Post completely revised and updated on July 09, 2021
The retail sector is in a state of radical change.
One could also say that since the Corona pandemic, no stone has been left unturned. Brick-and-mortar retail is one of the industries worst hit by the pandemic, while e-commerce is one of the winners.
Many retailers have reacted quickly and massively expanded their digital offerings. And consumers have also made significant changes: they are increasingly shopping online or now hybrid. That means ordering online and picking up in the store. Or - now again: test in the store and buy online.
Digitalization has fundamentally changed consumers' shopping behavior. Consumers are not only well connected and always informed. They also switch continuously between different devices and the online and offline worlds. But not only that! Brand loyalty is also dwindling. Global studies even suggest that consumers want to maintain their new habits.
The result: retail is facing increasingly complex customer journeys and fiercer competition. However, marketers need to know and understand the customer journeys in detail for successful and targeted campaigns. Understanding consumer behavior in its entirety is a prerequisite for allocating advertising budgets as efficiently as possible to the multitude of channels and advertising measures used. We have summarized the three main challenges for retailers and offer tips on how they can master them with attribution.
#1 Complexity of the customer journey
Today, customer journeys are more fragmented than ever. New channels, publishers, and advertising opportunities are constantly emerging. There are significant, industry-specific differences – both in the length and complexity of the customer journey and in the number of touchpoints measured until conversion.
Fig. 1: Customer journey touchpoints - sample excerpt
The average length of a customer journey is seven days. However, the duration varies considerably depending on the product or the need for advice. If we look at the data across all industries, a customer journey comprises an average of 20 touchpoints (median, including impression contacts).
At Exactag, we believe in holistic measurement and fair evaluation of all touchpoints in customer journeys. That means we let the attribution model evaluate the importance of a channel according to its value contribution to a defined goal, e.g., sales and/or other targets (e.g., newsletter registration). Exactag divides the touchpoints into introducers, influencers, and closers. As a general rule, we can say that channels that introduce new customers or start new buying processes require attribution in particular, as the incremental contribution to the business result is most significant here. Similarly, channels that do not lead directly to a site, such as display views, require attribution.
We recommend that every marketing professional immediately uses existing tools from media buying or web analytics to quantify the optimization potential or to be able to make initial optimizations directly. However, it is essential to remember that these tools have a limited view of the customer journey. For example, a DSP or ad server only measures the inventory it drives. Or the web analysis tool only measures clicks and not views. More informantion also in our blog post The five pillars of holistic marketing measurement
#2 Static models like last cookie wins are no longer sufficient
When it comes to evaluating the efficiency of marketing measures, many retailers still use outdated methods. They often fall back on the last cookie wins principle that assigns the sole advertising success to the last touchpoint in the customer journey. Consequently, marketers then often rely on advertising measures of which they cannot be sure that they will achieve the desired results. Optimization happens one-eyed and is based on incomplete data, as it only evaluates the last touchpoint. Thus, all rule-based models are rigid and therefore biased. However, the advantage of these models is that they are "easier" to understand what means that their acceptance in the organization can be higher in the short term.
Even though the Last Click Model has been an industry standard for a long time due to its simplicity, it is clear that the model no longer meets today's media consumption behavior and competitive demands.
The solution is the use of dynamic, data-driven attribution models which rely on machine learning, intelligent algorithms and which evaluate and analyze the individual touchpoints of consumers with the brand in terms of their efficiency. In other words, that quantify the actual value contribution of the individual touchpoints. Marketers can thus identify which advertising measures were successful and which were not. With these insights, they can adjust their strategy, reallocate budgets, and make informed decisions for action. More information also in our blog post Why CMOs need to digitize their marketing controlling now
#3 Attribution links the online and offline worlds
Despite a significant increase in e-commerce traffic due to the Corona pandemic (Exactag measures the growth of +15% YOY in the DACH region for 2019/2020), brick-and-mortar retail is recovering at an increasingly dynamic pace as the vaccination rate increases. Retailers place their offers with high advertising pressure in the relevant markets – online and offline.
One of the main difficulties for retailers is the constant and dynamic transition from offline to online shopping and vice versa. When searching for a product, consumers switch back and forth between brick-and-mortar and digital stores as a matter of course. Before buying a product in-store, they research online. Others check the quality of a product in the store and later buy it online to look for special offers. This constant change makes it increasingly difficult for retailers to track their customers’ journeys.
Where possible, i.e., where an opt-in is available, marketing attribution collects user-level data from all digital channels and links this data to offline measures (e.g., catalog advertising). For users that do not opt-in, Exactag has developed specific solutions that are privacy compliant. All data thus converge in a centralized and holistic manner in a single system. They also allow a look behind the walled gardens.
This holistic data platform helps marketing professionals to derive valuable insights for the marketing strategy. Besides, marketers can better link the online and offline worlds so that a customer can have a holistic brand experience. That not only leads to the desired increase in conversions but also to an improvement in brand loyalty. More information also in our blog post The Top Reasons Marketers Should Combine Marketing Mix Modeling and Attribution
In these challenging times, advertisers in retail have to perform better than ever. Complex customer journeys, high demands of hybrid consumers, and fierce competition require replacing old and outdated models and apply future-oriented strategies.
As a leading provider of marketing attribution, we are committed to helping our customers use attribution to optimize their marketing strategies and advertising budgets.
If you would like to learn more about how Exactag adds value or see a short live demo, please do not hesitate and ...