If you’re a director-level or higher marketing expert, chances are you’ve already embraced the promise of analytics and data-driven strategies to optimize your marketing mix. But have you ever stopped to question the precision of your current attribution models? Are they really capturing the complex customer journey from awareness to conversion? And more importantly, are you leaving money on the table by not understanding the true value of each marketing channel? This blog post, enriched with insights from Wizaly’s customer journey attribution platform, goes beyond the basics to dive deep into the world of Shapley Value—a game theory concept applied to marketing attribution that could redefine the way you measure, assign, and optimize the ROI of your marketing campaigns.
Why Traditional Attribution Models Fall Short
Traditional attribution models like last-click or even multi-touch attribution can only get you so far. They often do not accurately capture the value of each channel in a customer’s journey towards conversion.
First, they lack a deep understanding of the marketing effect contributed by each touchpoint. They either assign all the credit of a purchase to the last channel the customer interacted with or distribute it unevenly among the various touchpoints.
Second, traditional models are not equipped to compute the ROI or the marginal contribution of each channel. They fall short in predictive modeling, thus making it hard to forecast the future performance of marketing campaigns.
Third, these models often overlook the complexity of the modern digital marketing landscape. Online advertising, for instance, involves a multitude of channels and touchpoints, each with its unique payoff. The traditional attribution model can’t capture this.
Fourth, the simplistic nature of traditional models can lead to misallocated marketing budget. It could mean investing in popular marketing channels that may not necessarily provide the highest number of conversions.
Lastly, they rarely account for cooperative game theory elements, where different marketing channels could be working together in order to drive conversions.
Understanding Shapley Value: A Game Theory Approach to Attribution
The Shapley Value, a concept borrowed from cooperative game theory, offers a more nuanced approach to attribution. In this framework, each marketing channel is considered a “player” in a cooperative game working together to achieve conversions.
The method begins by creating a “coalition” of channels and calculating the total number of conversions that each subset of channels has yielded. It then computes the worth of each coalition, treating every marketing channel as players in a cooperative game.
Shapley Value allows us to measure a channel’s attribution accurately. It assigns the payoff based on the channel’s actual contribution to conversion, taking into account its interaction with other channels.
The algorithm that assigns Shapley Value is data-driven and can be tailored to fit the specific dynamics of your business. Unlike traditional models, Shapley considers the gains and costs related to each channel, providing a more rounded view.
Because it’s rooted in game theory, the Shapley model can detect not just the value but the right data and mix of channels that should be part of your marketing mix. It makes your approach to attribution not only more accurate but also more strategic.
Data-Driven Marketing Optimization Using Shapley Value
Adopting a Shapley Value approach to marketing attribution allows for smarter, data-driven marketing optimization. But what does this look like in practice?
First, Shapley Value provides a more accurate understanding of the correlation between the channels. You’re not just looking at last-click or a simple distribution of credit. Instead, you’re seeing how channels actually contribute to conversions when working together.
Second, this data-driven model involves more complex analytics but reaps greater benefits. It provides actionable insights to tweak your marketing mix, enabling better ROI.
Third, Shapley’s predictive capabilities are a cut above traditional models. It uses machine learning algorithms to predict the probability of conversion through various channels, thus informing future strategy.
Fourth, Shapley Value can integrate with existing tools like Google Analytics or even custom-built analytics solutions, giving you a complete picture of your marketing effectiveness.
Fifth, the value approach of Shapley extends beyond merely assigning credit to channels. It’s about understanding the marginal contribution of each touchpoint in the customer journey, and how best to allocate resources for maximum payoff.
Implementing Shapley Value in Python and Machine Learning
One of the beautiful aspects of Shapley Value is that it can be implemented using Python and machine learning frameworks. This makes it accessible to data science teams within your organization.
With Python, a function can be created that computes the worth of each coalition and then uses a Shapley algorithm to assign value. These machine learning algorithms can be as straightforward or as complex as you like—ranging from basic random forest methods to more advanced deep learning models.
These technical implementations are a data scientist’s dream but are also straightforward enough for marketing experts who are technical at times. Importantly, it ensures that your attribution model is based on rigorous data science, rather than heuristics.
The computational aspect of Shapley Value may seem daunting at first, but platforms like Wizaly offer pre-packaged solutions that make the implementation seamless.
Multi-Channel Attribution vs. Shapley Value Attribution: A Real-World Example
To drive the point home, consider a real-world example where multi-channel attribution and Shapley Value attribution were both implemented.
In this case, the customer begins his journey by clicking on a sponsored ad and then reads a recommended article from Medium. Several touchpoints later, a targeted Google ad finally convinced him to go purchase. A multi-channel approach might have simply divided the attribution credit between these channels, whereas a Shapley Value attribution would consider the collective and individual payoff of each.
The result? Shapley Value attribution showed that while the sponsored ad and Google ad were important, the Medium article had a disproportionately high value in persuading the customer—a nuance missed by multi-channel attribution.
The Predictive Power of Shapley in Conversion Optimization
Because Shapley Value employs predictive modeling, its use goes beyond merely understanding past performance. It helps in planning and optimization for the future.
Firstly, it allows you to forecast the total number of conversions based on various marketing channel combinations. This is invaluable for budget allocation and predictive strategies.
Secondly, Shapley Value models can gauge the potential success of channels that haven’t been used yet or are under-utilized, giving a predictive edge.
Thirdly, predictive analytics using Shapley provide not just a reactive but a proactive approach to marketing, allowing you to stay ahead of the curve.
Fourth, Shapley’s predictive power helps in real-time adjustments. If a channel is underperforming, you can pivot quickly, thus ensuring that your marketing mix is always optimized.
Fifth, the predictive capabilities also extend to customer behavior. By analyzing how customers are likely to move through the funnel, you can tailor
marketing strategies for maximum conversion.
Navigating the Complexities: Recommended from Medium to Advanced Strategies
While Shapley Value offers a compelling approach, it’s essential to navigate its complexities carefully. The model involves robust analytics and can be technical at times, which is why it’s crucial to use tools and platforms that simplify the process.
Wizaly, for instance, offers a simplified yet advanced approach to implementing Shapley Value. Their platform can integrate data-driven attribution model strategies with existing analytics tools, providing a holistic view of your marketing landscape.
For those who are technically inclined, advanced strategies can also be explored. These might include using deep learning for more nuanced attribution or integrating Shapley Value with other predictive models for a comprehensive strategy.
Future-proofing Your Marketing Attribution Models with Wizaly
So, are you ready to move beyond traditional attribution models and adopt a smarter, more effective strategy? Shapley Value allows you to unlock the full potential of each marketing channel, enhancing not just attribution but also predictive analytics and ROI optimization.
By integrating Shapley Value into your marketing mix, you prepare your business for the future—ensuring that each dollar spent is optimized for the highest payoff. And if the computational aspect seems daunting, remember that platforms like Wizaly are designed to make the transition seamless.
Shapley Value offers a future-proof, data-driven model that redefines marketing attribution. It provides a precise, predictive, and actionable approach to understand the true value of each marketing channel in a customer’s journey to conversion. Don’t settle for outdated methods. Take the leap and redefine your attribution strategy with a more accurate, Shapley-based approach.
Ready to make the shift? Reach out to Wizaly today to supercharge your marketing attribution and drive optimal ROI.
