and Marketing Ops Manager. Before joining forces with Kissmetrics, he was a Lyft driver in SF, which is also

how he ended up as a Kissmetrics marketer. Whenever Thue is not trying to automate everything around him, you can find him hiking in the Sierras.

THUE MADSEN Marketing Operations Manager, Kissmetrics

@ThueLMadsen

Before founding SaaS Management, Ryan created a number of data-driven testing methods that helped

him build multi-million user companies.

RYAN KOONCE CEO, SaaS Management Group

@RyanKoonce

www.SaaSMgmt.com

@saasmgmt #saasmgmt

#KissWebinar

@ryankoonce

1 Section One - What Is Attribution?

2 Section Two - Using UTM Parameters

3 Section Three - Attribution Models

TABLE OF CONTENTS

Attribution is HOT! What is it?

Attribution is crediting your conversions to your advertising and marketing channels, and assigning them a cost.

• For clarity, in this discussion we’re going to use “channel” to mean any method of marketing or advertising

• A conversion is anything that’s important to you. It could be filling out a lead form, inviting a friend, or completing a purchase.

• We’re going to focus on WEB attribution today, but the same principles apply for native mobile attribution, or any other type of promotion and conversion you might be considering.

WHAT IS ATTRIBUTION?

Good Channel Tracking

+ Good Conversion Tracking _______________________ = Good Attribution

If you’re not tracking your channels properly, there is no way for you to understand attribution.

The solution: “UTM Parameters”

GOOD CHANNEL TRACKING + GOOD CONVERSION TRACKING = GOOD ATTRIBUTION

•UTM Parameters allow you to pass additional information in your promotional URLs to your analytics tools such as Google Analytics and Kissmetrics

•These tools look for these parameters and automatically parse the information when someone clicks on them.

•Originally developed by Google for measuring data in Google Analytics.

•Now the industry standard for creating tracking links.

Example of a UTM:

yourdomain.com/?utm_source=twitter&utm_medium=social&utm_content=promotion_A&utm_campaign=Android%20-%20US%20-%20Download%20App%20-%20Fantasy%20Football%20App%20-%20Followers%20

WHAT ARE UTM PARAMETERS?

WHAT ARE UTM PARAMETERS?

Name Description

Campaign Source (utm_source)

Required parameter. Use utm_source to identify the source of the campaign. Usually this is the place where you purchased the ad such as “google” or “facebook”

Campaign Medium (utm_medium)

Required Parameter. Use utm_medium to specify where your ad is running. This could be email, cpc, or social

Campaign Term (utm_term)

If used in paid search, include the keyword that you bid on.

Campaign Content (utm_content)

Generally used to differentiate between content types. In Google this would be used to A/B test that pointed to the URL.

Campaign Name (utm_campaign)

Used to identify the campaign name that you set up in your advertising account.

Suppose you’re advertising on Google Adwords, Facebook, and in an email newsletter campaigns You want to see which one of these channels is most effective. Start by adding UTM parameters to all your links.

UTM EXAMPLE

Facebook Example

um_source facebook

um_medium social

um_term (omit)

um_content funny-cat-ad

um_campaign US-Cat-Owners

yourdomain.com/?utm_source=facebook&utm_medium=social&utm_content=funny-cat-ad&utm_campaign=US-Cat-Owners

https://support.google.com/analytics/answer/1033867?hl=en

UTM BUILDING

Get the SaaS Management UTMParameter Guidebook

www.saasmgmt.com/resources/UTM_Best_Practices.pdf?utm_source=kissmetrics&utm_medium=webinar&utm_content=attribution101&utm_campaign=UTM-best-practices

Note the UTM Parameters!

BEWARE OR AUTO-TAGGING, GCLID OR VALUETRACK!

Auto-tagging is using the automatic tracking URLs provided by Adwords to provide Google Analytics with attribution or conversion data.

• Auto-tagging doesn’t actually produce UTM parameters and is only understood by Google products.

• This limits your ability to track UTM parameters in any other tool including Kissmetrics.

• There is no technical downside to implementing manual UTM parameters.

• Since Google created UTM parameters their product will be able to read the UTM.

