Is Attribution Broken? Or are we just asking the wrong question?

The Mandela effect is the name for a collective memory that never happened. It is named after the collective memory that Nelson Mandela died in prison in the 1980’s – he didn’t.

Marketing has many of these urban myths but the one also stands out as the most ironic quotes of all time.

“Half of my marketing spend is wasted. I just don’t know which half.”

The sentiment is not ironic; the irony is that this quote about attribution is attributed to two people – John Wannamaker a Philadelphia based retailer and Lord Leverhulme, founder of Lever Brothers in the UK. Unfortunately, there is no evidence that either said it.

Moreover, the unasked follow-up “which half?” is the wrong question. It is impossible to prove which half is wasted and which half is not. Instead, we work very hard to prove which half is effective. Model complexity presents the first challenge. Simple models (like first or last touch) are easy to set-up, use and explain but miss out on many if not most of your touch points. Complex models (like weighted multi-source or unified measurement) will be a lot more accurate but are very hard to set-up, not user friendly and are very hard to explain.

The second challenge is that they cannot look at activity outside of the funnel like branding or sales process improvements. Similarly, other external factors like economic or weather events are lost.

What we really want to know is where our marketing is delivering value? Put more practically, “If I had more budget, how should I spend it effectively?”

The solution is found in a cohort analysis of people who have engaged with the different combinations of marketing channels during your business cycle.

By just looking at the people and the total spend in each channel combination will give you some really powerful information.

1. The average value per person in the single channel cohort tells you the maximum cost of acquisition for each channel.
2. The average value per person and the average value per purchaser tell you the channel combinations which are the most powerful.

Most importantly we can answer the marketer’s most important questions, “How much budget do I need and where should I spend it to hit my target?”

There is no record that either Wannamaker or Leverhulme ever lamented about wasted marketing spend. Regardless of who said it, this quote has had us chasing the wrong answer. We have developed all kinds of attribution models – some easy but not very accurate and others more accurate but hard to build, use and explain. Unfortunately, none of these models can be used to answer our most important question. Only cohort analysis can tell us the most effective way to spend our budget.

Want to learn more? Check out a previous article I wrote:
https://www.skipfidura.live/blog/2019/9/6/what-is-this-attribution-stuff-anyway