How Attribution Modeling Helped Bonobos Cut Marketing Costs and Double Sales
The concept of attribution modeling isn't overtly sexy. It enables marketers to look at a variety of ads that contribute to a sale or conversion over an extended period of time and then attribute credit to each ad or "touchpoint" within the sales funnel. After I learned about how omnichannel men's apparel brand Bonobos uses attribution modeling to cut its marketing costs and double sales, the concept downright sizzles.
I had a chat recently with Craig Elbert, the vice president of marketing at New York City-based Bonobos, and got the skinny about the company's attribution modeling program.
"When it comes to attribution modeling, we really think of it as a story or a narrative," says Elbert. "It helps us learn how new customers discovered our brand and what were their interactions along the path to making their first purchases. For existing customers, it helps us learn what brought them back and pushed them over the edge to make additional purchases."
Bonobos had been using a form of attribution modeling since it was founded in 2007, but it relied on Google Analytics, which measured attribution on "a last-click basis," says Elbert. In the summer of 2012, however, after the company increased its media spend with more display and other types of online advertising, it decided to take a more proactive approach to attribution modeling and began working with Convertro, a marketing attribution software provider.
"We would get results back from specific online advertising campaigns and find that our cost per acquisitions weren't hitting our target," recalls Elbert. "So we'd go back to the content provider, media provider or whomever we purchased media from and let them know, but their retort was always, ‘You exposed yourself to a lot of new customers who may not have converted immediately, but they will convert eventually.’ We wanted to test that hypotheses. We wanted to have data to show them we didn't think this was happening."
In July and August of this year, Bonobos began testing the hypotheses with Converto. It began tracking consumers who clicked on display ads over a specific period of time to see if the touchpoint led to a conversion. As Bonobos suspected, it didn't see a significant jump in conversions. "We went back to our media partners and told them we have the data to show them that the ads are driving traffic, but those consumers aren't coming back to convert," says Ebert. As a result, Bonobos slashed its display budget significantly in August.
Bonobos now attaches multitouch attribution parameters to all its URLs disseminated externally on a daily basis. That includes links on Facebook, in emails, in search ads, etc.
"We just found out through Convertro that Facebook news feed posts and paid ads on a first touch and first few touches basis perform well for us, so we've allocated a large percentage of our advertising budget to that," Elbert says. He added that Bonobos has a significant number of consumers coming into its Guideshops around the country, which enable consumers to try on clothes and decide which items to buy. Rather than leaving with the merchandise, however, customers order the clothes online in-store and receive them within one day or two days.
"Our Guideshops have been great for customers discovering the brand, and we work that into our attribution model as well," says Elbert. "For example, if their first purchase was in a Guideshop, we use that as their discovery point."
In short, Convertro can now reallocate dollars and optimize marketing strategies that specifically target each type of consumer, without wasting ad spend by targeting the wrong people through the wrong mediums.
Since using Convertro over the past year, Bonobos has "cut its marketing costs as a percentage of sales and at the same time doubled our business," says Elbert. "A lot of that is around being able to allocate our spend where it's most effective."
The results are pretty sexy, no?
How does your company handle attribution modeling? Is it working? Let me know by posting a comment below.