Everything You Need About eCommerce Attribution Models for Marketers

As an online seller, you need to understand what prompts a sale or conversion on your eCommerce site. 

It could be a result of an ad launched on Google or Facebook. Or what if a customer ordered your product when your eCommerce site showed up on Google’s top page due to SEO ranking?

There are other channels considered when giving credits. These include your landing page, product cart, the weekly newsletters, and many more.

This article explains attribution models, including types, benefits, and the best one to use.

Table of content:

• What is the eCommerce Attribution Model? 
• The most common ECommerce Attribution Models

1. First-click attribution model
2. Last-click attribution model
3. The linear attribution model
4. Time-decay attribution model 
5. Position-based attribution model

• Best eCommerce attribution model to use
• Benefits of Ecommerce Attribution Models

What is the eCommerce Attribution Model? 

The word “Attribution” means assigning value or credit to something. 

Ecommerce attribution models are a set of defined frameworks used in assigning credit to the channels or touchpoints leading to sales and conversions.

The most important question often asked in the online market is, "how did this sale happen?". Creating a functional sales funnel is impossible without a good answer.

A typical illustration of this question is given below:

1. On a website, Jackwood came across a Google ad for iPhone 14.
2. When he clicked the ad, he was taken to the iPhone 14 product page on Amazon.
3. After going through the entire product page, Jackwood added it to the cart but didn’t make a purchase.
4. The next day, Jackwood got an email from Amazon reminding him of the product.
5. Jackwood follows the product link in the email and completes the purchase.

Going through the entire illustration above, you could attribute the sales credit to the Google ad. Or the credit could go to the email marketing strategy later used. 

The practice of assigning this credit is what eCommerce Attribution entails.

The most common ECommerce Attribution Models

Sometimes, the process of sales or conversion is not one-way traffic. 

For an online market that focuses on different products, the channels involved in every sale could be more than just a single landing page or product cart. 

However, different attribution models help correctly assign credit to the deserving channels.

The five most common eCommerce attribution models include:

1. First-click/interaction model
2. Last-click/interaction model
3. The linear attribution model
4. Time decay model
5. Position-based model

Each of the attribution models listed above works differently. The one you use depends on the type of report you would like to get using the google analytics feature. 

To find out what contributed most to an eCommerce sale or conversion, you need to understand these eCommerce attribution models.

1- First-click attribution model

Here, 100% value or credit is assigned to the channel that made interaction possible between your brand and a new prospect. 

Customer A, for example, sees your product for the first time through a Facebook ad but only makes a $150 purchase after searching for your brand organically on Google. Thus, the credit is given to Facebook.

The customer's first interaction with your website that led to a sale came from the Facebook ad. 

When to use: The first-click attribution model is the best if you want to find out which channel a new prospect used to interact with your Commerce site. 

This helps you figure out the best channel for bringing in more potential sales prospects. For awareness campaigns, first-click attribution is ideal.

When to avoid using it: The first-click attribution model is unsuitable for knowing the channel that led to a sale.

2- Last-click attribution model

In contrast to first-click attribution, credit is given to the last or most recent channel before a sale. 

Check out this example:

1. On Google, Simpson looked up "best baby toys."
2. Simpson clicked on the top page of Google's list of eCommerce websites.
3. Simpson did not buy anything after going through the entire product page.
4. Simpson saw a Facebook video ad a week later that featured the same eCommerce site he had previously visited.
5. After being enthralled by the video advertisement, he revisited the product page.
6. Simpson discovered a suitable baby toy and purchased it.

Here, 100% credit is given to the Facebook video ad because it was the last touchpoint or channel before making sales.

When to use: The last-click attribution model can be used if you want to know the last channel before selling.

This report helps decide which channel to invest more in for more sales or conversions.

When to avoid using it: It's not good to use it for public awareness campaigns. 

More bias is towards direct visits, thus not making it practical to understand the efforts put into branding and creating awareness.

3- The linear attribution model

Unlike the first and last-click attribution model, credit is assigned equal parts to each touchpoint or channel a customer interacts with before purchasing. 

Following the previous example, 50% of the credit will be assigned to the organic search on Google and Facebook's paid video ads.

Another illustration is given below:

1. Let’s say a customer first interacted with your brand through a Facebook ad (1st channel)
2. Then she organically searched for your brand’s product on google (2nd channel)
3. She went through an Instagram post on your brand (3rd channel)
4. Finally, she purchased it through a link she got in an email from you (4th channel)

Each of these channels is assigned a credit value of 25%. 

When to use: This model is suitable for reporting how every channel is performed. 

It gives you a comprehensive marketing insight and allows you to optimize each channel accordingly. 

When to avoid using it: It does not allow for a deeper insight into each channel. 

This makes the linear-attribution model unsuitable for eCommerce sites that are more specific about conversion channels.

4- Time-decay attribution model 

Not every channel or touchpoint leads to sales. Most touchpoints only serve to convert your customer until they make a sale. 

