Question

In: Finance

Suppose that Company A had three paying consumers in the month of April 2016. The customer...

Suppose that Company A had three paying consumers in the month of April 2016. The customer journey of these three consumers and the respective revenue from the sale is presented in the table below.

Consumer

First Channel

Second Channel

Third Channel

Final Channel before Sale

Revenue from Sale

Consumer 1

Paid Search Ad

Organic SERP

Direct

Email

$150

Consumer 2

Organic SERP

Direct

Direct

Paid Search Ad

$200

Consumer 3

Direct

Email

Paid Search

Display Ad

$275

Assume that the company uses the time decay attribution model to ascertain revenue sharing across the digital marketing channels. The time decay is set up such that the channel closest to the sale is given and attribution of 50%, followed by 30%, 15% and 5% attributed respectively to channels preceding it in decreasing order of closeness to sale as shown in the table below:

Channel

First Channel

Second Channel

Third Channel

Final Channel before Sale

Attribution

5%

15%

30%

50%

A. For the scenario depicted in the document the share of revenue for Paid Search channel is ... a. $190 b. $210 c. $180 d. $200

B. For the scenario depicted in the document which channel gets the highest share of revenue?....a. direct b. paid search ad C. organic D. email

C. IF the company had employed a linear attribution model the share of revenue for direct channel would have been: A. $158 b. $206.25 c. $190.25 d. $190

D. For the scenario depicted in the document which channel gets the lowest share of the revenue? a. Organic b. Direct c. Paid Search Ad d. Email

Solutions

Expert Solution

Question – A:

Share of revenue for paid search channel = revenue*channel %age for paid search sum total

= 150*0.05 + 275*0.3 + 200*0.5 = 190

Answer is: (a) $190

Question – B:

Highest share of revenue:

We will find the share of revenue for each channel:

Paid search = $190 (found in part a)

Organic SERP = 200*0.05 + 150*0.15 = 32.5

Direct = 275*0.05 + 200*0.15 + 200*0.3 + 150*0.3 = 148.75

Email = 275*0.15 + 150*0.5 = 116.25

Display Ad = 275*0.5 = 137.5

Hence highest is:

Answer is: (b) Paid Search

Question – C:

Linear attribution means every channel 0.25

Direct channel = 0.25*(275 + 200 + 200 + 150) = 206.25

Answer is: (b) $206.25

Question – D:

From calculations in part b, lowest is 32.5 (for Organic SERP)

Answer is: (a) Organic




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