How does time decay attribution work?
Table of Contents
- Work model of Time decay attribution
- Customer Journey Tracking
- Assigning Credit
- Weighting Scheme
- Determining the Decay Rate
- Calculation of Credit
- Summing Up the Credits
- Real Life Example
Work model of Time decay attribution
Time decay attribution is an attribution modeling method that gives more credit to marketing touchpoints that are closer in time to the conversion event. It operates on the principle that more recent interactions have a higher influence on the customer’s decision to convert compared to interactions that occurred further in the past. The basic idea is that the impact of marketing efforts tends to diminish over time as customers move through the sales funnel or decision-making process.
Customer Journey Tracking:
The first step is to track and record the various touchpoints a customer interacts with during their journey with the brand. These touchpoints can include ad clicks, website visits, email opens, social media engagements, and more.
Assigning Credit:
Each touchpoint is assigned a certain amount of credit for the conversion. The more recent the touchpoint, the higher the credit it receives.
Weighting Scheme:
Time decay attribution uses a weighted scheme to assign credit. As time progresses, the weight of each touchpoint decreases, signifying a decrease in its impact on the conversion.
Determining the Decay Rate:
The decay rate represents how quickly the credit for a touchpoint decreases as time goes by. The rate can be predefined or based on historical data analysis, depending on the complexity of the attribution model.
Calculation of Credit:
The actual calculation of credit for each touchpoint involves applying the decay rate to the touchpoint’s credit based on the time elapsed since the interaction. The more time has passed since the touchpoint occurred, the less credit it receives.
Summing Up the Credits:
The total credits of all touchpoints are then added up to determine the overall attribution for the conversion event.
Real Life Example:
Let’s consider a customer journey where a user interacts with a brand’s social media ad, visits their website through an organic search, receives an email, and finally makes a purchase. The time decay attribution model might assign the following credits based on the time elapsed since each interaction:
- Social Media Ad (2 days ago): 20% credit
- Organic Search (5 days ago): 15% credit
- Email (10 days ago): 10% credit
In this example, the social media ad receives the highest credit as it occurred most recently, followed by the organic search, and the email gets the least credit due to it being the oldest touchpoint.
Time decay attribution can be an effective method, especially when the customer’s decision-making process is relatively short-lived, and the recent interactions have a more significant impact on their final decision to convert. However, it may not be suitable for all businesses or customer journeys, so it’s essential to consider the specific characteristics of your target audience and marketing efforts when choosing an attribution model
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