For years now, the success of online traffic sources has relied solely on the principle that the ‘last click wins’. This has been a major flaw in web analytics as customer journeys are often a lot more drawn out and complex that just one visit. In fact, leading web analytics company DC Storm, found that 70% of all sales consist of more than one traffic source.
Their research in December 2008 also revealed that there’s an average of 3.36 visits per sale. When creating reports and performing analysis, the winning emphasis is often solely with those last clicks, and so the remaining 70% are effectively ignored. But in reality, that 70% play a vital role in the customer journey and that ever important final conversion event.
Here’s an example of 4 different customer journeys that lead to sales:
From the above 4 transactions there’s a total revenue of £2,480. Add to the mix a total PPC spend of £420.
Traditional reporting and analytics would attribute these sales to the last click and as such would look like this:
Last click revenue
On the face of it, it appears that PPC has an ROI of just 124%, and Direct/Bookmarks didn’t deliver any sales at all.
However, considering the contribution each channel makes to a sale changes the picture completely. Contribution reporting looks at the entire customer journey and awards the sale and revenue to each traffic source and keyword that played a part in each particular sale. So now the 4 sales above would be reported like this instead:
Revenue contribution
Traditionally brand names are the last natural search keyword used and are therefore seen to be the more significant keywords. However, this new method of reporting now allows marketers to see the true value of each traffic source. In this case, the PPC ROI is now 590% and in the example above Direct/Bookmarks helped lead to 3 sales worth a total of £1,960.
PPC keyword optimisation can be a delicate balancing act and choosing the right keywords, match types and Max CPCs is key to a campaign’s success. In the previous examples we see that 6 PPC ads were clicked on in total but only 1 actually won a ‘last click’ sale. These ‘losing’ keywords would be seen as ineffective and costly resulting in them receiving a reduced CPC or even changing their status to paused.
Contribution reporting however paints a more accurate picture, revealing that each PPC keyword actually played a vital role in gaining those sales. Should those keywords be paused then future sales may not occur, therefore resulting in lost revenue because, apparently in this case, PPC isn’t that profitable.
But what about going beyond your own analytics, will this approach be adopted by the likes of affiliate networks? Will this mean the end to the dominance of voucher code websites, allowing all other parties involved to take an even cut? All we know is that for us, looking at the entire customer journey makes much more sense and paints a more informed and acurate picture.
Stu –
Excellent post!!! As for affiliate networks switching from ‘last click’ to other attribution methods, like the C3 Metrics Attribution Gateway (obvious plug), don’t expect it to happen anytime soon with the larger networks like CJ.com and others.
Just imagine you’re an affiliate and your entire business model is based on ‘last click’. Now comes along attribution and you have to share your commission with a bunch of other affiliates — most folks would move on and find another program!!
As we tell all of our clients — we live in a ‘last click’ world and its going to stay that way for a while — but using proper tools that handle attribution allows one the ability to make the proper decisions.
Hi Jeff,
You’re exactly right, if this were to ever be utilised by a big affiliate network then the chances are that people will leave them.
However, is this an opportunity for a network to offer a new system encompassing all clicks for those site owners that aren’t typically responsible for the last click. A few problems they may encounter include, cookie length, repeat visits from one referrer etc.
But the key feature here for advertisers is that they now have the opportunity to make more informed decisions for all online channels and ensure that every penny of their precious media budget is working as hard as possible.
It’s still early days and many agencies are yet to pick this up, but the early adopters will no doubt see some great improvements in account management and ROI, just as we at Propellernet have.
Stu
PS - DC Storm have just released their new tool, Storm for Affiliates, aimed to help affiliates track and optimise their PPC campaigns more efficiently.
Good points all. I would like to add that when using Google Analytics you could set up goals for each of the sources and actually see the sales funnel. The in-depth tracking ability in GA should not be overlooked nor discounted by anyone.
Have been an analyst for more than 30 years, I can always find value in the many sources of data. And anyone with analytic skills will tell you, give me 2 data points and I can make them represent whatever you need - give me more and the sky’s the limit.
“All we know is that for us, looking at the entire customer journey makes much more sense and paints a more informed and acurate picture.”
Indeed it does Stu - good post. It’s clear that path-to-conversion analysis and attribution modelling are finally emerging as critical issues. A very similar discussion is going over at E-consultancy (http://econsultancy.com/blog/4426-the-changing-model-of-online-marketing-attribution-2), which suggests to me that the snowball has picked up a new bout of speed.
Thanks for all your comments so far.
Paul, thanks for mentioning the e-consultancy article, I’ve just posted a comment on there too. It will be interesting to see how this technology develops and is adopted over the next 12-18 months.
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