E-Mail Marketing, Search, Matchback, Attribution

One of the mysteries of marketing in 2009 is the concept of attribution, a process where we matchback orders derived in one micro-channel to the advertising micro-channel that drove the order.

For whatever reason, the e-mail blogosphere and vendor community fails to capitalize on this opportunity.

My Mutichannel Forensics projects repeatedly indicate that e-mail marketing and search marketing play a unique micro-channel role. E-Mail marketing is a "love" channel, if you will. The 10% to 50% of your twelve-month buyer file that subscribes to e-mail marketing "loves you" more than the average customer. These customers have better "RFM" characteristics, not because of e-mail marketing necessarily, but because the customer is a good customer who wants to learn more.

And then we have search, which works in the opposite direction. The customer who "loves you" doesn't implicitly trust you. As a result, she wants to make sure that she's getting the best deal possible, the best combination of merchandise and value.

When you have customers who want to see your e-mail campaigns and then want to use search, you have a classic micro-channel combination that must be tabulated in your database, and analyzed going forward.

At minimum, we need to run matchback algorithms for e-mail marketing. Catalogers have been running matchbacks for the past fifteen years, taking credit for orders that were not necessarily driven by catalogs. E-Mail marketers, however, have been exceptionally slow to embrace attribution and matchback programs. I don't understand why.

It's a fairly simple process. Say you deliver an e-mail marketing campaign on a Tuesday. Take all customers who ordered on Tuesday, Wednesday, Thursday, and Friday, and match them back to your e-mail campaign. And by the way, make sure you have a holdout group, a group who did not receive the e-mail campaign, and do the same process --- subtracting the difference between mailed and holdout group for true incremental value.

Now, any orders that are generated by search marketing are matched back and attributed to the e-mail marketing campaign. And here's where we need to make an adjustment ... we need to make a guess at all of the unconverted searches that were caused by e-mail marketing, and allocate the cost of those unconverted searches back to the e-mail marketing campaign. If the typical search conversion rate is, say, 3%, you have to multiply converted searches by 33, and then multiply that total by the cost-per-click, in order to get at the right advertising cost.

Two things usually happen, two things that are highly relevant to e-mail marketers.

1. E-Mail marketing causes search activity, and that search activity results in orders that are normally credited to search and should be credited to e-mail. This can result in e-mail marketing being more productive that usually measured to be.
2. E-Mail marketing causes the "search audience" to do a bunch of unproductive searches. As a result, the "search segment" is actually unprofitable --- causing the e-mail marketer to withhold e-mail marketing campaigns to customers who search all of the time.

The latter point is worth noting ... the e-mail marketer should be creating segments in the database of customers who utilize search on a frequent basis ... electing to develop a different contact strategy for the "E-Mail / Search" micro-channel combination.

Mega-Metrics: Attribution Combinations

Oh those online marketers ... looking to attribute orders to the right marketing channel.

Allocation / Attribution is a largely futile effort. We simply cannot get in the mind of the customer, can we?

We can test. Testing works really well in the direct marketing world, but testing for attribution purposes works less well in the online marketing world.

So here's what you can try ... I've had success with this.

• Create what I would call "combinations". When a customer visits your site on March 3 via paid search, and purchases on March 5 via an e-mail campaign, you create a "combination" that captures the first touch and the last touch. In this case, the combination is "PAID SEARCH / E-MAIL".

• If the customer only had one visit (say from an affiliate marketer), then the combination is "AFFILIATE ONLY".

• The pundits will jump in and suggest that we're missing everything that happens in-between first touch and last touch. Let them jump in and argue.
  

• Pay CLOSE ATTENTION to what happens on the next purchase. What are the combinations that are most likely to happen NEXT? Does "PAID SEARCH / E-MAIL" lead to "E-MAIL / PAID SEARCH"? Or does it lead to "PAID SEARCH / E-MAIL"? Or does it lead to "ORGANIC ONLY"? The mega-metric to calculate is the percentage of folks who migrate to different combinations in the future.
  

We care about what happens next, because what happens next tends to dictate what the primary driver is. Over time, you'll learn that certain advertising channels tend to "drive" orders, while other advertising channels tend to "complement" orders.

Once you identify the channels that drive orders, you begin to understand how you might attribute orders to ad channels better --- and you'll make better investment decisions.

The combinations help you see how customers migrate over time ... helping you figure out "what to do next" as opposed to helping you figure out "what just happened". Ultimately, you'll plug the most popular combinations into a Multichannel Forensics simulation, and you'll see what is about to happen to the future trajectory of your business.