The ‘golden trinity’
Comparing attribution modelling with econometrics is like comparing apples and oranges. Attribution’s role is to understand individual customer behaviour and journeys, while econometrics is about understanding the full impact of market and macro factors alongside an aggregated channel view of sales drivers.
When employed appropriately, data-driven attribution models have a beneficial and important role in any measurement framework but are not comparable to econometrics. They don’t answer the same questions or use the same techniques. Econometrics is strategic, long-term and macro; whereas attribution is tactical, mid-term and micro.
The best way to properly measure effectiveness is for attribution, experimentation and econometrics to evaluate performance together.
In previous articles on Marketing Week, we have emphasised an urgent need for marketers to adopt a more agile and holistic approach to measurement, employing multiple metrics from different sources to form a sensible and coherent story around marketing’s impact throughout the funnel, and the combined contribution of the marketing mix. This requires a more sophisticated approach, overcoming the siloed mentality that has been nurtured by more simplistic tactics, using multiple data sources and various measurement techniques to gain a comprehensive view on effectiveness, and overlaying human context to make sense of the results.
By classing one approach as ‘wrong’ and one as ‘right’, the benefits of a holistic measurement system are overlooked. Instead, the preferred approach should be to employ the solution that works best for the requirement while being cognisant of the limitations of this choice.
Google’s recent paper supports the view that the best way to properly measure effectiveness is for attribution, experimentation and econometrics to evaluate performance together. Experimentation can validate where modelling outcomes differ, and the models are able to incorporate the results of uplift tests in their assumptions. This allows the appropriate measurement techniques to be used based on the types of decisions that you need to make. Effectiveness expert Les Binet recently described this as “triangulating ROI”, while others refer to it as ‘unified marketing measurement’ or the ‘golden trinity’ approach.
The combination of these three techniques creates a durable system, which can adapt to any inconsistencies through each learning from the others. This allows the golden trio to be more focused.
Econometrics provides a longer-term strategic outlook of sales drivers, and can forecast budgets and outcomes, but is constrained in its capabilities to look further – for example at a campaign, creative and keyword level. Attribution can then be employed for monitoring customer touchpoints and the short-term, granular media channel efficiencies of these budgets. Experimentation builds on the incremental views of each approach to support in-flight tactical decision making and overcome any discrepancies.
Studio Retail has already seen the benefits of using this holistic measurement approach on performance, by employing both econometrics and attribution modelling alongside experimenting with spend through Google.