An Attribution Model for Word of Mouth

Attribution models are used by search marketers to give equal credit to all ads the user clicks on in the purchase path, not just the final ad. Word of Mouth (WOM) also needs an attribution model.

The example below shows how WOM plays a highly influential role in a consumer’s restaurant dining choice: (Note that I’ve simplified the purchase decision process to illustrate the point about the value of WOM.)

  • Awareness: Customer learns about restaurant via WOM recommendation from friend.
  • Consideration: Customer reads positive reviews about restaurant on Yelp. Again, WOM plays a key role.
  • Purchase: Customer goes to OpenTable and makes restaurant reservation.
  • Advocacy: Customer recommends restaurant to his friends, which leads to additional purchases.

In the example above, OpenTable would get credit for the purchase because it was the final click in the purchase path. However, WOM deserves credit for heavily influencing the purchase decision. In fact, without the initial WOM recommendation and the positive reviews of the restaurant on Yelp, the consumer probably would never have chosen the restaurant. This means that WOM should actually get more credit than the click or last action immediately before the purchase.

Since WOM plays a highly influential role in the two steps leading up to the purchase, the restaurant should give credit to WOM for at least two-thirds of the value that it currently gives to OpenTable. If the restaurant is paying $2 to OpenTable for each reservation, WOM deserves $1.32 of the credit for this reservation. (OpenTable charges a pay-for-performance fee of $1 per seated diner booked on OpenTable.)

By the way, this doesn’t take into consideration the value of the fourth stage in the decision process - advocacy - where the customer recommends the restaurant to his or her friends.

To sum up, then, here’s a simple way to assign value to WOM:

  1. Model the customer decision process.
  2. Analyze what role WOM plays at each step in the customer’s purchase decision process.
  3. Assign value to the role of WOM based on what you currently pay for the last click or action before the purchase occurs.

This attribution model isn’t perfect (very few are.) But at least it can help you analyze the value of WOM in the purchase decision process.

-Rob Fuggetta, Founder/CEO, Zuberance