The closer a channel is to the time of sale, the more credit is assigned to it. Time-decay attribution model attaches more relevance to more recent channels or touchpoints than those far back. 

Using the Linear attribution model illustration, the time-decay model will assign more credit to the 4th channel instead of distributing it equally. The 1st channel will be awarded the most negligible value.

This attribution model considers every other touchpoint, aside from the last one, a conversion channel.

When to use: This model can be used if you want to appreciate every other channel involved in conversion. While still assigning more credit to the touchpoint that led to the final sale.

When to avoid using it: It assigns too little credit or value to the channel that brought about the first interaction. 

This can be very dangerous in the long run for the brand's awareness which plays a significant role in creating a good sales funnel.

5- Position-based attribution model

This model attributes 40% of the sale's credit to the first and last click. The remaining credit is equally assigned to every other touchpoint or channel.

Using the same illustration seen in the Last-click attribution model:

1. Let’s say a customer first interacted with your brand through a Facebook ad (1st channel)
2. Then she organically searched for your brand’s product on google (2nd channel)
3. She went through an Instagram post on your brand (3rd channel)
4. Finally, she purchased it through a link she got in an email from you (4th channel)

The 1st and 4th channels get a 40% credit each for sale, while the 2nd and 3rd channels get a 10% credit each.

When to use: You can use this model if you want to get a clear report on the first and last clicks while still assigning a little importance to other channels. 

This can be significant when optimizing your eCommerce marketing strategy for new customers and more sales.

When to avoid using it: There is lesser consideration for the remaining touchpoints that could have played a more prominent role in the sales process. 

It is not suitable for obtaining a comprehensive insight into your marketing strategy. 

Best eCommerce attribution model to use

There is no best “eCommerce attribution model.” Each of these models has its pros and cons. 

Most digital marketers prefer to use a combination of two or more to understand the touchpoints for sales or conversion better.

You can customize your eCommerce attribution model. However, this can take a long time and much effort because of the amount of data needed. 

Benefits of Ecommerce Attribution Models

• Understand customer behavior

Ecommerce attribution models help you understand customer behavior. For example, suppose you have an eCommerce store and receive a customer who came from Facebook but made a purchase on Amazon. In that case, you don't know what happened between the two visits.

However, use an eCommerce attribution model like Last Click or First Click. You will be able to know which channel contributed most towards getting that sale through. 

This knowledge will help you improve your marketing efforts in the future by focusing on what works best.

• Identify the Best-Performing Channels

You need to know which channels generate more sales to increase your marketing budget and allocate resources accordingly. 

Analyzing channel performance using an eCommerce attribution model can identify which channels are driving more revenue and allocate more funds towards them.

For example, you find out that Facebook ads generate twice as many conversions as Google AdWords. You can increase your spending on Facebook ads and reduce it on Google AdWords.

• Optimize Your Marketing Budget

Inbound marketing strategy involves a lot of effort and resources. You need to create content, build links, run ads, and many other things that cost money. But how do you know what works best? How do you know which activity will bring in the most sales?

Using eCommerce attribution models lets you see exactly where your money is going and what brings in the most revenue for your business. With this information, you can spend more money on those activities generating more sales for your business.

You can optimize your marketing budget by comparing how much revenue each channel generates versus how much traffic each channel is driving to your website. You can then determine which channels are most profitable and focus on those when planning future campaigns.

• Customer Lifetime Value (CLV)

Ecommerce attribution models can help you determine how much money each customer is worth over their lifetime. Armed with this information, you can optimize your marketing efforts to bring in more customers who will be profitable for your business over time.

Customer Lifetime Value (CLV) is the amount of revenue that an individual customer will generate throughout their lifetime. This metric is fundamental to eCommerce businesses because they rely on repeat customers to grow their business.

 Suppose you know how much money each customer is worth. In that case, you can better understand how much you should spend acquiring new customers to maximize profits.

• Better Decision Making 

You may find yourself torn between investing more in retargeted ads and simply focusing on improving your product's page to engage new prospects better. An eCommerce attribution model can help you make smarter decisions about where to spend your budget.

Navigating to Google’s analytics feature will help you decide by giving you a report of the conversions made by your blog and your retargeted ads.

In addition, these models provide detailed reporting on performance metrics like sales velocity and profitability per customer type. They allow you to make better decisions about future strategies and marketing tactics to drive higher conversion rates.

Final Thought

Learning how to master the e-commerce attribution modeling technique is not a difficult task to accomplish. Still, it will require time, patience, and perseverance. Building the model from scratch needs careful planning, which is what most of us aren't capable of doing. Thanks to innovative platforms like Convertedin, it’s now easier for us to calculate the proper path that would lead us to the result we are looking for.

Convertedin made marketing automation and dynamic ads easy with a visible ROI. It's a significant addition to any e-commerce business seeking maintained growth. Get started with ConvertedIn here.