• Do not combine glid or valuetrack with UTM parameters - it is an either/or scenario.

BEWARE OR AUTO-TAGGING, GCLID OR VALUETRACK!

BUT my SEM expert told me I had to use gclid!

Of course they did! Adding UTM parameters is a pain.

• Your SEM is generally only looking at conversion data in Adwords (or the place they purchased the media) - they don’t need your “special” utm parameters.

• Insist! In a multi-channel universe, inevitably ALL the channels are taking credit for some of the same conversions.

• Knowing which channel worked and which didn’t is the foundation of multi-channel attribution

Some of your publishers are taking credit for the

same conversion. THIS MEANS YOU’RE PAYING MORE THAN YOU THINK!

GOOGLE ADWORDS / ANALYTICS CONVERSION TRACKING

• AdWords will attribute a conversion to the last AdWords click only.

• On the other hand, for all reports except the Multi-Channel Funnels reports, Google Analytics uses a last click attribution model across all channels (excluding direct).

For example, let’s say a user clicks on a creative from your AdWords account, then returns the next day via a Google organic search result and reaches your Goal page or triggers a Transaction. Google Analytics will attribute the Goal or Transaction to google/organic. AdWords will attribute the Goal to the AdWords campaign.

FACEBOOK CONVERSION TRACKING

• User Viewed Ad and Converted Within 1 Day

• User Clicked Ad and Converted Within 28 Days

TWITTER CONVERSION TRACKING

• Default post-view attribution window: 1 day

• Default post-engagement attribution: 14 days

EXAMPLE

Suppose you had a campaign running on Google Adwords, Twitter, and Facebook, all with different creative, but driving the user to the same landing page.

1. Your customers stops work for lunch, and quickly checks their Twitter feed. Your ad flies by.

2. Next she heads over to google, and does a search for a super-widget, and your site comes up in the sponsored results. She clicks on your ad and lands on your site.

3. Her phone rings and while she’s talking, she heads over to Facebook and checks her feed. Your retargeting campaign in Facebook kicks in and she is reminded about your product and clicks one of the ads, goes to your site and then makes a purchase.

Who gets the credit?

EXAMPLE RESULTS

In their reporting, Twitter, Facebook, AND Google are going to take credit for the conversions

• Your conversion data in these reports will almost always be over reported.

• Your effective COA as reported in these tools will almost always be under reported.

• The data in the advertising providers dashboards will almost never match your analytics data.

This means that in all three systems, your cost per conversion will be under reported.

Enter Attribution Models!

WHAT ARE ATTRIBUTION MODELS

• Attribution Models are ways of describing which channel should receive the “credit” for a specific conversion (sale, lead, etc.).

• Any attribution model that makes sense for your business can work.

• We’re going to talk about the five most popular.

ATTRIBUTION MODELS

• First touch - The first ad clicked received credit for the conversion • Last touch - The last ad clicked receives credit for the conversion

• Linear - All ads receives equal credit for the conversion

• Position Based - Visits from the first and last channel receive the most credit while the middle channels receive an equal amount of credit

• Time Decay - The ad leading up to the conversion received varied amounts of credit with the last ad taking the most.

For now we’re going to ignore look-back windows.

First Touch Attribution

FIRST TOUCH ATTRIBUTION

First click receives credit for the conversion.

Consider this example:

1. Person clicks on adwords and visits site. 2. Clicks around but doesn’t purchase. 3. Comes back to site (type in URL - “Direct”) and makes a purchase.

We spent $10 on Adwords. In this case, our COA would be $10 because the sale originated with a click at Google.

Last Touch Attribution

LAST TOUCH ATTRIBUTION

The last click receives credit for the conversion.

Using the same example:

1. Person clicks on adwords and visits site. 2. Clicks around but doesn’t purchase. 3. Comes back to site (type in URL - “Direct”) and makes a purchase.

We spent $10 on Adwords. However, we spent $0 on direct traffic, so in this case our COA is $0 because the sale is attributed to direct.

Linear Attribution

LINEAR ATTRIBUTION

All visits receive equal credit for the conversion.

Using the same example:

1. Person clicks on adwords and visits site. 2. Clicks around but doesn’t purchase. 3. Person comes back to site (type in URL - “Direct”) and makes a

purchase.

