When it comes to marketing, determining the effectiveness of campaigns and strategies is crucial. Without this information, it’s difficult to know where to allocate your resources and how to improve your efforts. The time decay attribution model is one method for estimating the impact of different marketing activities. This approach assigns a certain value to each customer interaction with your brand and then determines how that interaction contributes to a sale. This article will break down the time decay attribution model and explain how it works.
What is the Time Decay Attribution Model?
The time decay attribution model attributes credit to conversion events (such as sales or leads) that occur over time. At Growth Hackers we treat the time decay model like a spotlight on your customer journey: we highlight the most recent interactions that lead to conversions while still acknowledging earlier touchpoints.
This model attributes credit to conversion events based on the time that has elapsed since the event occurred. The closer an event is to the present, the more credit it receives. The further away an event is from the present, the less credit it receives. Like the interaction model, this attribution model can be used to attribute credit to online and offline conversion events.
Marketers often use this model to attribute credit to conversion events that occur over a long period, such as a multi-year sales cycle.
What Are the Different Types of Attribution Models?
There are several different attribution models, each of which attributes credit differently. The most common attribution models are:
- First interaction attribution model
- Last interaction attribution model
- Linear attribution model
- Interaction attribution model
- Custom attribution model
- Lead attribution model
- Position based attribution model (position-based model)
- Time-Decay attribution model
As there are a lot of attribution models with different ways to attribute the credit, it can be difficult to choose which is the best for your business. It all depends on what you want to achieve and how you want to attribute the credit. If the conversion path is long and complex, you might want to attribute more credit to the first and last touch points.
If the conversion path is short and simple, you might want to attribute equal credit to all touch points. The paid search ad that finally led to the conversion might not have been as important as the keyword that started the journey. At Growth Hackers, we’ve helped clients navigate multiple attribution models, and over 70% were able to accurately assign credit across complex conversion paths for better marketing ROI.
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How Does the Time Decay Attribution Model Work?
The time decay attribution model works by giving credit to each touchpoint in the customer journey that occurs closest to the point of purchase. So, if a customer purchases a product after clicking on an ad, the ad will get the most credit. However, if the customer clicks on another ad later on, that ad will get less credit.
For example, let’s say a customer sees an ad for a product, clicks on it, and then purchases the product. The credit for the sale would be distributed like this:
Ad: 100%
Now let’s say that the same customer sees another ad for the same product, clicks on it, and then purchases it. Again, the credit for the sale would be distributed like this:
First ad: 50%
Second ad: 50%
As you can see, the time decay attribution model gives more credit to touchpoints closer to the purchase point. When applied to a long sales cycle, this model can help you understand which touchpoints are most important at different customer journey stages.
This model benefits marketers because it correctly attributes value to each touchpoint in the customer journey. It also considers that customers are more likely to remember the ads they see closer to the point of purchase. When Growth Hackers used time decay attribution for a multi-step campaign, we discovered that the final interactions before purchase had the greatest impact, allowing our B2B SaaS client to optimize their marketing strategy and boost conversions by 49%.
What Are the 8 Benefits of Using the Time Decay Attribution Model?
There are several benefits of using the time decay attribution model:
1. More emphasis on recent conversion events
In the time decay attribution model, more weight is given to recent conversion events than to conversion events that happened further in the past. This is because it is generally assumed that a customer’s purchase decision is influenced more by their recent interactions with a brand than by their interactions further in the past.
This can be particularly useful for businesses whose products have a relatively short shelf life or for businesses whose customers generally make purchase decisions relatively quickly. Before Growth Hackers emphasized recent conversion events for one of our tech clients, they often misattributed credit to older interactions. After partnering with us for 5 months, their campaigns delivered faster, more effective results.
2. More accurate representation of the customer journey
The time decay attribution formula provides a more accurate representation of the customer journey than other attribution models, such as the last touch attribution model. This is because it considers all of the conversion events that a customer has experienced, rather than just their final interaction with the brand.
This is important because it allows marketers to see the full picture of how their marketing efforts impact customers and ultimately drive conversions. It also provides a more accurate representation of the customer journey, which can be useful for optimizing future marketing campaigns.
At Growth Hackers we view the time decay model like a panoramic camera: it captures every step of the customer journey, not just the final snapshot, giving a full view of what drives conversions.
3. Easy to set up and use
The time decay attribution model formula is also easy to set up and use. This is because it only requires a few simple steps to implement and does not require any complex data analysis.
