Let me clarify something before my friends who work for cross channel attribution companies try to kill me. I don’t think that the market for cross-channel attribution is inherently dead, but I do believe that the way most vendors offer those services today is dead.

I believe that the markets for marketing mix modeling and cross channel attribution are going to merge into one.

The growth in cross channel attribution was spurred by the shift in advertising spending from traditional media to digital media. A few years ago, several startups saw a business opportunity to utilize the digital touch points generated by digital media to create models that could identify the drivers of sales. Then these startups decided to include offline sales channels and—voila, we got cross channel attribution.

Cross channel attribution is a bottom-up technique in which an algorithm analyzes individual touch points when our brand interacts with the customer—for example, when the customer clicks on a paid search ad on Google—and then allocates the credit of the purchase to each touch point proportionally to its impact in the purchase process.

In a sense this is similar to marketing mix modeling because the final goal is the same, which is to assign a return on investment on each marketing activity. But while marketing mix modeling takes a high-level, top-down approach, cross channel attribution takes a bottom-up approach.

The problem is that traditional cross channel attribution faces a problem of missing variables. For example, for broadcast marketing vehicles, like radio, we don’t have a way to individually identify who was in the car with their radio on at the time when we aired a commercial. Moreover, the models don’t normalize for changes in the economy, the weather, our competitors advertising spending, or other factors that affect our sales but are outside of our control.

As a consequence, the recommendations from most cross channel attribution projects are misleading, and therein lies the opportunity for a combination of marketing mix modeling and cross channel attribution.

I already see signs from the vendors that confirm this trend. Some companies that specialize in marketing mix modeling have purchased cross channel attribution solutions and some cross channel attribution vendors are offering marketing mix modeling.  More importantly, these companies are working on integrating the results and methodologies of both techniques into a single solution.

The tipping point will occur when clients realize that there is no point in setting up a standalone cross channel attribution that doesn’t account for all drivers, including the ones that can’t be traced back to a particular individual.

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Tags: analytics, attribution, cross-channel


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Comment by Hope Foster-Reyes on March 1, 2016 at 6:18am

Hi Damian, I'm an old school digital marketer/marketing manager and just getting started in data analytics (current grad student at UChicago). Would love to hear more about the trends in marketing mix modeling.

Any examples of the cross pollination of vendors you're referring to you could share? Who are the leaders in the space and what resources would you recommend to read up on the topic?

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