Last-Click Attribution – Last Click, Last Choice?

Series: How Smarter Attribution Leads to Smarter eCommerce Marketing

How to measure the return on investment of online marketing? It’s a non-stop hot topic for eCommerce marketers, and a controversial one, as well. In our series about attribution models, we explain some of the ways smart marketers are measuring their marketing success.

The first and most widely used attribution model in online marketing is the last-click approach. This model assigns credit to the online marketing touch-point that delivers the last click before the desired action or transaction is completed. Makes sense, so far — but think again. What if the customer found you through online search, clicked on an offer you sent in a newsletter and browsed your online shop, and finally completed the purchase clicking on a personalized display banner a couple of day later?

With the last-click attribution model, credit is only given to the final click before the transaction without considering all the other clicks that led to the purchase. It’s like paying tribute only to the sales person closing the deal, and not acknowledging the hard work of your marketing team that gained the attention of the new client in the first place, or the invaluable connections of your management team who helped build trust and validate the offer.

This model can have significant implications for a vendor’s pricing model and adjustment of investments. In a Cost-Per-Order (CPO) pricing model, the marketing vendor is only paid if it produces the last click for a particular sale, and thereby the target cost-per-order is automatically met by default. Sounds fair. But again, with a last-click attribution model the full CPO is being passed on to the last marketing touch-point before the transaction, instead of allocating it across all the marketing touch-points that preceded the purchase. Although the CPO payment model with last-click attribution certainly makes things easy for the advertiser, it also might mean continued over-investment into a channel or vendor that is only pulling part of the conversion weight.

On the other hand, if you’re paying a vendor on a cost-per-click (CPC) or cost-per-volume (CPM, or cost per mille) basis, you’ll need to continuously adjust your payment metric according to market dynamics in order to reach your CPO targets. Here again, a last-click attribution leaves out the assisting channels and could result in investment that doesn’t accurately reflect the role played in closing the deal.

Think of it as a sports game. If you applied a “last-touch” model to your team, you would give all the credit to the last player who touched the ball without acknowledging the help of all the other players who passed the ball down the field. You would soon whittle down your investments to a one-man team. But winning gets much harder when there’s no one there to pass the ball down the field.

For a smarter way to assign credit to your marketing channels, stay tuned for our next blog post.

Screen Shot 2016-02-22 at 13.27.25Learn more about the different steps in refining attribution models in The Digital Marketer’s Attribution Handbook.