Your Sales Attribution Method Is Lying to You

More than 100 years ago, marketing pioneer John Wanamaker fam­ously said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Now, thanks to digital advertising, the majority of marketers have a different ethos: “Whatever I can’t directly attribute sales results to is wasteful.” In other words, if an ad, sign, post, blog, or any other marketing tactic can’t be traced as the reason someone purchased your home, then it wasn’t worth what you paid for it.

But in my opinion, the pendulum has swung too far in the opposite direction—from complete ignorance of marketing’s direct effectiveness on sales to supreme overconfidence in digital attribution­. Both extremes are dangerous.

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The Promise of Attribution in New-Home Sales and Marketing

Attribution is defined as the action of something being caused by something else; simply, a clear cause and effect. In the most direct example for new-home sales and marketing, an ad campaign is attributed with causing 30 leads, 10 appointments, and two home sales.

In traditional advertising, attribution was done mostly through a pure cause-and-effect correlation; your sales results occurred within 30 days of running radio ads, so those ads must have influenced your results. The lack of data in that assumption is what made Wanamaker’s sentiment universally famous among executives frustrated with the amount of money being spent on ads without much direct accountability.

The problem was that neither ad impressions nor clicks really had a direct connection to sales. Marketers could buy millions of ad impressions for just a few hundred dollars and end up with no attributable sales.

It is the ability to track and measure in a way previously unthinkable that helped digital marketing grow at such a precipitous pace. Finally, there was a fact-based way to confirm an ad was viewed, and if the consumer took action on it or not. As a result, banner ads were sold by the billions in the late 1990s and early 2000s, and the clicks piled up.

The problem was that neither ad impressions nor clicks really had a direct connection to sales. Marketers could buy millions of ad impressions for just a few hundred dollars and end up with no attributable sales. This caused the first dot-com ad bubble to burst and deep distrust of online advertising to settle in for a few years.

New Approaches to Sales Attribution

Then, in late 2007, Google ads based on keywords really started to take off and it seemed like digital ads were delivering on their original promise of attribution. Now you could connect consumers’ intent to the ad because the consumer had to put something into the search box to let Google know what they were looking for.

Around the same time, last-click attribution became a key focus for market­ers. That term is defined as the marketing channel that drove the “last click” the consumer made before entering your website and converting to a lead or purchase.

The theory of last-click attribution is analogous to the way many builders think about real estate agents, that is, if an agent is the “procuring cause” for a buyer visiting their model home, builders are happy to pay a referral fee. However, if the customer walks into the model home on their own and doesn’t let anyone know an agent is involved until a month later, the attributable value of the agent is suspect.

The hard truth is that none of them are perfect and all of them need to be treated as informative, not an exact science. Builders and marketers need to stop perpetuating the belief that they can track everything.

For last-click attribution, then, it stood to reason that if someone typed in “new homes Columbus” and completed a registration form on your website, the credit for that lead should be fully attributed to Google.

When you view an attribution report and see that Google is driving the majority of your online conversions, what’s a marketer to do with that data and insight? Invest more into the platform, of course! That “cause and effect” thinking drove up Google’s ad revenue from $16 billion in 2007 to over $134 billion in 2019 ... setting the stage for the second dot-com ad bubble to burst.

When it Comes to Sales Attribution Methods ... Is It Lies, All Lies?

The problem is that today most last-click conversions coming from Google ads are from keywords that imply the consumer was heavily influenced by other forms of advertising, such as social media, Zillow, or previous organic searches.

For instance, if I type “Happy Acres Builders” in a Google search, it implies that I became aware of Happy Acres Builders from some other source; how else would I know to search for that specific brand name? Yet last-click attribution won’t give credit to anything else but that builder’s Google ad (whether I actually saw it or not) for my search term.

That disconnect is compounded by many digital marketing agen­cies that mask these details when reporting results, in an attempt to show their strategy’s overall effectiveness.

If you suspect your agency is doing this, look for reporting that doesn’t distinguish between unbranded searches (for example, “New homes Columbus”) and branded ones (“Happy Acres Builders”), or when they use made-up math such as “return on ad spend” (ROAS) to prove their value for your sales and marketing investments.

Information vs. Winning

In a customer journey as long, complex, and emotionally charged as searching for a new home, last-click attribution is clearly not the exact science many experts pretend it is.

This wariness has spurred other attribution methods, such as “first click” (the cause of the beginning of the customer journey), “linear” (equal causality across clicks), “time decay” (the closer to the conversion the more value is applied), and “position based” (80% credit given to first and last click with the rest split evenly; see the “Placing Attribution Value” graphic, above).

The hard truth is that none of them are perfect and all of them need to be treated as informative, not an exact science. Builders and marketers need to stop perpetuating the belief that they can track everything.

The rise of privacy protection efforts such as the European Union’s GDPR (General Data Protection Regulation) and the CCPA (California Consumer Privacy Act) are further reducing the transparency for marketers, causing some to cling even more tightly to last-click attribution and others to give up on the idea of attribution entirely.

The best way forward is to use attribution data as part of your analysis, but more importantly to build out your own quantitative and qualitative knowledge about how consumers shop for a new home today ... by simply asking them, either in person or on a survey: Where are you spending your time? With what mediums? What technology? Who do you trust or look to for advice?

Of course, we all want more useful data, but not so we can remove ourselves from the decision-making process entirely. For now, the best machine for the job is still a human. Opportunities for innovation and disruption are found in the spaces between what attribution data says and what we know from direct observation of human behavior.

Access a PDF of this article in Pro Builder's May/June 2020 digital edition