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Bringing Advertising Effectiveness to Life in the Path to Purchase

The “purchase funnel” and “path to purchase” are concepts integral to being a Finding the Right "Path to Purchase"true marketer.  What CMO would consider themselves an expert at their craft without understanding these concepts?

But understanding and actively using the purchase funnel and path to purchase are two different things. For most Marketers, they’ve been lazy abstractions rather than concrete tools to improve advertising performance.

One Path to Purchase?

In fact, there is no single “path to purchase” or “purchase funnel.”  Consumers are exposed to numerous brand touchpoints, and the order of exposure is highly varied.  There are many, many paths to purchase (probably too many to even measure), making the task of the CMO even harder.  Which touchpoints are most influential and when?  It usually falls to a piece of custom research to find out—and even then results are far from precise.

A New Approach to Path to Purchase

But there’s a new and highly granular approach to understanding path to purchase—attribution modeling.  Attribution modeling is essentially market mix modeling performed at the individual level.  It captures each person’s exposure to all digital touchpoints and, increasingly, offline ones as well.  It matches this exposure data to sales or upper funnel brand metrics for the same individual.

This data is captured at scale for millions of individuals (with no PII) over time on a longitudinal basis. Imagine a single anonymous consumer shown as a timeline over several years with each advertising exposure and purchase transaction (or not).  Across millions of consumers, regression analysis is used to understand the brand or sales impact of each touchpoint as well as all possible combinations of touchpoints.

Attribution Modeling vs. Marketing Mix Modeling

So what?  Well, this is really different than traditional marketing mix modeling in several ways.  First, it measures exposure at a very granular level—e.g., individual search keywords, unique display ads, etc. Second, it measures the combinatorial impact of different sets of touchpoints.  That is, knowing the impact of A and B, what’s the impact of A+B?—and all other possible combinations.  Third, it can measure the sequential impact of advertising exposure.  And lastly, it’s fast.  The models can be updated daily.

A Better View of the Path to Purchase

All of this means that attribution modeling can tell us a lot—a whole lot—about the real path to purchase across the purchase funnel.

  1. Touchpoint Impact—The model tells us which touchpoints are most impactful and which combinations of touchpoints have the greatest impact.  This is, in essence, the “path to purchase.”
  2. Touchpoint Impact Order—The model also shows where each touchpoint had the most impact in the exposure sequence.  Understanding the order of exposures that achieved the highest impact can help improve media plan execution.
  3. Touchpoint Brand vs. Sales Impact—The media exposure data can also be modeled against upper funnel brand metrics—e.g., awareness, consideration, etc.  This enables you to understand whether the impact of media touchpoint exposure differs by top and middle of funnel brand metrics vs. sales metrics, and, if so, how to optimize one or both.

Moving Forward—From Fuzzy to Actionability

Moving the path to purchase and purchase funnel from fuzzy, abstract concepts to real world tools to improve advertising and media performance is no longer a dream.  Increasingly, sophisticated marketers are using attribution modeling to gain unique insights into how consumer advertising exposure translates into brand and sales results.

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About Randall Beard

Randall Beard is President, Global Innovation Practice at The Nielsen Company. He is a leading and award winning Chief Marketing Officer and General Management executive with 25+ years of global experience. For more about his thinking, visit Randall Beard’s blog at randallbeard.wordpress.com.

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