Analytics news and expert advice every Thursday.
Why A Baseline Is Essential To Accurate Marketing Attribution
Establishing a baseline for your marketing isn't easy, but columnist Eric Dezendorf explains why it's essential and what you'll need to do it the right way.
Accurately measuring the return on your marketing initiatives can be a struggle for any company. However, it’s universally acknowledged that every marketer needs to do so in order to grow their business effectively.
Many marketers rely on last-click attribution from their media partners and agencies to report on performance. But in reality, that information is unreliable, as it doesn’t account for the many external factors that play into a consumer’s decision to make a purchase.
It’s critical for every company to establish a baseline to fully understand the incremental value of their marketing.
What Is A Baseline?
A baseline is the attributed value of everything outside of the marketing campaign being measured — or in simpler terms, what would have happened anyway. This includes:
• External Factors. Does your company already have far-reaching brand recognition? Do you have excellent existing customers who praise your company to others just by word of mouth?
Have your competitors changed their marketing strategy to give them greater visibility in the market? Many things can influence a purchase, and it is important to try to account for them all.
• Seasonality. This affects some companies more than others, but it is important for every company to identify their customers’ purchasing trends over the course of a year. For example, if you sell miniature holiday villages, it is likely that you are going to see the majority of your sales come in November and December, regardless of your marketing efforts.
This isn’t going to be as obvious for every company, but it is something everyone needs to include as a baseline factor.
• Unmeasured Marketing. What marketing outlets do you have that may not be included in your data? How effectively can you measure the internet activity of someone searching for a product when he gets information from a third-party site?
How much impact does your bus stop ad or billboard really have? Is someone who saw a display ad for your company still impacted by that when he converts three months later?
All these things and others must be included for an accurate baseline measure.
After formulating an approach to measure each of these factors, your baseline can be simplified into the formulas below:
Baseline = Total sales – sales attributed to marketing
Baseline = Unexposed sales + exposed non-attributed sales (sales that would have happened even if they had not seen marketing)
Why Is It Needed?
Establishing a baseline allows you to do two different things that are important when trying to measure your marketing campaigns.
First, you can compute the incremental impact of your marketing. Rather than saying, “We saw a 25 percent rise in sales last quarter,” you can say, “We saw a 25 percent rise in sales last quarter, and 17 percent is directly attributable to the launch of our new display ads.”
This can be a huge boon to the justification of your marketing plan and purchases.
Second, it allows you to explain and account for fluctuations in performance due to external factors. With an advanced baseline algorithm established, it’s much easier to explain that dip in March and spike in July, even though your marketing budget stayed the same.
What Are The Requirements?
So now that you know what a baseline is and why you need one, the question of how you can establish a working baseline that is unique, agile and tailored to your business remains. There are three main requirements that you must account for to do this.
First, it must be dynamic. If you only use averages to build your baseline, it will only account for expected behavior and fail to report on external factors that may lead to a spike or dip. This means that shifts in consumer behavior will also go unaccounted for.
Second, it must be inclusive. You must be able to report on all conversions made, not just those by people who are exposed to your marketing. Without this data, it is impossible to have a baseline.
Finally, your baseline must be integrated into all attribution computations. If you even once ignore it, your marketing attribution is no longer valid.
Creating a baseline for your marketing is no small task, but to accurately measure your marketing efforts, it is essential to create a dynamic, inclusive and integrated baseline.
With an accurate baseline, you can uncover new insights about each of your marketing channels well beyond determining the sources of conversions.
Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.