We spent $10 on Adwords and $0 on Direct traffic. Because we had one sale from both channels, our COA is $5.

Position-Based Attribution

TIME TO GET CRAZY!

POSITION-BASED ATTRIBUTION

Visits from the first and last channel receive the most credit while each channel in between receives an equal amount of credit.

By default, most position-based attribution models assume:

• 40% of the credit goes to the first channel

• 40% of the credit goes to the last channel

• Remaining 20% going to the middle channels

POSITION-BASED ATTRIBUTION

Our example gets more complex.

1. Person clicks on adwords and visits site. 2. Person clicks on Facebook ad and visits site. 3. Person clicks on Twitter ad and visits. 4. Person comes directly to the site (type in URL - “Direct”). 5. Person clicks on an email newsletter ad and visits site, and finally makes a

purchase.

Assume our spend per channel as follows:

Adwords: $10 Facebook: $15 Twitter: $100 Direct: $0 Email: $15

POSITION-BASED ATTRIBUTION

We’re going to allocate the spend:

Adwords: 40% Facebook: 6.7% Twitter: 6.7% Direct: 6.7% Email: 40%

Calculating our Position-Based COA:

Adwords: 40% * $10 = $4 Facebook: 6.7% * $15 = $1 Twitter: 6.7% * $100 = $6.70 Direct: 6.7% * $0 = $0 Email: 40% * $15 = $6

$17.70 COA

Time-Based (Time Decay) Attribution

TIME-BASED ATTRIBUTION

The ad leading up to the conversion received varied amounts of credit with the last ad taking the most.

Using our previous example:

1. Person clicks on adwords and visits site. 2. Person clicks on Facebook ad and visits site. 3. Person clicks on Twitter ad and visits. 4. Person comes directly to the site (type in URL - “Direct”). 5. Person clicks on an email newsletter ad and visits site, and finally makes

a purchase.

POSITION-BASED ATTRIBUTION

We’re going to allocate the spend:

Adwords: 3% Facebook: 7% Twitter: 15% Direct: 25% Email: 50%

Calculating our Position-Based COA:

Adwords: 3% * $10 = $.30 Facebook: 7% * $15 = $1.05 Twitter: 15% * $100 = $15 Direct: 25% * $0 = $0 Email: 50% * $15 = $7.5

$23.85 COA

Attribution Comparison

TIME-BASED ATTRIBUTION

1. Person clicks on adwords and visits site. 2. Person clicks on Facebook ad and visits site. 3. Person clicks on Twitter ad and visits. 4. Person comes directly to the site (type in URL - “Direct”). 5. Person clicks on an email newsletter ad and visits site, and finally makes

a purchase.

COA by Attribution Model:

• First Touch: (adwords) $10 COA • Last Touch: (email ) $15 COA • Linear: (20%*$10+20%*$15+20%*100+20%*0+20%*$15) = $25 COA • Position-Based: $17.70 • Time Decay: $23.85

WHICH MODEL IS RIGHT FOR YOU?

1. Start slow and grow!

2. First make sure you’re tracking all your conversions correctly.

3. Then look at the difference between the effects of first touch and last touch attribution.

4. After you have a handle on that, look at other attribution models that might make sense for your business.

HOW SHOULD I MEASURE ATTRIBUTION?

The tool you choose depends on your business goals.

1. Google Analytics • Supports custom attribution modeling (all 5 types) • Doesn’t handle “identify” well. • https://support.google.com/analytics/answer/6148697

2. Kissmetrics (www.kissmetrics.com) • Supports custom attribution for first touch, last touch and linear. • Allows you to see “who” (identify) is doing what / when / where.

3. Attribution (www.attributionapp.com) • Supports the 5 types of attribution out of the box for Facebook and

Adwords, including cost data. • Doesn’t provide a holistic view of users (only 2 channels).

RYAN KOONCE CEO, SaaS Management Group

@RyanKoonce

ryan@saasmgmt.com

THUE MADSEN Marketing Operations Manager, Kissmetrics

@ThueLMadsen

tmadsen@kissmetrics.com

Questions?