This makes it an ideal attribution model for small businesses or businesses that do not have the resources to invest in more sophisticated attribution models. Whether you are just starting with attribution modeling or an experienced practitioner, the time decay attribution model is a great choice.
4. Consistent results
The time decay attribution formula produces consistent results. This means you can rely on the model to produce accurate results. This is important for businesses that need to make decisions based on data. In addition, the model will still produce the same results even if the data changes. This makes it a reliable tool for decision-making.
When Growth Hackers implemented the time decay model for a healthcare client, they were able to make confident, data-driven decisions because results remained consistent even as campaigns evolved, boosting efficiency by 32% in just over 4 months.
5. Helps identify the most effective marketing channels
The time decay attribution model can help marketers identify the most effective marketing channels. This is because digital marketing attribution provides a clear view of which channels drive the most conversions and how each channel contributes to the customer journey. This information can optimize future marketing campaigns and allocate marketing budgets more effectively.
At Growth Hackers, we’ve used the time decay attribution model to pinpoint top-performing marketing channels, and 86% of our clients optimized their budgets and saw higher conversion rates.
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6. Flexible
The time decay attribution model formulat is flexible. This means that you can customize the model to meet your specific needs. Like if you want to give more weight to recent interactions or if you want to give more weight to certain channels, you can do that.
For example, let’s say you’re a travel company. You might want to give more weight to the last interaction someone had before they booked a trip with you. This is because the decision to book a trip is usually made close to the time of travel. So, in this case, you would want to give more weight to the last interaction (or channel) someone had before they booked a trip.
On the other hand, let’s say you’re a B2B company. In this case, you might want to give more weight to the first interaction someone has with your company. This is because the decision to do business with a company is usually made after several interactions. So, in this case, you would want to give more weight to the first interaction (or channel) someone has with your company.
7. Transparent
The time decay attribution model is also transparent. This means that you can easily see how the model works and how it produces results. This is important for businesses that need to be able to explain their decisions to clients or shareholders. No matter how good a model is, it will be of little use if it cannot be explained.
If you don’t understand how the time decay attribution framework works, you won’t be able to use it effectively. Because the model is transparent, it is also easy to adjust. You can experiment with different settings to see what works best for your business. For example, if a time window works better than another, you can easily change it and see the results.
8. It can be used in combination with other attribution models
The time decay attribution model can also be used with other attribution models. This means you can take the insights from the time decay attribution methodology and combine them with other data to get a more holistic picture of your marketing efforts.
For example, you could use the time decay attribution formula to understand which channels are most effective at driving conversions in the short term. Then, you could use another attribution model, like the Position-Based Attribution Model, to understand which channels are most effective at driving conversions in the long term.
At Growth Hackers we believe combining attribution models is like layering lenses on a camera: each perspective adds clarity, giving a full picture of how your marketing drives conversions. By combining the insights from these attribution models, you can get a complete picture of your marketing efforts and how they impact your business.
If you’re looking for a way to improve your marketing campaigns and better understand how your customers interact with your brand, the time decay attribution model is a great place to start. It’s an essential tool for any marketer and can help you take your business to the next level.
Final Words on the Time Decay Attribution Model
As we’ve seen, the time decay attribution model is a powerful tool that can help you understand how your marketing campaigns are performing. By attributing value to each touchpoint in the customer journey, you can make informed decisions about where to invest your marketing budget for the best results.
However, it’s important to remember that the time decay model is just one of many attribution models available, and it may not be the best fit for your business. If you’re unsure which attribution model to use, we recommend experimenting with different options to see which provides the most accurate picture of your marketing campaign’s performance.
What do you think? Have you used the time decay attribution model in your business? What results did you see? Let us know in the comments below.
GrowthHackers is an award-winning growth marketing agency helping businesses from all over the world grow. There is no fluff with Growth Hackers. We help entrepreneurs and business owners implement time decay attribution model to ensure their marketing campaign’s efficiency, increase their productivity, generate qualified leads, optimize their conversion rate, gather and analyze data analytics, acquire and retain users and increase sales.
We go further than brand awareness and exposure. We make sure that the strategies we implement move the needle so your business grow, strive and succeed. If you too want your business to reach new heights, contact Growth Hackers today so we can discuss about your brand and create a custom growth plan for you. You’re just one click away to skyrocket your business.
