In today's rapidly evolving e-commerce landscape, one of the most pressing challenges for executive leaders is understanding the true impact of their marketing efforts. The questions of where to allocate resources, how to measure success, and which marketing channels are driving growth have become increasingly complex. Two key concepts that have gained prominence in recent years are "attribution" and "incrementality." In this article, we will delve into these critical topics, explore their relevance to e-commerce businesses, and offer insights into how to navigate the changing marketing measurement landscape.
Before we dive into the details, let's clarify the terms. Attribution is a widely-used term in marketing, but it has become somewhat overloaded and can refer to different things. In its simplest form, attribution is about understanding which marketing channels or touchpoints contribute to a conversion or sale. However, the traditional attribution models, such as last-click attribution, are limited in capturing the full picture of how different marketing efforts interact and drive results.
Incrementality, on the other hand, is a more precise concept. It focuses on understanding the causal relationship between marketing activities and business outcomes. In essence, it answers the question, "If I invest more in this marketing channel, how much additional revenue or profit will I generate?" Incrementality seeks to differentiate between marketing efforts that truly drive growth and those that might have occurred organically or are cannibalizing other marketing efforts.
The e-commerce landscape is witnessing several shifts that make attribution and incrementality more critical than ever. Here are some of the key trends:
Given these shifts, it's evident why incrementality is increasingly in the spotlight. It provides a path to understand the real impact of marketing activities, regardless of how fragmented the marketing ecosystem becomes.
To navigate the intricacies of attribution and incrementality in the e-commerce space, businesses can adopt a strategic approach. We can structure these efforts around what we call the "Four Pillars of Media Measurement":
The key is to ensure your marketing team is well-versed in the strengths and limitations of each of these measurement methodologies. With this knowledge, you can effectively triangulate and arrive at a more accurate understanding of your marketing efforts' true impact.
For e-commerce businesses dealing with seasonality and external factors that add significant variation, testing can be more complex. It's essential to remember that experimentation provides a snapshot in time, which may not account for the unique conditions of your peak sales periods.
Here are some strategies for addressing seasonality:
Whether you should work with a vendor or develop in-house expertise depends on your organization's resources and goals. There are excellent tools and vendors available to assist with marketing measurement. However, it's vital that your marketing team understands the intricacies and limitations of these tools or vendor reports.
It might make sense to have a dedicated marketing science or analytics team within your organization. They can work closely with vendors, ensuring the translation of complex results into actionable insights for your marketing team. The key is to ensure your team has a solid understanding of the methods used and can interpret the results effectively.
The changing e-commerce landscape, coupled with privacy regulations and increased diversity in marketing channels, makes attribution and incrementality more critical than ever. As executive leaders of e-commerce businesses, it's crucial to invest in measurement methodologies that help you understand the true impact of your marketing activities. A thoughtful approach to attribution, the four pillars of media measurement, and consideration of seasonality and external factors will guide you toward more effective and efficient marketing strategies in this ever-evolving e-commerce environment.