November 18, 2013 Andrew Olsen, CFRE [post_view] 0
Attribution: What is it, and why is it important?
Attribution is the process of allocating credit to one fundraising channel or another. This process (in theory) allows you – the fundraiser – to make data-driven decisions to most effectively plan, allocate and spend your fundraising expense budget.
Firstly, a caution. Attribution is difficult. I mean, really difficult. If you don’t have good data it is next to impossible to accurately understand how each of your media channels interacts with another, and how the overall mix drives performance. In fact, even nonprofits that have invested heavily in sophisticated data management and analytics have a hard time truly understanding and leveraging attribution.
So why do it? Simple. In today’s environment where donors are consuming and interacting with multiple media sources and channels on an ongoing basis, you can’t afford not to understand the impact that your media channels have on one another. Ultimately, leveraging attribution allows you to make smarter use of your fundraising expense budget, improve the timing of your campaigns and increase the average value of your fundraising efforts.
There are two frequently used attribution methods. The first, and most frequently used method is called Full Attribution. In the Full Attribution model credit is given to the last channel – the channel that captures response. This is a highly inaccurate way to attribute performance because it doesn’t give you vision to the impact that any other channel(s) had in driving the response that was captured by the last channel.
For example, one of our clients – a major national nonprofit medical charity conducted a radio campaign in five U.S. markets. The goal of the campaign was to drive response to their call center.
The campaign generated just two calls. Using Full Attribution, this campaign would be considered a failure, and the client would never invest in something like this again.
BUT…analyzing their online performance in just one of the five markets showed that they achieved a 300% increase in web traffic and a 180% lift in web revenue year-over-year during the time the radio campaign was running.
This process of giving credit not only to the final channel but to all channels that could have influenced response is called Partial Attribution. While still not perfect, Partial Attribution is much more accurate than Final Attribution.
We have conversations all the time with nonprofit organizations that want to slash their direct mail budgets because they see web revenue increases and believe that by investing more heavily in web and less so in the mail they can drive greater revenue at lower costs. We’re in favor of optimizing the media mix to generate more net revenue too. But the greatest value of attribution is that it helps you understand what NOT to cut.
And what we’ve found is that most nonprofits can’t cut their mail programs and expect to maintain the same (or increased) web revenue. Why? Because mail is a primary DRIVER of web revenue. In fact, for some organizations, direct mail is driving 20%-30% of their web revenue. While cutting the mail might help by reducing some costs, it will result in huge revenue decreases – both from the drop in web revenue, as well as the drop in revenue directly attributable to the mail program.
Some quick cautions about attribution…
1. It’s not easy. If you’re going to undertake attribution modeling (and we think you probably should), you need C-level buy-in.
2. It will NEVER be exact. In an integrated environment you have to be comfortable with some degree of fuzzy math, and estimation, because you’ll never be able to see 1:1 channel interaction across all channels.
3. Attribution within digital channels (i.e., email to SEM, Display to SEM, etc.) is much easier to track than cross-channel attribution. In fact, you’ll never be able to tell with certainty how DRTV or radio impact your mail program, etc.
4. It’s dynamic. Any change in media mix, timing, time of year, etc., will impact your attribution model.
5. Beware the politics. As you begin to understand channel interaction and cross channel donor behavior this may lead to redistribution of marketing and fundraising budgets across your organization. That could lead to infighting in your organization. Have a plan to manage this risk before you jump into attribution.